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Public Meeting Transcripts

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

Held on Friday, April 23, 2004, at the Federal Reserve Bank of Chicago

Unedited transcript

       1

           2                      PUBLIC MEETING

           3       J. P. MORGAN CHASE AND BANK ONE CORPORATION

           4                    CHICAGO, ILLINOIS

           5

           6           STENOGRAPHIC REPORT OF PROCEEDINGS had in

           7   the above-entitled matter held on April 23, 2004,

           8   at the Federal Reserve Bank, 230 South LaSalle

           9   Street, Chicago, Illinois, MS. SANDRA BRAUNSTEIN,

          10   presiding, commencing at 8:30 o'clock a.m.

          11     PRESENT:

          12           MS. SANDRA BRAUNSTEIN, Director, Board of

          13                 Governors of the Federal Reserve

          14                 System

          15           MR. JAY BERNSTEIN, Bank Supervision

          16                 Officer, Federal Reserve Bank of New

          17                 York

          18           MR. WALTER McEWEN, Senior Counsel, Board

          19                 of Governors of the Federal Reserve

          20                 System

          21           MS. ALICIA WILLIAMS, Vice President,

          22                 Federal Reserve Bank of Chicago

          23   Reported By:  Anna M. Morales, CSR, RMR

          24   License No:   084-002854

                                                                  1




           1     MS. BRAUNSTEIN:  Good morning, everybody.

           2   We're going to get started.  We have a tight

           3   timetable today, so we're going to try to stick to

           4   that.  Good morning, everyone, and I'm pleased to

           5   welcome you to Chicago and to this important public   
08:31:04

           6   meeting on the application by J. P. Morgan Chase to

           7   acquire Bank One Corporation.

           8            Let me first introduce myself.  I'm

           9   Sandra Braunstein, and I'm the Director of the

          10   Division of Consumer and Community Affairs at the     
08:31:18

          11   Board of Governors of the Federal Reserve System in

          12   Washington, D.C.

          13            Our other panelists are to my left is

          14   Alicia Williams, who's Vice President at the

          15   Federal Reserve Bank of Chicago for Consumer and      
08:31:34

          16   Community Affairs.  To my immediate right is

          17   Walter McEwen, who is a senior legal counsel at the

          18   Board of Governors in Washington, D.C.; and to his

          19   right is Jay Bernstein, who is the Bank Supervision

          20   Officer in Banking Applications and Analysis for      
08:31:52

          21   the Federal Reserve Bank of New York.

          22            We are here today because J. P. Morgan

          23   Chase and Company in New York has applied for

          24   approval to acquire Bank One Corporation here in

                                                                  2




           1   Chicago, Illinois.  When the Federal Reserve System

           2   considers one of these applications, we look at a

           3   number of factors under the Bank Holding Company

           4   Act.  These factors include financial issues,

           5   managerial issues, competitive issues and the         
08:32:24

           6   convenience and needs of the communities affected.

           7   In doing so, we particularly look at the record of

           8   performance of the parties under the Community

           9   Reinvestment Act.  The CRA requires the Board to

          10   take into account an institution's record of          
08:32:44

          11   meeting the credit needs of its entire community.

          12            The purpose of this public meeting today

          13   is to receive information regarding these factors.

          14   We will be seeking to elicit this information and

          15   to clarify factual issues related to the              
08:33:00

          16   application.  We're very pleased that so many

          17   witnesses have signed up to testify today.  In

          18   fact, we have, I think, a little over 85 groups

          19   that will -- and individuals that will be

          20   represented.                                          
08:33:16

          21            Let me make a few comments about what the

          22   procedures will be; and, for those of you who are

          23   here for the long haul for the entire day, some of

          24   these things you're going to hear me repeat again

                                                                  3




           1   and again for each panel because I know we have a

           2   lot of traffic flow, people coming in and out.

           3            Basically this is called an informal

           4   public meeting.  Members of this panel may ask

           5   those who are testifying about their testimony.       
08:33:44

           6   However, this is not a formal administrative

           7   hearing, so we're not bound by rules regarding

           8   evidence, cross-examinations and some of the formal

           9   trappings of that kind of procedure.

          10            Because we have so many witnesses today,     
08:34:00

          11   we are really going to need to stick to the

          12   timetable so that everyone who is here and has

          13   signed up has a chance to offer their testimony.

          14   And so we're going to ask the witnesses to please

          15   be mindful of the needs of other panelists and to     
08:34:14

          16   help us stay on schedule.  And we're going to ask

          17   the witnesses to please keep within their allotted

          18   time.

          19            We have a time-keeping system, and each

          20   panelist -- by the way, for most of the panels the    
08:34:30

          21   way it's done is each panelist will have five

          22   minutes to present their testimony.  After three

          23   minutes, we have timekeepers over here -- raise

          24   your hands, Sherry and Helen -- they're our

                                                                  4




           1   timekeepers, and we have several systems here.  We

           2   have the systems and back-up systems and fail-safe

           3   systems for timing.

           4            For one thing, after the first three

           5   minutes of your testimony, a yellow light will        
08:34:54

           6   flash in that little box, and then a red light will

           7   flash, and I understand a sound -- there will be a

           8   sound when the five minutes are up.  In addition,

           9   we also have as a back-up system signs which tell

          10   you when you have two minutes left and when you are   
08:35:08

          11   finished.  So we would ask people to please not

          12   just ignore the timekeepers and to pay attention to

          13   them and that will be helpful.

          14            Also if anyone has a copy with them of

          15   their statement, it would be helpful if you could     
08:35:24

          16   leave a copy of that with our court reporter who is

          17   in the center of the room.  And with regards to

          18   that, I just want to let people know, we are being

          19   taped -- we're being taped in terms of sound

          20   system.  We are not being videotaped.  You see, the   
08:35:42

          21   cameras are on just to have the big screens to make

          22   it easier for the people in the back to see the

          23   panelists, but it is not being videotaped.  We're

          24   being audiotaped only.

                                                                  5




           1            The last thing, one more comment, is that,

           2   witnesses, if you can't finish your testimony in

           3   five minutes, that's okay.  Your time will be up

           4   for speaking, but you may submit a written

           5   supplement to your oral testimony, but you must do    
08:36:10

           6   this by next Friday, April 30th, and then the

           7   record will be closed.

           8            Written supplements should be directed to

           9   Jennifer Johnson, Secretary of the Board of

          10   Governors of the Federal Reserve Bank in              
08:36:24

          11   Washington, D.C.  They must be received by 5 p.m.,

          12   5 p.m. Eastern Standard Time on April 30th.  You

          13   may also fax your submissions to 202-452-3462.

          14            If you haven't turned in copies of your

          15   written testimony or if you have other written        
08:36:46

          16   statements to put in the record, please leave them,

          17   as I said, with the court reporter or with the

          18   Federal Reserve staff that are at the registration

          19   desk.

          20            We are doing a transcript for this           
08:36:58

          21   meeting.  The hard copy of the transcript for the

          22   meeting will be available by April 30th through the

          23   Federal Reserve Bank of Chicago and through the

          24   Board of Governors.  In addition, the official

                                                                  6




           1   transcript will be up on the Web site, on the

           2   Board's public Web site at

           3   www.FederalReserve.gov/events/public meetings.

           4            And with that we're going to begin the

           5   proceedings.  I would ask that everyone who is        
08:37:26

           6   speaking to please state your name and organization

           7   at the beginning of your remarks for the record.

           8   And also with our first panel, we do have a little

           9   bit difference in time.  You have one-half hour.

          10   You won't be signaled until the end of your half      
08:37:42

          11   hour, till the last five minutes of your half hour.

          12            With that, Mr. Harrison, would you like to

          13   begin?

          14       MR. HARRISON:  Thank you, Sandra.

          15            Good morning.  I'm Bill Harrison, Chairman   
08:37:52

          16   and CEO of J. P. Morgan Chase.  It's my pleasure to

          17   address you, the distinguished members of the

          18   panel, today.  I'm here with Jamie Dimon, Chairman

          19   and CEO of Bank One Corporation; Mark Willis,

          20   Executive Vice President, head of J. P. Morgan        
08:38:06

          21   Chase's Community Development Group; and Byron

          22   Reed, First Vice President and Managing Director of

          23   Bank One's Community Investment Group.

          24            First, I want to thank the Federal Reserve

                                                                  7




           1   for convening this public meeting, giving us the

           2   opportunity to discuss the proposed merger of

           3   J. P. Morgan Chase and Bank One.  I would like to

           4   explain why we believe our merger will benefit our

           5   customers, our employees, our shareholders and the    
08:38:32

           6   important communities in which we do business and

           7   in which we live.

           8            In January, J. P. Morgan Chase and

           9   Bank One announced an agreement to merge in a

          10   strategic business combination which based on total   
08:38:46

          11   assets will establish the second largest banking

          12   franchise in the United States.  We'll have assets

          13   of $1.1 trillion; a strong capital base; over 2300

          14   branches in 17 states and employees in 50 countries

          15   around the world.  We will have top-tier positions    
08:39:04

          16   in retail banking and lending, which includes small

          17   business and home finance, as well as top-tier

          18   positions in credit cards; investment banking;

          19   asset management; private banking; treasury and

          20   security services; middle-market banking and          
08:39:20

          21   private equity.

          22            With balanced earnings contributions from

          23   retail and wholesale banking, we believe we will be

          24   well positioned to achieve strong and long-term

                                                                  8




           1   stable financial performance and to increase

           2   shareholder value.  We'll have a more diverse

           3   business mix, greater scale, and enhanced

           4   efficiencies and competitiveness.

           5            I will be Chairman and CEO; Jamie Dimon,     
08:39:44

           6   Bank One's current Chairman and CEO, will be the

           7   President and Chief Operating Officer.  Jamie will

           8   succeed me as CEO in 2006 and I will continue as

           9   Chairman.

          10            Our corporate headquarters will be in        
08:39:56

          11   New York, and both our middle market and retail

          12   businesses will be headquartered here in Chicago.

          13            You probably also know that J. P. Morgan

          14   Chase has had just a small presence in this great

          15   City of Chicago, primarily serving government         
08:40:12

          16   entities and large corporations, and that

          17   Chase Mortgage has been growing its business of

          18   helping families achieve the American dream of home

          19   ownership in this area.  That's why we're so

          20   excited that the merger joins us with Chicago's       
08:40:28

          21   biggest, most convenient bank, a bank that's been

          22   here for more than 140 years.

          23            We believe this merger will be a great

          24   benefit to our communities.  Making banking

                                                                  9




           1   services widely available and continuing to help

           2   develop affordable housing and revitalize

           3   neighborhoods are integral to our business goals

           4   and corporate values.  They always have been.

           5            J. P. Morgan Chase has always been both a    
08:40:54

           6   major home mortgage lender nationwide and a major

           7   small business lender throughout our local

           8   communities providing innovative products to meet

           9   the credit needs of first-time homeowners and small

          10   businesses.                                           
08:41:08

          11            We've also distinguished ourselves in the

          12   community development field as a lead lender for

          13   large, complex transitions resulting in affordable

          14   housing for low- and moderate-income households and

          15   for economic development transactions that create     
08:41:20

          16   new jobs and help revitalize communities.

          17            In fact, I am very proud to note that

          18   J. P. Morgan Chase Bank again earned the highest

          19   rating, outstanding, on its most recent CRA

          20   performance examination from the Federal Reserve      
08:41:38

          21   Bank of New York.  This is the seventh consecutive

          22   time spanning 14 years that our lead bank has

          23   earned the highest rating in the CRA category.  And

          24   all three of our subsidiary banks also have current

                                                                 10




           1   outstanding CRA ratings.

           2            We had determined that our new firm will

           3   maintain the highest possible CRA ratings.

           4            Since the merger was announced, community

           5   investment offices of both firms have already         
08:42:06

           6   reached out to more than 700 of our community

           7   partners across the country seeking innovative ways

           8   for banks to work with strategic local and national

           9   partners.  That's because the local leaders know

          10   the needs of their communities.  Based on responses   
08:42:20

          11   from the community groups, we are creating new

          12   initiatives and redoubling our efforts on existing

          13   ones.

          14            On that note, I am proud of our

          15   unprecedented nationwide $800 billion community       
08:42:30

          16   investment commitment that will span an entire

          17   decade.  I'm especially proud because this is the

          18   biggest such commitment ever made by any financial

          19   services company.

          20            This pledge which includes mortgages,        
08:42:44

          21   small business lending and community development

          22   lending reaffirms our national leadership position

          23   in community and economic development.  It also

          24   underscores our efforts to support the credit and

                                                                 11




           1   capital needs of underserved markets, efforts that

           2   will involve much of our new firm ranging from our

           3   market-leading home finance business to our

           4   municipal finance team.

           5            Our commitment includes $675 billion in      
08:43:10

           6   mortgages nationwide for both minority and lower

           7   income communities and borrowers and an expansion

           8   of credit and mortgage counseling programs;

           9   $90 billion in loans and investments to assist

          10   small business and community-based, not-for-profit    
08:43:26

          11   organizations; $35 million of the 800 in loans and

          12   investments for affordable housing and commercial

          13   and economic development in low- and

          14   moderate-income communities; and a new financial

          15   education partnership office that will sponsor        
08:43:42

          16   financial education and social entrepreneurial

          17   programs; work with mortgage counseling groups;

          18   develop new anti-predatory lending programs; work

          19   with our branches to develop bank programs designed

          20   to serve recent immigrants; and teach credit          
08:43:58

          21   fundamentals to not-for-profit personnel.  This

          22   $800 billion pledge reaffirms our commitment to

          23   outstanding CRA ratings and strong, fair lending

          24   programs.

                                                                 12




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

           2   relying on many of the groups who are in this room

           3   today, our partners who are here in support of us

           4   and those who have come to raise reasonable

           5   concerns.                                             
08:44:26

           6            Our new firm will strive to reach all

           7   segments of our markets.  We value the leadership

           8   and innovation of our community development group,

           9   confident that they, with the help of community

          10   partners, will continue to deliver outstanding        
08:44:38

          11   results.

          12            Before I hand the microphone over to

          13   Jamie, I want to thank you again for this

          14   opportunity to speak at today's meeting; and though

          15   Jamie and I will only be able to stay for the first   
08:44:50

          16   panel's presentations, Mark Willis, who will head

          17   the combined firms' Community Development Group and

          18   Byron Reed from Bank One will be here for the

          19   entire session and will address any follow-up

          20   questions you may have regarding CRA.                 
08:45:06

          21            Jamie.

          22       MR. DIMON:  Thank you very much.  Good morning,

          23   everyone.  I'm Jamie Dimon, Chairman and Chief

          24   Executive Officer of Bank One.  I have been in this

                                                                 13




           1   role for four years, after joining the company in

           2   March of 2000 and moving to Chicago with my family

           3   at that time.

           4            After the merger, as Bill said, I will

           5   serve as President and Chief Operating Officer of     
08:45:24

           6   the combined company and become CEO in 2006.  I,

           7   too, would like to talk about the benefits of our

           8   proposed merger.

           9            I understand the important role Bank One

          10   and its predecessors have played in their             
08:45:36

          11   communities across the country for well over

          12   100 years and, in fact, more than 140 years here in

          13   Chicago.  Like all major banks in the country

          14   today, Bank One has grown through acquisitions and

          15   mergers, gaining scale, strength and breadth to       
08:45:48

          16   serve our customers, our employees, our

          17   shareholders and our communities in even better

          18   ways.

          19            Over the last four years, we have faced

          20   some very tough challenges at Bank One; and through   
08:45:58

          21   diligence, discipline and hard work, our employees

          22   have created a strong, healthy company that has

          23   begun to expand again.  In 2003, we opened 58 new

          24   branches for a total of 1,841 in 14 states.  We've

                                                                 14




           1   already had 14 more this year as we continue to

           2   expand.  We've also added 175 ATMs so far this

           3   year, and we are in the process of replacing every

           4   one of the 4,300 ATMs in the nation.  We're

           5   investing millions more in refurbishing our           
08:46:24

           6   branches and we've added more than 1,000 additional

           7   salespeople to help customers with everything from

           8   checking accounts and mortgages to investments and

           9   college savings plans.  As we open additional

          10   branches in 2004, we will continue to add             
08:46:36

          11   salespeople to help our customers.

          12            The proposed merger with J. P. Morgan

          13   Chase and Company will begin another exciting

          14   chapter in our company's history.  We know the

          15   consolidation will continue in the banking            
08:46:46

          16   industry, and we believe this combined, stronger

          17   company will have more control over our future than

          18   we would having grown separately.  We now have the

          19   unique opportunity to create one of the world's

          20   truly great global financial institutions.            
08:46:58

          21            We believe that each business in the

          22   combined enterprise will be strengthened by the

          23   efficiencies that come with scale and that the

          24   businesses that complement each other, providing

                                                                 15




           1   substantial competitive advantage.  For current and

           2   prospective customers, the combined company will

           3   provide access to a broader offering of products

           4   and services more competitively priced.

           5            For each of our communities, a vibrant,      
08:47:18

           6   healthy company is the prerequisite for responsible

           7   corporate citizenship, a value deeply held by both

           8   companies.  For employees, a stronger company

           9   ultimately results in expanded opportunities for

          10   career growth and development, even though in the     
08:47:30

          11   beginning there will be, unfortunately, some

          12   painful staff reductions.

          13            We will treat our employees fairly and

          14   respectfully as we plan to integrate the companies.

          15   Soon after the merger announcement, we instituted a   
08:47:40

          16   hiring freeze at both companies so we can take

          17   advantage of attrition and can move displaced

          18   employees into the new positions.  We also will

          19   have a severance program that gives employees

          20   advanced notice as well as a generous severance       
08:47:52

          21   pay.

          22            While the combined company will be

          23   headquartered in New York, the merger provides that

          24   the retail and middle-market business will be

                                                                 16




           1   headquartered here in Chicago.  Those businesses,

           2   which serve everyone from consumers and small

           3   businesses to companies with annual revenues of

           4   $500 million or more, are expected to generate

           5   nearly one-third of the company's combined            
08:48:10

           6   earnings.  To put that in context, in 2003, those

           7   businesses generated pro forma $6 billion of

           8   pre-tax earnings.

           9            This merger also will afford the combined

          10   company a more diversified earnings stream, a         
08:48:20

          11   larger capital base, stronger capital generation

          12   capabilities, and increased capacity to invest in

          13   our businesses.  All of these we believe should

          14   ultimately lead to a lower cost of capital and the

          15   ability to better withstand difficult times in the    
08:48:32

          16   economic cycle.

          17            The combined strength of our retail

          18   business will be crucial serving our communities

          19   because it includes not only the branch and ATM

          20   network but also mortgage lending and small           
08:48:42

          21   business banking.  The company, new company, will

          22   have 2,300 branches in 17 states, and we plan to

          23   add more than 100 branches annually for at least

          24   the next three years.  We will open them in low-

                                                                 17




           1   and moderate-income neighborhoods as well as the

           2   fast-growing suburban areas.  In fact, in Chicago

           3   alone, we'll open 12 branches in LMI areas by the

           4   end of next year.

           5            Equally important, J. P. Morgan Chase's      
08:49:02

           6   large mortgage business will be good news for

           7   consumers in Chicago and across Bank One's

           8   14 footprint states.  While Bank One has provided

           9   excellent banking services, the merger will provide

          10   our customers with a wider range of mortgage          
08:49:16

          11   products, helping them to achieve the American

          12   dream of home ownership.

          13            Small business owners, too, will benefit

          14   from this merger.  Small businesses need banking

          15   services, especially credit, to grow, and we will     
08:49:26

          16   offer the best products and services of both

          17   companies to help our small business companies do

          18   just that.

          19            Mortgage lending and small business

          20   lending are two of the most important factors in      
08:49:34

          21   evaluating a bank's Community Reinvestment Act

          22   performance.  Bank One's lending has helped it earn

          23   outstanding and satisfactory ratings in its markets

          24   across the country.

                                                                 18




           1            We are proud that our merger partner's

           2   lead bank, headquartered in New York, has earned an

           3   outstanding CRA rating, the highest possible, for

           4   its mortgage, small business and community

           5   development lending and community development         
08:49:54

           6   investments and services.  In fact, it has received

           7   outstanding CRA ratings for the last seven

           8   consecutive periods covering more than 14 years.

           9   It is even more important to know that the combined

          10   company will strive to maintain that outstanding      
08:50:04

          11   record.

          12            Bank One has been a terrific civic leader

          13   and major contributor in our markets across the

          14   country, contributing more than $40 million

          15   annually to economic empowerment, youth education,    
08:50:14

          16   and arts and culture.  In Chicago alone, we have

          17   contributed more than $65 million over the last

          18   decade.  In Chicago and across our market,

          19   Bank One's senior executive officers and other

          20   employees serve on the boards of civic, community     
08:50:26

          21   development, educational and cultural institutions

          22   across our markets.  And our employees volunteer in

          23   their neighborhoods, in religious organizations and

          24   in community-wide efforts throughout the country.

                                                                 19




           1            We will continue that kind of support

           2   after the companies merge, and we can link our

           3   community partners and their cutting-edge ideas

           4   with those of J. P. Morgan Chase's markets.

           5            On the night the merger was announced, I     
08:50:48

           6   and Bill reaffirmed our commitment to Chicago's

           7   community leaders.  And last week, we went even

           8   further when Bill Harrison announced our

           9   $800 billion pledge for mortgages, small business

          10   loans, and community investments and loans over the   
08:51:00

          11   next ten years.  That unprecedented commitment will

          12   be delivered one family, one small business and one

          13   apartment building at a time across America.

          14            There is no doubt that the combined

          15   J. P. Morgan Chase will be a national and             
08:51:12

          16   international leader in banking.  And there should

          17   be no doubt that the combined J. P. Morgan Chase

          18   will also be a civic leader in Chicago and every

          19   other market it serves.

          20            Now let me turn it over to my colleague,     
08:51:22

          21   Byron Reed, Managing Director of Bank One's

          22   Community Investment Group, and Byron will provide

          23   more detail of how Bank One has been a leader in

          24   our communities across the country and especially

                                                                 20




           1   in Chicago.

           2       MR. REED:  Thank you, Jamie.  Good morning.  I

           3   am Byron Reed, Managing Director of Bank One's

           4   Community Investment Management Group.  I

           5   appreciate the chance to speak about Bank One's       
08:51:40

           6   proud tradition of how we serve our communities and

           7   how this merger can help us do even more.

           8            Bigger, better, stronger.  You have heard

           9   it from Bill Harrison and Jamie Dimon.  Certainly,

          10   it's exciting for our customers, employees and        
08:51:56

          11   shareholders; but, for me, the most exciting aspect

          12   of the merger is what a bigger, stronger bank can

          13   do for our communities.

          14            Sometimes community development is

          15   headline news, attracting local dignitaries and the   
08:52:10

          16   media.  For example, On North Halsted Street in

          17   Chicago, Bank One's construction loan helped

          18   replace the Cabrini-Green public housing units with

          19   mixed-income townhomes at the North Town Village,

          20   creating the prototype for the country.               
08:52:24

          21            In West Dallas, Bank One helped welcome

          22   the first family in Casa Rio, the first affordable

          23   single-family development in that part of town.

          24            And in Denver, Bank One helped to create a

                                                                 21




           1   170-acre master plan community, Belle Creek, with

           2   over 900 units of affordable and market rate

           3   housing, a charter school, a community and retail

           4   commercial space.

           5            In Tulsa, Bank One's investment in           
08:52:50

           6   historical credits and our construction funding

           7   helped remake the Tulsa Tribune Building into

           8   housing while the city worked to redevelop and

           9   revitalize the Brady Arts District.

          10            Most often, however, community development   
08:53:02

          11   takes place quietly with a biggest impact coming in

          12   small, steady increments.  Knowing that small

          13   businesses are a mainstay of our U.S. economy,

          14   Bank One has made the SBA Community Express program

          15   a core component of its outreach to small             
08:53:18

          16   businesses.  In 2003 alone, Bank One closed nearly

          17   200 Community Express loans totaling almost

          18   $22 million, including 16 loans in the Chicago area

          19   totaling $1.5 million.

          20            Since 2000, Bank One has fueled thousands    
08:53:34

          21   of affordable multi-family units for low-income

          22   families in communities across the nation by

          23   investing more than $1.9 billion in low-income tax

          24   credit projects either directly or through funds.

                                                                 22




           1            While a relatively small player in overall

           2   mortgage origination, Bank One has focused on some

           3   areas of greatest need because it recognizes the

           4   vital role home ownership plays in low- and

           5   moderate-income families and their neighborhoods.     
08:54:00

           6   Let me share a few examples.

           7            Bank One has already made loans of nearly

           8   $5 billion from a five-year $12.5 billion

           9   commitment with Fannie Mae for single-family and

          10   multi-family homes across Bank One footprint          
08:54:14

          11   states.  We announced that plan here at Chicago 17

          12   months ago.

          13            Bank One was the first large national bank

          14   to offer a Section 8 mortgage product for very

          15   low-income families moving from welfare and public    
08:54:26

          16   assistance to self-sufficiency home ownership.

          17            Bank One's HUD 184 financing, including

          18   Apache Dawn project in Arizona, has provided over

          19   300 families safe, decent and affordable housing on

          20   Native American tribal lands.                         
08:54:42

          21            As Jamie noted, we can do much when we

          22   pair J. P. Morgan Chase's extensive mortgage

          23   origination business and Bank One's 1800-plus

          24   branch network.  And we plan to add at least

                                                                 23




           1   100 branches a year for the next three years in all

           2   communities, including low- and moderate-income

           3   neighborhoods.  In Chicago, that means 30 more

           4   branches this year, including 12 in low- and

           5   moderate-income neighborhoods by the end of 2005.     
08:55:06

           6            Bank One also has established itself as a

           7   leader in financial education and in helping

           8   families take advantage of financial opportunities.

           9   There are many examples.

          10            In Chicago, Bank One just made a             
08:55:18

          11   $1 million five-year commitment to LISC to create

          12   comprehensive financial education centers across

          13   the city.  Also in Chicago, Bank One contributed

          14   $100,000 each year from 1999 through 2003 to

          15   support the National Housing Service's education,     
08:55:34

          16   community building and neighborhood lending and

          17   real estate development efforts.

          18            Bank One has underwritten The Money Farm,

          19   a public television program in which children teach

          20   children about money, savings and other aspects of    
08:55:46

          21   banking.  It started at WTTW-Channel 11 here in

          22   Chicago and it airs in multiple communities across

          23   the United States.

          24            Bank One employees, as well as Bank One

                                                                 24




           1   grants, help families in a number of cities,

           2   including Dallas, Phoenix and other cities, to take

           3   advantage of the complicated Earned Income Tax

           4   Credit, putting real dollars in their pockets.  In

           5   Chicago, Bank One employees volunteer through the     
08:56:12

           6   Tax Counseling Project, a ten-year-old program that

           7   just surpassed the $100 million mark in federal

           8   funds to Illinois families.

           9            In Illinois, Indiana, Texas, Wisconsin,

          10   Arizona, Bank One has sponsored financial literacy    
08:56:28

          11   "train the trainer" programs for directors and

          12   employees of multiple nonprofits.

          13            In Arizona, a Bank One grant helped launch

          14   Arizona Saves, a savings and wealth-building

          15   program focused on low-income families.               
08:56:42

          16            At Bank One, we are proud of what we have

          17   done with our partners to serve our communities.

          18   And we are very excited about the opportunity that

          19   this merger brings to our communities.  I know my

          20   future colleague, Mark Willis, head of J. P. Morgan   
08:56:54

          21   Chase's Community Development, shares this

          22   excitement with me.  Thank you.

          23       MR. WILLIS:  Thank you, Byron -- that was

          24   great -- for sharing your examples of the

                                                                 25




           1   responsive and meaningful work that Bank One has

           2   been doing throughout its footprint.

           3            Good morning.  My name is Mark Willis.  I

           4   manage J. P. Morgan Chase's Community Development

           5   Group and I have been asked to head it after the      
08:57:22

           6   merger.  Thank you for giving us the opportunity to

           7   discuss our unique and innovative community

           8   development program, outline our $800 billion

           9   public commitment, and talk a little bit about

          10   creating a compact with our communities, an           
08:57:36

          11   initiative driven by the J. P. Morgan Chase

          12   Community Advisory Board.

          13            We are proud that our Community

          14   Development Group is a leader in creating new

          15   approaches to financing community development         
08:57:46

          16   projects.  As J. P. Morgan Chase has grown, our

          17   Community Development Group has designed new

          18   capabilities to deliver a far more sophisticated

          19   array of products and services.  We are also

          20   retaining the J. P. Morgan Chase Community            
08:58:00

          21   Development Group model that allows us to bring

          22   together, in a single organization, community

          23   development experts from both banks.

          24            We have also helped incubate the

                                                                 26




           1   affordable mortgage business by providing mortgages

           2   with flexible underwriting criteria, and we have

           3   seen this business grow and mature.

           4            In the early 1990s, we held tens of

           5   millions of dollars in such mortgages in our          
08:58:22

           6   portfolio because they did not conform to secondary

           7   market credit criteria.  All of these mortgages

           8   have developed into a seasoned portfolio.  The

           9   secondary market has learned from our experience

          10   and created some new affordable products that all     
08:58:38

          11   lenders could provide.  It is a great success when

          12   we can mainstream a product because it has become

          13   both ubiquitous and profitable.

          14            Our Community Development Group's

          15   entrepreneurial spirit and willingness to focus on    
08:58:50

          16   our customers' unique banking needs has

          17   distinguished J. P. Morgan Chase as a cutting-edge

          18   leader for innovation.  While we recently announced

          19   a ten-year $800 billion program, we will continue

          20   to celebrate those small, tangible, day-to-day        
08:59:04

          21   successes that make such a difference for our

          22   customers and community partners.

          23            Let me now lay out the ten-year plan in a

          24   little more detail.  The components of the plan are

                                                                 27




           1   a set of key performance measurements against which

           2   the public can assess our annual results.  Bill has

           3   talked about the top-line members that comprise the

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

           5   components again and then discuss some new            
08:59:28

           6   initiatives.

           7            The vast majority of this ten-year plan,

           8   $675 billion, is comprised of mortgages which are

           9   so vitally important to cities and neighborhoods in

          10   every market across the country.  These loans will    
08:59:40

          11   be made to households with incomes at or below the

          12   median household income, minority borrowers and on

          13   properties located in predominantly minority

          14   communities and in LMI communities.

          15            Second, we will make more than $90 billion   
08:59:54

          16   in loans to small businesses and not-for-profit

          17   organizations in the 17 markets served by the

          18   combined banks' branches.  Finally, we anticipate

          19   $35 billion in community development loans and

          20   investments.                                          
09:00:08

          21            Let me now talk about the initiatives that

          22   grew from our discussions with literally hundreds

          23   of community leaders and advocates, including some

          24   who oppose the merger.

                                                                 28




           1            We are creating a new Home Ownership

           2   Preservation Office at Chase Home Finance that will

           3   work with community groups helping victims of fraud

           4   or other abusive mortgage practices and

           5   restructure, when possible, their mortgages to help   
09:00:30

           6   them keep their homes.  We will work with the

           7   mortgage industry and HUD on FHA foreclosure policy

           8   and work with community groups to sell or donate

           9   certain REO properties to help minimize any

          10   negative impact on their neighborhoods.               
09:00:44

          11            We're also creating a national community

          12   mortgage-lending unit to serve the home-buying

          13   needs of low- and moderate-income consumers looking

          14   to buy their first homes in inner cities and other

          15   historically underserved communities.  In large       
09:00:56

          16   markets, we will use salaried loan officers who

          17   will have both lending goals and outreach goals.

          18   In other markets, we will have incentives for

          19   commissioned loans officers to serve the needs of

          20   mortgage counseling agencies and their clients.       
09:01:10

          21            We will provide $1 billion in loans and

          22   investments to CDFIs, Community Development and

          23   Financial Institutions, across our markets as part

          24   of our $800 billion plan.

                                                                 29




           1            We will create a new Financial Education

           2   Partnership Office to focus on the basic financial

           3   education needs of consumers so that they can make

           4   more informed choices about borrowing, investing,

           5   saving and selecting the right banking account for    
09:01:34

           6   their needs.  We already have developed a basic

           7   banking curriculum which we obviously will be

           8   expanding.

           9            We will open new business resource centers

          10   and expand the SBA Community Express program Byron    
09:01:44

          11   just talked about across all our retail banking

          12   franchises.

          13            Also we have heard community groups'

          14   concerns about our consumer and small business

          15   products and services, and we are looking closely     
09:01:56

          16   at ways we might help address those concerns.

          17            Let me now turn to our Community Advisory

          18   Board which is comprised of 46 community leaders.

          19   At our last two meetings, we spent a great deal of

          20   time discussing whether to announce a ten-year        
09:02:10

          21   plan.  The Board voiced its confidence in our

          22   commitment to community development and to

          23   outstanding CRA performance.  They did not feel

          24   that a large dollar goal would add incremental

                                                                 30




           1   value.  However, they wanted us to expand the

           2   debate beyond dollars to values in impact.  Their

           3   idea was to create a compact with our communities.

           4            A Board subcommittee has started to

           5   outline principles to guide the compact, including    
09:02:38

           6   the following:

           7            Partner with the community; listen to all

           8   perspectives; execute locally; strive for economic

           9   sustainability; share knowledge; invest in

          10   innovation; go beyond regulatory requirements; lead   
09:02:56

          11   with best practices in fair and responsible

          12   lending; and deliver the full resources of this

          13   great, new firm.

          14            We value our Community Advisory Board

          15   because the members keep us focused on the really     
09:03:10

          16   important issues.  We also learn from the

          17   perspectives and experiences of members from around

          18   the country as they, too, learn from each other.

          19   We look forward to expanding the Board to include

          20   community leaders from throughout the Bank One        
09:03:22

          21   footprint.

          22            The merger will have great benefits for

          23   the communities we serve.  We are very excited

          24   about the challenges, the opportunities and the

                                                                 31




           1   responsibility.  Thank you for your time.

           2       MS. BRAUNSTEIN:  Thank you very much.  If I

           3   may, I just have one question for the panel.

           4            J. P. Morgan Chase is primarily known as

           5   an urban bank, and I was wondering if you could       
09:03:46

           6   just take a couple minutes and address what your

           7   plans are for serving some of the needs of the

           8   rural areas especially that you will be getting

           9   with the Bank One footprint out in the Midwest?

          10       MR. HARRISON:  We are primarily in the largest    
09:04:04

          11   cities as a retail branch manager, but we do

          12   business across the country and so it's not a big

          13   leap of knowledge or expertise.  Bank One would

          14   have more than us; but we think the combination, if

          15   we do it right, will add a lot of value.              
09:04:22

          16            The key issue here for us -- and it's

          17   beyond just doing a great job in the communities --

          18   is also doing a great job in middle-market lending

          19   and private banking in the local communities.  And

          20   we are a great believer of making sure the local      
09:04:38

          21   communities have enough authority and power to go

          22   execute it off of a basic architecture that's at

          23   the top of the house.  And we look at Chicago, for

          24   example, as having the biggest financial presence

                                                                 32




           1   of any bank in Chicago with great global

           2   capabilities.  And if we execute that well, I think

           3   we can add tremendous value whether it's community

           4   activities or anything else that we're doing, and

           5   that's our goal.                                      
09:05:04

           6       MS. BRAUNSTEIN:  Okay.

           7       MR. HARRISON:  Is there anything else?

           8       MS. BRAUNSTEIN:  Okay.  Thank you very much for

           9   your time.  Could we have the next panel come

          10   forward.                                              
09:05:16

          11       MR. HARRISON:  Thank you.

          12       MS. BRAUNSTEIN:  Good morning, gentlemen.  As

          13   with the previous panel, I am told that this panel

          14   also has one-half hour and you'll be signaled at

          15   the end of that.  Please be mindful of your fellow    
09:06:26

          16   speakers in terms of the time you take

          17   individually; and, with that, we'll get started.

          18       HON. QUINN:  My name is Pat Quinn.  I am the

          19   Lieutenant Governor of Illinois.  I was elected by

          20   the voters in 2002.  Prior to that, I was elected     
09:06:44

          21   State Treasurer of Illinois in 1990, served as

          22   Illinois State Treasurer from 1991 to 1995.  I

          23   dealt with probably 4 or 500 banks in Illinois,

          24   large, middle-sized and small.  Prior to that, I

                                                                 33




           1   was elected Commissioner of the Cook County Board

           2   of Property Tax Appeals.

           3            On behalf of the people of Illinois, I

           4   think it's important that we, in considering this

           5   merger, realize that we're today across the street    
09:07:18

           6   from one of the biggest bank failures in the

           7   history of the United States.

           8            Continental Bank was once deemed one of

           9   the best banks in the country.  Unfortunately, they

          10   made imprudent loans, and they were so imprudent      
09:07:34

          11   that the bank collapsed, and they were so big that

          12   the regulators decided that the only way to resolve

          13   the problems of credit access and regulation was to

          14   have the taxpayers bail out Continental Bank.

          15            That history, I think, should be on the      
09:07:58

          16   minds of regulators today that in putting together

          17   these megamergers, first -- I think the first issue

          18   should be whether or not the taxpayers and the

          19   public is protected from failure of these

          20   institutions.  I don't want to see Illinois           
09:08:16

          21   taxpayers or American taxpayers some time down a

          22   few years from now or ten years from now or

          23   whenever be forced to have to pay millions and

          24   millions of taxpayer dollars to bail out an

                                                                 34




           1   ill-conceived merger.

           2            I think the American economic system works

           3   best where there's competition; and when you have

           4   too many entities becoming too large and

           5   consolidating, oftentimes the customer, the           
09:08:44

           6   consumer, is the one who suffers in the

           7   marketplace.

           8            As State Treasurer, I put together

           9   literally hundreds of access-to-credit initiatives.

          10   We called them link deposits.  I would say the        
09:08:58

          11   predecessor bank of Bank One, then known as First

          12   National Bank of Chicago, was a reluctant

          13   participant in our programs of access to credit

          14   that I was involved in.  And, indeed, when they

          15   merged with Bank One from Columbus, Ohio, it got      
09:09:14

          16   even worse.  It was difficult for the Treasurer of

          17   Illinois, one of the largest customers of these

          18   large banks, to communicate with the bank.

          19            So some of the proposals we heard earlier

          20   this morning sound good when you say them fast, but   
09:09:32

          21   I can tell you from real experience, we used to

          22   refer to First National Bank of Chicago, then

          23   Bank One, as having big bank disease; the syndrome

          24   of not listening enough to their customers,

                                                                 35




           1   including the State of Illinois that not only put

           2   deposits in the bank but also had numerous

           3   processing contracts with the bank, very difficult

           4   to speak to them.

           5            Now, at that time, the bank management was   
09:10:00

           6   located here in the City of Chicago, State of

           7   Illinois.  Under this proposal, major decisions

           8   about the merged bank, a trillion-dollar bank, will

           9   be made in New York City.  And I consider that an

          10   ominous development for the people of our state.      
09:10:16

          11            We're particularly concerned also about

          12   the jobs of the people who work at Bank One, one of

          13   the largest employers in Chicago and the State of

          14   Illinois.  According to some of the news reports,

          15   as many as 10,000 people are going to lose their      
09:10:28

          16   jobs.  The record is that J. P. Morgan Chase is an

          17   aggressive outsourcer of jobs, American jobs to

          18   other parts of the world, and we do not want to see

          19   hard-working Illinois citizens who take their

          20   deposits and put them in Bank One or J. P. Morgan     
09:10:48

          21   Bank One Chase, whatever it's called, end up seeing

          22   their neighbors losing their jobs as the bank

          23   develops call centers in some foreign part of this

          24   world.

                                                                 36




           1            I think it's important when a depositor

           2   puts a deposit in the bank that they have the kind

           3   of personal service, neighborhood service,

           4   eye-to-eye service that we've become accustomed to

           5   over the long history of customer banking             
09:11:18

           6   relationships; but in recent years, it's a much

           7   more distant relationship.  And if it means

           8   Illinois citizens losing their jobs to outsourcing

           9   because of this merger, that's not good for our

          10   state or for the public interest or I don't think     
09:11:34

          11   it's good for our country.  We have to have a

          12   middle class in order to have a growing economy,

          13   and this development could be very bad for

          14   middle-class jobs in our state.

          15            Now dealing with a very important issue      
09:11:46

          16   which the previous speakers talked about is access

          17   to credit.  I think the word credit -- I took Latin

          18   in high school.  It means "to believe" in Latin,

          19   and we need to believe in the pledges made by the

          20   proposed merger.                                      
09:12:04

          21            But one thing that leads to skepticism is

          22   we have in Illinois more payday loan stores than we

          23   have McDonald's restaurants.  Now this development

          24   has occurred in recent years.  What has the biggest

                                                                 37




           1   bank of Illinois, Bank One, done about that?  Not

           2   enough.  That's for sure.  They have stood there by

           3   the side of the road as payday lenders multiply

           4   like topsy all over the place.

           5            I was at Great Lakes Naval Air Base last     
09:12:30

           6   Friday at a funeral of a soldier, and I noticed

           7   driving there all these payday loan stores outside

           8   the base gates.  And they're all over our state.  I

           9   think there's 8 or 900.  And these are working

          10   people who oftentimes can't get in the door of a      
09:12:46

          11   bank to get the loans that they need in order to

          12   live from paycheck to paycheck.

          13            And we find that the Bank One and

          14   J. P. Morgan Chase may be involved in financing the

          15   payday lenders instead of being on the front line     
09:13:02

          16   making the consumer loans to these working people

          17   who today are paying very, very high usurious

          18   interest rates which aren't fair.  They don't help

          19   access to credit.  They don't recycle money through

          20   the neighborhood.  They're predatory.  They're the    
09:13:18

          21   kind of loans that make -- the banker should be

          22   ashamed of themselves if they watch a market

          23   developing out there and they're willing to consign

          24   a lot of working people to this payday loan

                                                                 38




           1   industry.

           2            It seems to me that if this has occurred

           3   in recent years, how is the merger going to help

           4   remedy the problem of access to credit for people

           5   with respect to payday lending?  Nothing has been     
09:13:44

           6   said about that.  That's a very disturbing

           7   development.

           8            In closing, one thing that is of concern I

           9   think to me and to every single American is a

          10   recent book, Power Failure, The Inside Story of the   
09:13:58

          11   Collapse of Enron.  It indicates that J. P. Morgan

          12   Chase was a tax and financial advisor for Enron in

          13   many of their questionable transactions.  What is

          14   this all about?  Are we going to see this continue

          15   where a major megabank is consulting with a           
09:14:14

          16   corporation on very questionable deals that end up

          17   causing the collapse of a major firm, thousands of

          18   people losing their jobs, and perhaps the bank goes

          19   belly up.

          20            So I think before rushing into this, we've   
09:14:30

          21   got to hear I think a lot more information from the

          22   financial institutions involved.  We would like to

          23   have a quarterly report from them on exactly what

          24   they're doing with respect to outsourcing of jobs.

                                                                 39




           1   We would like to hear pledges that they're not

           2   going to get involved in these questionable

           3   corporate schemes.  We would like to have a payday

           4   loan alternative in Illinois so working people,

           5   when they need a loan, don't have to go to a payday   
09:14:56

           6   loan store and pay 520 percent interest, or

           7   military person goes outside the gate of their base

           8   and ends up getting fleeced by the local payday

           9   loan store.

          10            Let's have a Bank One, J. P. Morgan Chase    
09:15:10

          11   initiative to help people who are helping defend

          12   our country.  Thank you very much.

          13       ALDERMAN FLORES:  My name is Manuel Flores.

          14   I'm an alderman for the 1st Ward in the City of

          15   Chicago.  I want to thank the Federal Reserve Bank    
09:15:28

          16   and the members of the panel for your time and

          17   preparation for this hearing.

          18            Today as we all know, we'll be hearing --

          19   we've heard some testimony already considering the

          20   proposed merger of J. P. Morgan Chase and Bank One.   
09:15:42

          21   Given the enormous impact that a merger of this

          22   magnitude would have, I am pleased that a public

          23   review process, such as this one, has been made

          24   available so that we all may have an opportunity to

                                                                 40




           1   discern the possible effects of this merger as I

           2   believe all members, all constituents of our

           3   communities deserve.

           4            On February 11, 2004, the City Council of

           5   Chicago passed a resolution urging the Federal        
09:16:10

           6   Reserve Bank to proceed with caution in review of

           7   this merger application.  The resolution also

           8   called for the City of Chicago's Corporation

           9   Counsel to attend and monitor this hearing and to

          10   report to the City Council's Committee on Finance     
09:16:24

          11   the process and the outcome of the public hearing.

          12   We are pleased that this proceeding was scheduled.

          13            Public scrutiny through a public hearing

          14   process is necessary to address concerns of job

          15   loss, outsourcing, predatory lending, foreclosure     
09:16:38

          16   practices, and also just to in general explain to

          17   the public how this type of merger is going to

          18   impact them.  The most local of issues when you're

          19   dealing with availability and access to credit, how

          20   is it going to impact their service, how is it        
09:16:54

          21   going to be -- how is it going to change their

          22   lives.  I mean, are we going to be losing banks?

          23   Are we going to be creating more banks on the

          24   retail level to provide better services?

                                                                 41




           1            We have a vested interest in both the

           2   intended effects and unintended consequences that a

           3   merger of this enormity would have on the City of

           4   Chicago and the region.  To date, Bank One is the

           5   largest municipal depository with anywhere between    
09:17:20

           6   $35 to $50 million on hand to cover payroll and

           7   vendor invoices while also handling a large portion

           8   of transactions processing for the City of Chicago.

           9            Bank One and the City of Chicago have

          10   created and maintained and enjoyed a working          
09:17:36

          11   relationship, a positive working relationship,

          12   through these transactions and this should all

          13   continue.  Frankly, that's why I have taken such a

          14   level of interest in this.  We do applaud Bank One

          15   for its history, for its track record with regards    
09:17:52

          16   to the CRA credit rating, and we want that to

          17   continue here in the City of Chicago.

          18            But I believe that and many of the

          19   residents of the City of Chicago believe that when

          20   you have a merger of this size, there are some        
09:18:08

          21   questions and issues that need to be addressed.

          22            We want to ensure that not only residents

          23   and businesses have access to fair and equitable

          24   credit but that our local employment will also not

                                                                 42




           1   be negatively impacted.  What safeguards are in

           2   place to ensure that Bank One will stay across the

           3   street and not go across the state line or even

           4   farther to other countries, decreasing our access

           5   and also available to services -- availability to     
09:18:38

           6   services?

           7            With the creation of a merger of a

           8   megabank encompassing multi-national markets,

           9   products and service sectors, it is crucial to

          10   maintain the rapport that encourages local            
09:18:50

          11   relationships, employment and open lines of

          12   communication.

          13            The purpose of the Federal Community

          14   Reinvestment Act is to encourage depository

          15   institutions to assist in meeting the credit needs    
09:19:02

          16   of the communities in which they serve.

          17   J. P. Morgan Chase and Bank One have made

          18   agreements with community-based nonprofits in the

          19   Chicago area and other communities to outline their

          20   community -- excuse me, their commitment to           
09:19:16

          21   community reinvestment, lending practices and

          22   foreclosure controls.

          23            However, structural remedies rather than

          24   promises are required to maintain accountability to

                                                                 43




           1   the communities that these banks serve.  How will

           2   the proposed merged banks provide equal access to

           3   credit for both residents and businesses in Chicago

           4   and throughout Illinois?

           5            We must not only inquire about the           
09:19:42

           6   outsourcing of employment but also the availability

           7   of payday loan monies.  A market of hard-working

           8   and loyal customers await the availability of

           9   short-term affordable loans but instead is offered

          10   quick fixes at astronomical interest rates with       
09:19:58

          11   inadequate regulatory oversight.  Banking

          12   institutions have quietly observed and, at times,

          13   funded these operations and operators themselves,

          14   practices that break the backs of hard-working men

          15   and women.  How will the megabank be held             
09:20:16

          16   accountable to all the people it serves and offer

          17   community solutions to problems like this?

          18            I ask that we remain vigilant in

          19   monitoring the creation and structure of an

          20   institution such as the one that is being proposed    
09:20:32

          21   before us.  Now, not later, is the time to insist

          22   that the leadership in this institution maintain

          23   the character and corporate culture of Bank One.

          24   Their corporate giving, municipal depository

                                                                 44




           1   responsibilities, and provision of many jobs are

           2   due in part to the City of Chicago itself.

           3            I also ask that the Federal Reserve Bank

           4   of Chicago carefully consider the testimony that we

           5   bear witness today and to truly analyze how this      
09:20:56

           6   merger will impact the residents and businesses of

           7   our great city and continue to be responsible and

           8   vigilant in your oversight of corporate actions.

           9   It is your regulatory control that will be vital to

          10   maintaining a robust banking marketplace in           
09:21:12

          11   Chicago.

          12            Finally, I ask that we continue to be

          13   proactive in creating an environment in Chicago

          14   that encourages positive corporate behavior that

          15   demonstrates responsibility to consumers, employees   
09:21:26

          16   and our great City of Chicago.

          17            Now I also want to commend the earlier

          18   individual -- the individuals that provided earlier

          19   testimony in particular with their $800 billion

          20   commitment which there have been a number of bullet   
09:21:42

          21   points and issues that were raised as to how the

          22   $800 billion were going to be spent.

          23            Now I also want to commend Bank One and

          24   J. P. for being as accessible as possible to the

                                                                 45




           1   elected officials.  We have met with them on a

           2   number of occasions, and I want to commend them for

           3   that.  However, I do ask that with the fact that

           4   they demonstrated here a willingness with an

           5   $800 billion commitment over a ten-year period to     
09:22:12

           6   the communities, to our communities, that they sign

           7   a CRA agreement; that they also provide a report

           8   for outsourcing; that they take a hard look at the

           9   payday loans.

          10            Here we have an opportunity with an          
09:22:26

          11   $800 billion commitment to actually take a look at

          12   what alternative products our banks can provide our

          13   communities in greatest need.  Predatory loans

          14   should also be taken a hard look at and be

          15   incorporated in this $800 billion commitment.         
09:22:46

          16            Thank you.

          17       MS. BRAUNSTEIN:  Thank you.  Reverend Jackson.

          18       REVEREND JACKSON:  Good morning.  My name is

          19   Reverend Jesse Jackson, Senior, President and

          20   Founder of Rainbow/Push Coalition, the Citizenship    
09:22:58

          21   Education Fund and its initiatives, the Wall Street

          22   and LaSalle Street projects.

          23            I'm going to begin my comments by stating

          24   that presently we are neither opposed to nor in

                                                                 46




           1   favor of J. P. Morgan Chase's application for

           2   merger with Bank One.  Mergers are not inherently

           3   wrong, but too much power in the hands of too few

           4   is beyond checks and balances.

           5            Our mission is to green-line, red-line       
09:23:26

           6   America, connectable process of access to capital

           7   industry and technology.  Our rule at this time is

           8   to provide research and counsel as to the

           9   importance of inclusion while you review this

          10   merger.  We feel it's essential that safeguards be    
09:23:44

          11   put in place to assure that any gains in diversity

          12   must be protected.

          13            Further, there must be a greater call for

          14   disclosure.  The joining of J. P. Morgan Chase and

          15   Bank One support an establishment that enable         
09:23:58

          16   payday loans, red-lining, predatory and subprime

          17   lending.

          18            Matthew Lee, in part, will share with you

          19   today some of the initial findings of his

          20   organization.  I encourage you to listen closely to   
09:24:12

          21   his testimony.  I also encourage you to listen

          22   closely to the pleas of nearly 40 farmers who

          23   travel here today from Central and Southern

          24   Illinois.

                                                                 47




           1            There are several items I will address

           2   during the brief time allotted.  Historical

           3   patterns and present-day practices of race

           4   discrimination is prevalent.  These issues must be

           5   resolved while the merger is on the ground.  Once     
09:24:40

           6   it takes off, it will be out of sight.  This

           7   merger, to have community values, must break from a

           8   history of race-based lending, gerrymandering,

           9   schemes invested that will hurt the poor and limit

          10   growth of the middle class.  Structural               
09:24:56

          11   dislocations perish whole communities, undermine

          12   the tax base, the education base and ultimately to

          13   a jail's for-profit industrial complex.

          14            Number one, this $60 billion transaction

          15   will create the second largest financial services     
09:25:14

          16   institution in the world.  These two will control

          17   approximately $600 billion in assets.  The fees

          18   alone to facilitate this merger will range between

          19   $30 and $100 million, just the fees in the

          20   transaction.  Our findings indicate that not one      
09:25:34

          21   dime will be spent with diverse brokerage firms.

          22            We need to clarify as to the linkages that

          23   exist between both of these banks and payday loan

          24   centers, check-cashing facilities, gun shops,

                                                                 48




           1   predatory lenders and subprimers.

           2            While we commend J. P. Morgan Chase for

           3   the $800 billion commitment to reinvestment, we

           4   cannot accept the system and the process of

           5   providing loans for low- and moderate-income          
09:26:02

           6   housing while in the same neighborhood providing

           7   support for modern-day loan sharks.  You can't farm

           8   the house and then farm a termite factory next

           9   door.

          10            Let me put it for you in this context:       
09:26:16

          11   National estimates on a four-day payday loan can

          12   reach 1,825 percent.  The average percentage on a

          13   37-day loan is approximately 3395 percent.

          14   Colorado, one of the few states that keeps close

          15   tabs on payday loans, indicates that from 1996 to     
09:26:34

          16   '97, payday loans had an average APR of 485.26

          17   percent.  The recent Associated Press article

          18   concerning the victimization of soldiers and their

          19   families by payday lenders in Fort Stewart,

          20   Georgia, reported that interest rates ranging from    
09:26:54

          21   340 to 592 percent were being charged to these

          22   soldiers' families.

          23            Predatory lending and payday loans are the


          24   new forces continuing to dismantle our communities.

                                                                 49




           1   We must closely monitor and end the support given

           2   to these entities by these banks.

           3            The top 50 to 100 executives for both of

           4   these banks command salaries in the multi-millions,

           5   yet their faces do not look like the faces of the     
09:27:22

           6   community.  Bank One's officer team, executive

           7   planning group is mostly one of multi-culture and

           8   diversity.  J. P. Morgan Chase's executive

           9   leadership team has nominal representation, if any.

          10   This leadership team of this merger is beginning to   
09:27:36

          11   look like Mount Everest with an unhappy merging

          12   entity with a black and brown base of short trees

          13   reaching to the heights of a snow-capped mountain.

          14   This is America.

          15            The newly established Board of Directors     
09:27:52

          16   may not just have one or two diverse candidates.

          17   And as I was parenting on the playing field, we saw

          18   a role for everyone.  We must duplicate this in the

          19   board room.  There's a historical context that must

          20   not be trivialized as being past the legal statute    
09:28:06

          21   of limitations.  You must not forget nor will we

          22   only ask you to remember that slavery is the

          23   predecessor to the established problems of

          24   red-lining, employment discrimination, sexual

                                                                 50




           1   harassment and the predatory lending we see in our

           2   communities.

           3            It is alleged that J. P. Morgan Chase was

           4   a part of a consortium of financial services

           5   institutions to help maintain slavery through an      
09:28:30

           6   insurance syndicate.  With or without reparations,

           7   our forebearers cry out to us for equality and

           8   justice.

           9            Remember that before CRA, the sons and

          10   daughters of inheritance and privilege, Salt and      
09:28:42

          11   steel seek to keep the sons and daughters of

          12   disenfranchisement and exploitation beneath them.

          13   This serves as a primary force continuing to widen

          14   the gap in our ability to access capital and

          15   financing to open and expand the business,            
09:28:58

          16   obtaining a mortgage or a loan, or asking for a

          17   seat at this table in managing the capital of our

          18   financial markets.

          19            African-Americans and other underserved

          20   groups pay more for less -- pay more for less, live   
09:29:10

          21   under stress, die early with less, and don't live

          22   as long because we're targets of immoral business

          23   practices.

          24            Predatory lending costs Americans over

                                                                 51




           1   $9 billion annually.  Minorities, farmers and the

           2   elderly in urban communities continue to be

           3   targeted for subprime loans regardless of their

           4   credit history based upon their race and geographic

           5   location.                                             
09:29:36

           6            The federal government has yet to

           7   substantively define predatory lending, let alone

           8   create a federal regulatory system that protects

           9   the rights of consumers.

          10            It is our desire, lastly, that as you        
09:29:46

          11   carry out your defined role of educating these

          12   institutions about CRA programs, that you

          13   incorporate the importance of diversity and

          14   inclusion in the context of suppliers, employees,

          15   executive leadership, corporate board                 
09:30:00

          16   representation, and capital investment; a 5 percent

          17   minimum increase in outsourcing of opportunities

          18   that comes to the investment banking and brokerage;

          19   appointing African-American and Hispanics and other

          20   underserved groups and offer positions; employing a   
09:30:16

          21   more grass-roots approach, literally putting these

          22   predators out of business.

          23            Commitment is now on the way, lastly, to

          24   employ the last-tide-first-flight strategy and

                                                                 52




           1   layoffs.  Bank of America is shedding 12,500 jobs,

           2   rural ones, part of a move to justify the

           3   $48 billion that is spent buying Fleet Falls and

           4   Financial.  This must not be duplicated.

           5            The Federal Reserve must not bless this      
09:30:48

           6   merger until the community-added value of

           7   inclusion, diversity, expansion and

           8   nondiscrimination is agreed and honored.

           9            In using this example, if banks are

          10   willing to green-line our communities, change the     
09:31:04

          11   historic discriminatory lending patterns, break

          12   from the practice of funding termites next to

          13   CRA-built homes, then the merger will be of value.

          14            Thank you for this opportunity to be

          15   heard.  I hope to work with you as an advisor in      
09:31:18

          16   the area of inclusion.  Thank you.

          17       MS. BRAUNSTEIN:  Thank you.  Mayor Coleman.

          18       HON. COLEMAN:  Good morning.

          19            My name is Mayor Mike Coleman, mayor of

          20   the City of Columbus, the 15th largest city in the    
09:31:28

          21   nation, the largest city in the State of Ohio, and

          22   the fastest growing city in the Midwest.  I am

          23   pleased to be here today even with my broken ankle.

          24            Today represents another step in

                                                                 53




           1   Bank One's evolution; and there are some very

           2   important points I would like to make as it relates

           3   to the City of Columbus because it is in the City

           4   of Columbus where Bank One was created originally

           5   and where it still maintains a significant            
09:32:00

           6   presence.  And we know Bank One the longest and we

           7   know Bank One the best.

           8            First, let me tell you that Bank One

           9   continues with the significant economic presence in

          10   the City of Columbus and continues to be a major      
09:32:14

          11   and significant employer.

          12            Secondly, Bank One has had a history of

          13   supporting our community as it relates to

          14   community-development initiatives.

          15            And, thirdly, we view this merger as a new   
09:32:32

          16   season by which neighborhood development, economic

          17   development, community empowerment can take place,

          18   and increased employment can take place in the City

          19   of Columbus as a result of this merger.

          20            But let me point out some things.  First     
09:32:50

          21   is that Bank One is, in Columbus, the largest

          22   retail bank in the city with over $9 billion in

          23   deposits.  They have 68 branches in Central Ohio.

          24   They have 9500 employees; and they have paid more

                                                                 54




           1   than $3 million in City of Columbus income tax in

           2   the year 2002.

           3            Bank One also owns more than $3 million

           4   square feet of office and retail space and paid

           5   over $2.4 million of property taxes in the City of    
09:33:28

           6   Columbus.  Bank One has also invested in many of

           7   our most important community initiatives, and they

           8   have invested in charity $3 million in our

           9   community in the year 2003 alone.

          10            J. P. Morgan Chase is also a significant     
09:33:48

          11   employer in the City of Columbus where they have

          12   located mortgage servicing headquarters with 2700

          13   employees and represents the 13th largest

          14   private-sector employer in the City of Columbus.

          15            So with these two banks merging, it          
09:34:06

          16   represents about 12,000 employees in the City of

          17   Columbus.  And you can see that this merger -- the

          18   City of Columbus has a great deal at stake with

          19   respect to this merger.

          20            In 2002, I started an initiative called      
09:34:28

          21   The Partnership for America's 21st Century City,

          22   and it has resulted in $3.5 billion commitments in

          23   the central city neighborhoods and neglected

          24   neighborhoods in the City of Columbus of which

                                                                 55




           1   Bank One is an active and contributing partner.  I

           2   am surprised that it did not come up in the

           3   presentation this morning.

           4            Bank One also has been very active with

           5   new market tax credits to spur development in our     
09:35:00

           6   central city communities, and they have been very

           7   involved with the low-income housing tax credit

           8   program.

           9            But I believe that it is critical that

          10   this merged entity build upon the history of          
09:35:12

          11   Bank One in the City of Columbus and not only

          12   continue what they have done but to expand upon

          13   this commitment.

          14            I am encouraged to hear what has happened

          15   with Chase in other communities around the country,   
09:35:28

          16   with homes and jobs and business opportunities,

          17   community development, and this $800 billion

          18   commitment.  I'm here to say as the Mayor of the

          19   City of Columbus that a lot of that should be spent

          20   right in the City of Columbus, and we'll talk about   
09:35:44

          21   that.

          22            It is my hope that a merged Bank One,

          23   J. P. Morgan Chase will be actively involved and

          24   continue to be involved as Bank One has in the

                                                                 56




           1   past, not just for our community which is

           2   important, but it is a sound investment for the

           3   merged bank.  Is it a good business practice.

           4            Several areas that we want them to

           5   continue in is affordable housing and residential     
09:36:12

           6   development where in the City of Columbus we have

           7   built 6,000 residential units in our city for the

           8   past four years, many of which Bank One has been

           9   involved in, but needs to continue and up their

          10   commitment to our city under the merged entity        
09:36:26

          11   whether or not it merges in the City of Columbus;

          12   downtown development which is critical;

          13   neighborhood development which is critical to our

          14   community; West Edge Business Park north of the

          15   mall.                                                 
09:36:42

          16            And, finally, it is in the best interest

          17   of the merged bank and the City of Columbus that

          18   they retain the job base of 12,000 employees in the

          19   City of Columbus but also expand it for good, sound

          20   financial and business reasons.                       
09:37:02

          21            We have the work force, and that work

          22   force is skilled.  Columbus was recently ranked as

          23   one of the lowest cost cities in the country for

          24   doing business, among all cities, in the nation.

                                                                 57




           1   So a skilled work force, plus low cost of doing

           2   business in our community, equals, hopefully, a

           3   formula of success where everybody can win in this

           4   regard.

           5            The city, Chase and Bank One could each      
09:37:32

           6   benefit by this merger if the following shall

           7   occur:

           8            Continued investment in our community in

           9   many of the ways that was discussed here this

          10   morning; job expansion in our community for sound     
09:37:48

          11   business reasons and sound business practices; and

          12   ongoing community engagement.

          13            I submit to you that the future of this

          14   merger and the City of Columbus are intertwined.

          15   Thank you very much.                                  
09:38:08

          16       MS. BRAUNSTEIN:  Thank you very much.  And

          17   could we have the next panel please come forward.

          18            We'll get started with the next panel.  I

          19   would just like to for the record state -- welcome

          20   you and also to state the ground rules again.  Each   
09:39:32

          21   speaker has five minutes.  Please keep your eye on

          22   the timekeepers who will signal you.  You will see

          23   the little lights light up.  The yellow light

          24   lights up when there's two minutes left.

                                                                 58




           1            I would also ask if you have a printed

           2   copy of your testimony that you can leave with us,

           3   please leave that with our court reporter here at

           4   the center table.  And, lastly, when you begin

           5   speaking, please state your name and organization     
09:40:00

           6   at the beginning for the record.

           7            And with that, Brenda, do you want to lead

           8   us off -- and, hi, it's nice to see you.

           9       MS. LaBLANC:  My name is Brenda LaBlanc.  I'm a

          10   board member of the National Training and             
09:40:12

          11   Information Center and Co-Chair Person of National

          12   People's Action.  I have been one of three women

          13   elected to fill the role of our late chairperson,

          14   Gale Cincotta.

          15            Many of you know of Gale Cincotta as the     
09:40:24

          16   mother of the Community Reinvestment Act.  She has

          17   a long history in other parts of the country as

          18   well as here in Chicago.  I worked with Gale on CRA

          19   issues for more than two decades.  I was on the

          20   leadership team when National People's Action hit     
09:40:38

          21   the Federal Reserve building in 1980.

          22            From this action, we had a meeting with

          23   Paul Volcker, who was then Chairman of the Federal

          24   Reserve Board.  Leaders from around the country

                                                                 59




           1   persuaded Volcker that regulators should be

           2   monitoring the banks for CRA performance which they

           3   have not done since CRA had been passed.  He agreed

           4   and bank monitoring happened after that.

           5            In fact, in the 1980s, NTIC held hearings    
09:41:00

           6   throughout the country with banks, community groups

           7   and regulators about the enforcement of the CRA.

           8   In fact, Kenneth H. Thomas, Ph.D., noted CRA

           9   scholar wrote, "The National Training and

          10   Information Center has been involved with the         
09:41:16

          11   largest number of CRA challenges and agreements."

          12   In his book called, Community Reinvestment

          13   Performance, "In Chicago, NTIC still sits on

          14   several bank review boards as part of CRA

          15   agreements that were negotiated in 1984."             
09:41:30

          16            I am testifying on behalf of NTIC and

          17   community organizations throughout the country that

          18   have been urging J. P. Morgan Chase to make a CRA

          19   commitment with our affiliates.  These are Central

          20   Illinois Organizing Projects:  Springfield,           
09:41:46

          21   Bloomington, Normal, Decatur, Champaign/Urbana,

          22   Danville, Peoria, and rural Logan County;

          23   Communities United for Action in Cincinnati;

          24   Creston Neighborhood Association, Grand Rapids,

                                                                 60




           1   Michigan; East Side Organizing Project, Cleveland,

           2   Ohio; Iowa Citizens For Community Improvement,

           3   Des Moines, Iowa; Pittsburgh Community Reinvestment

           4   Group, Pittsburgh, Pennsylvania; Syracuse United

           5   Neighborhoods of Syracuse, New York; South Austin     
09:42:12

           6   Coalition Community Council, Chicago; Lawndale

           7   Neighborhood Organization, Chicago; and Sunflower

           8   Community Action, Wichita, Kansas.

           9            When we met with officials from

          10   J. P. Morgan Chase/Bank One on March 5th to suggest   
09:42:26

          11   solutions to the banks' problems in meeting the

          12   communities' credit needs, the banks told us that

          13   they would not agree to any accountable measures to

          14   achieve these solutions.  J. P. Morgan Chase did

          15   not announce a CRA commitment until the public        
09:42:38

          16   comment period was extended by the Federal Reserve.

          17   The commitments they announced and the agreement

          18   they signed with the group here in Chicago are not

          19   strong commitments.  J. P. Morgan Chase is trying

          20   to get away with doing the least amount of work as    
09:42:52

          21   possible.

          22            We submitted comments to the Federal

          23   Reserve that outlines our concerns with high denial

          24   rates for minorities; lack of specific programs in

                                                                 61




           1   dealing with the foreclosed properties, considering

           2   that both banks are tops on the list of foreclosed

           3   properties in many of the cities in which we work;

           4   Bank One's attempts to evade state legislation on

           5   predatory lending; how Bank One's lending fuels the   
09:43:18

           6   growth of corporate farmers at the expense of

           7   family farmers.

           8            We invite everyone in the room to review

           9   our comments on the details.

          10            We cannot overstate how important CRA is     
09:43:30

          11   to our neighborhoods.  We were originally left out

          12   of the process that enables people to become

          13   homeowners, and our neighborhoods were devastated

          14   because of this.  J. P. Morgan Chase wants to leave

          15   us out of the process again by not signing the CRA    
09:43:44

          16   agreement.

          17            We have had a great success at the local

          18   level with groups like ours that have used CRA

          19   making friends eventually of local bankers.  Though

          20   at first they thought we were trying to get them to   
09:43:56

          21   make bad loans, they found that we had, in fact,

          22   opened up a new market for them which has been a

          23   profitable market.  And we have seen our

          24   neighborhoods improve as a result.  It's been a

                                                                 62




           1   win-win situation.

           2            But as our banks are morphed into huge

           3   nationals, our efforts have become impaired.

           4   Though our local president may be understanding, he

           5   has to take orders and go by policy set at higher     
09:44:22

           6   levels with more geographic distance.

           7            If J. P. Morgan Chase wants to be a leader

           8   in community development throughout the country,

           9   they have to do more than cherry-pick a few groups

          10   from New York City with whom to work.  They need to   
09:44:34

          11   live up to the spirit of the Community Reinvestment

          12   Act and not be a contributing factor in killing the

          13   law.  The law has not outlived its purpose.  With

          14   megamergers such as these, the CRA is needed now

          15   more than ever.                                       
09:44:50

          16            We'd also like to leave a copy of the new

          17   report that we released today about J. P. Morgan's

          18   record in lending in our neighborhoods.  And I

          19   would like to hear from William Harrison why he is

          20   so afraid of signing a CRA agreement with community   
09:45:02

          21   groups.  Thank you.

          22       MS. RAMSEY:  Good morning.  My name is

          23   Jane Ramsey, and I'm the Executive Director of the

          24   Jewish Council on Urban Affairs.  I am honored

                                                                 63




           1   today to join you and appreciate the opportunity to

           2   express our deep reservations about this proposed

           3   merger.  We ask Federal Reserve to require that an

           4   approval process for this merger be based on the

           5   banks' compliance with four specific conditions as    
09:45:28

           6   I will share in a moment.

           7            Since 1964, the Jewish Council on Urban

           8   Affairs has worked to combat poverty, racism and

           9   anti-Semitism in partnership with diverse

          10   communities in the greater Chicago area.  Drawing     
09:45:44

          11   on Judaism's commitment to care for people of all

          12   faiths, races and ethnic groups for the past four

          13   decades, we have dedicated our time, energy and

          14   resources to ensuring that low-income communities

          15   have access to capital and credit on equal terms as   
09:45:56

          16   all other Chicagoans.

          17            We've also fought for a holistic approach

          18   to regional economic development that promotes

          19   balanced investment, expanded job training, and the

          20   targeting of promising industries for aggressive      
09:46:10

          21   support by the city and state.  Chicago has an

          22   unfortunate history of witnessing countless

          23   instances where low-income communities, often

          24   minorities and immigrants, have been denied access

                                                                 64




           1   to appropriate, fair financial services.

           2            So throughout the past four decades we

           3   have fought against predatory lending practices by

           4   financial institutions in the city.  We have also

           5   fought against payday loan abuses.  We have urged     
09:46:34

           6   that these adverse and, at times, illegal practices

           7   must be studied and strictly regulated to protect

           8   our state's most vulnerable citizens from

           9   unscrupulous practices that can place homes,

          10   families, communities at risk and that do.            
09:46:52

          11            In this situation before us today, we see

          12   several red flags of particularly grave concern.

          13   We note the research conducted in part by our

          14   colleagues from the National Training and

          15   Information Center and applaud their work, and by     
09:47:06

          16   the Inner City Press in New York suggesting that

          17   J. P. Morgan Chase has a problematic history when

          18   it comes to lending to individuals in minority

          19   communities who want to purchase homes.

          20            We are also disturbed by memories of         
09:47:20

          21   recent bank failed mergers in our city, including

          22   the Continental Illinois National Bank and the

          23   burden on the public to bail out these failed

          24   institutions.  More information upfront about the

                                                                 65




           1   proposed merger under consideration today would go

           2   a long way obviating both of these concerns.

           3            The size of this merger, if approved, will

           4   have tremendous impact on our regional economy.

           5   We, therefore, ask that four conditions be            
09:47:48

           6   fulfilled before this merger is approved.

           7            First, we ask the Federal Reserve to

           8   require that Bank One and J. P. Morgan Chase

           9   provide complete records of their lending policies

          10   in this city for the past 40 years.  This             
09:48:04

          11   information should be disaggregated by race, ethnic

          12   group and neighborhood and should be made public

          13   for review and comment.

          14            Second, we ask the Federal Reserve to

          15   require that Bank One and J. P. Morgan Chase hold a   
09:48:20

          16   series of open meetings in neighborhoods that have

          17   historically suffered from the banks' -- most from

          18   the banks' discriminatory practices.  These

          19   community meetings should include discussion on the

          20   two banks' records of providing access to capital     
09:48:36

          21   and credit in these neighborhoods where applicable.

          22   For a start we would recommend these hearings take

          23   place in Lawndale, Englewood, Woodlawn, Humboldt

          24   Park, South Shore, Uptown, Albany Park and Pilsen,

                                                                 66




           1   among the city's most -- representing most

           2   disadvantaged citizens.

           3            Third, we ask the Federal Reserve to

           4   require that both banks make an explicit written

           5   promise to keep jobs in the area.  We share the       
09:49:02

           6   Lieutenant Governor's concerns on outsourcing.

           7   They must publicly affirm their commitment to

           8   keeping workers in Illinois and not allow

           9   good-paying positions to slip away.

          10            Fourth, we ask the Federal Reserve to        
09:49:20

          11   require the two banks to issue a detailed

          12   memorandum explaining how this merger will help

          13   preserve and develop affordable housing in

          14   Illinois.  In particular, we need information which

          15   includes access to credit and alternative models      
09:49:34

          16   that do not exploit as do predatory lending and

          17   payday loan shops.  This memorandum should be

          18   circulated widely to community leaders and housing

          19   developers for comments.  The banks must then

          20   respond publicly to these comments before seeking     
09:49:52

          21   the fed's approval of the merger.

          22            Our tradition teaches, "It is not wreckers

          23   we need but builders."  We ask this honorable

          24   committee and the entire Federal Reserve Bank to

                                                                 67




           1   heed these words and to demand much greater

           2   production of information from these banks to allow

           3   low-income Chicagoans to be able to preserve and

           4   build their homes and their communities through

           5   access to credit and capital when needed.             
09:50:20

           6            In closing, the Jewish Council on Urban

           7   Affairs thanks you for providing us with the

           8   opportunity to testify this morning on this most

           9   critical issue, and please let us know if we can be

          10   of any further assistance.                            
09:50:34

          11       MS. BRAUNSTEIN:  Thank you very much.

          12       MR. VAN TOL:  Thank you for this opportunity.

          13   My name is Hubert Van Tol, Executive Director of

          14   Fairness and Rural Lending as part of Wisconsin,

          15   and my comments represent the position fairness and   
09:50:50

          16   rural lending.

          17            Fairness in Rural Lending is also a member

          18   of the National Community Reinvestment Coalition as

          19   are a number of your other commenters today, and we

          20   also give our support to the concerns raised by all   
09:51:00

          21   of the members of NCRC and their testimony.

          22            As you know, I also serve as a member of

          23   the Federal Reserve's Consumer Advisory Council;

          24   and, if you wish at any time to assign me the task

                                                                 68




           1   of articulating the Federal Reserve's official

           2   position on this merger, I will be happy to take

           3   that job.

           4       MS. BRAUNSTEIN:  We'll keep that in mind.

           5       MR. VON TOL:  Fairness in Rural Lending's         
09:51:24

           6   comment letter on this merger focused on two

           7   primary issues.  First, our analysis of the

           8   foreclosure records in rural Wisconsin counties

           9   seem to show that both J. P. Morgan Chase and

          10   Bank One were listed as plaintiffs in an unusually    
09:51:38

          11   high number of foreclosure actions in the rural

          12   Wisconsin counties, given the number of home

          13   mortgage loans that they actually provide in those

          14   counties.

          15            Secondly, we are concerned that there's a    
09:51:50

          16   pattern developing among the largest lenders in

          17   which their prime lending, their community

          18   development lending and their CRA investments are

          19   focused in metropolitan areas, and rural areas get

          20   more attention from their subprime subsidiaries and   
09:52:04

          21   affiliates.

          22            On the foreclosure issue, J. P. Morgan

          23   Chase's response letter of March 12th argues that

          24   the foreclosure percentage is not really as high as

                                                                 69




           1   it seems because Chase Manhattan Mortgage

           2   Corporation services many more loans than it

           3   originates in rural Wisconsin; and that while both

           4   Chase and Bank One's percentage of foreclosures in

           5   rural Wisconsin counties are higher than the          
09:52:30

           6   Wisconsin average, they're nonetheless lower than

           7   the "east/north central industry percentage".

           8            Since we don't have access to this larger

           9   industry in Chase Manhattan databases, we will have

          10   to hope that the numbers that they provided are in    
09:52:42

          11   fact correct.  But the larger issue of the adequacy

          12   of Chase's policies governing their purchasing

          13   servicing and securitizing of subprime mortgages

          14   remains.

          15            In the various answers that Chase has        
09:52:56

          16   provided to the Federal Reserve and the comment

          17   period on this merger, they seemed to lay out quite

          18   different standards for the loans that they

          19   originate themselves and for the loans that they

          20   purchase, service and securitize.                     
09:53:08

          21            For their own subprime loans, Chase does

          22   not offer a single premium credit life.  They do

          23   not require a mandatory arbitration.  Prepayment

          24   penalties are not required.  Customers who qualify

                                                                 70




           1   for a prime product are offered prime products.  In

           2   their broker channel, they cap yield spread

           3   premiums at 3 points.

           4            By these policies that they have

           5   established, they acknowledge that abusive loans      
09:53:34

           6   are not just HOPA loans or those loans that are

           7   considered high cost under the various state laws.

           8            In terms of their policies, they make some

           9   attempt to prevent at least some of the practices

          10   that community groups consider abusive.  When they    
09:53:48

          11   purchase loans, Chase avoids purchasing HOPA or

          12   high-cost loans and undertakes some due diligence

          13   that looks for borrowers' ability to repay,

          14   evidence of equity stripping and loan flippings.

          15            But when securitizing loans, the "best       
09:54:02

          16   practices" that Chase adheres to appears to be a

          17   commitment to avoid purchasing HOPA loans or loans

          18   that meet high cost thresholds.  Any due diligence

          19   that Chase performs appears to focus on determining

          20   whether the issuer followed their own underwriting    
09:54:20

          21   policies and procedures and whether they broke any

          22   of the various consumer laws.

          23            Chase asked to keep part of its answer

          24   about servicing practices confidential, but nothing

                                                                 71




           1   in the public answer that I have seen indicates

           2   that they make any attempt to avoid servicing loans

           3   originated by other lenders that might be

           4   considered abusive loans by community groups.

           5            Here I think we get to the heart of the      
09:54:44

           6   disagreement between community groups and banks and

           7   their regulators.  Bankers and their regulators are

           8   fond of saying that very little predatory lending

           9   originates from the regulating lenders.  And if

          10   your definition of predatory lending is simply a      
09:55:00

          11   HOPA loan, then that might be true.  And, yet,

          12   there are a large number of loans out there

          13   carefully priced just under that HOPA threshold for

          14   borrowers who may or may not qualify for a prime

          15   product that find purchases, servicers and            
09:55:14

          16   securitizers.  Many of them are the large

          17   regulatory financial institutions.

          18            Without that pipeline to the secondary

          19   market, the rogue broker can only do a limited

          20   amount of damage; but with an anything-goes           
09:55:28

          21   pipeline, the rogue broker becomes the rule --

          22   closer to the rule rather than the exception.  You

          23   can do a great deal of good in reviewing these

          24   applications, and I'm sorry I don't speak fast

                                                                 72




           1   enough, but I will include the rest of my comments

           2   in my written testimony.

           3       MS. BRAUNSTEIN:  Thank you very much.

           4       MS. HAYNESWORTH:  Hi.  My name is

           5   Catherine Haynesworth.  I'm a member of East Side     
09:55:54

           6   Organizing Project, ESOP, from Cleveland, Ohio.

           7            ESOP is a community affiliate of the

           8   National Training and Information Center, NTIC,

           9   located here in Chicago.  I'm testifying on behalf

          10   of ESOP and community organizations throughout the    
09:56:10

          11   country that have been urging J. P. Morgan Chase to

          12   make a written CRA commitment with our affiliates.

          13   These groups are Central Illinois Organizing

          14   Project, Springfield, Bloomington, Normal, Decatur,

          15   Champaign/Urbana, Danville, Peoria and rural Logan    
09:56:28

          16   County; Communities Neighborhood Association, Grand

          17   Rapids, Michigan; Creston Neighborhood Association,

          18   Grand Rapids; Iowa Citizens For Community

          19   Improvement; Pittsburgh Community Reinvestment

          20   Group; Syracuse United Neighbors; South Austin        
09:56:46

          21   Coalition Community Council; Sunflower Community

          22   Action.

          23            ESOP has been leading the charge for fair

          24   access to quality credit throughout Northeast Ohio.

                                                                 73




           1   We recently signed a historic CRA agreement with

           2   Charter One who agreed to work with us to be among

           3   the top three lenders in the minority census tracks

           4   over the next few years.  Before the agreement,

           5   they were near the bottom.  In 2003, Charter One      
09:57:20

           6   increased its lending in the low- to

           7   moderate-census tracks by nearly 300 percent.

           8            ESOP has been -- I'm sorry, our victory

           9   with Charter One has proven that fine CRA

          10   agreements with banks are the most effective if not   
09:57:36

          11   the only way to ensure that our lending and

          12   investment needs are fully met.

          13            Besides Charter One, ESOP has several

          14   other noteworthy accomplishments.  Our local

          15   organizing campaign against Fairbanks Capital         
09:57:52

          16   Corporation, the nation's largest subprime loan

          17   servicing, led ESOP to spearhead negotiations with

          18   NTIC and CEO of Fairbanks Capital, James Ozanne, a

          19   written agreement that goes well beyond the FTC

          20   settlement that was signed a couple weeks ago.        
09:58:14

          21            In late 2003, ESOP participated in the

          22   creation of the Third Federal Savings and Loan's

          23   Home Today Program.  This product is designed for

          24   first-time homebuyers and/or current homeowners

                                                                 74




           1   with less than perfect credit.  This is truly a

           2   unique program that does not use credit scores and

           3   has rescued dozens of victims of Fairbanks, even

           4   those who were in foreclosure.

           5            As part of NTIC, ESOP signed an agreement    
09:58:42

           6   with the nation's largest subprime lender,

           7   CitiFinancial that requires CitiFinancial to

           8   immediately stop engaging in many abusive lending

           9   practices as well as offering prime rate loan

          10   products throughout its network of CitiFinancial      
09:59:00

          11   branches.

          12            Be it Charter One, CitiFinancial,

          13   Fairbanks or the product created with Third

          14   Federal, written agreements make sense, not just

          15   for our communities but for the institutions as       
09:59:12

          16   well.

          17            I am here from Ohio.  Bank One abandoned

          18   our communities when they decided to move their

          19   corporate headquarters to Chicago.  I'm here to

          20   tell you they will do the same thing to Chicago if    
09:59:26

          21   they do not have a CRA agreement that holds them

          22   accountable.

          23            ESOP submitted detailed comments to the

          24   Federal Reserve that outlines our concerns about

                                                                 75




           1   Bank One's lack of branches in the inner city of

           2   Cleveland and Bank One and J. P. Morgan Chase's

           3   questionable loan servicing practices.  We invite

           4   everyone in the room to review our comments from

           5   the details or review the NTIC study that you were    
09:59:50

           6   just showed.

           7            Allow me to share my nightmare regarding

           8   Fairbanks and J. P. Morgan Chase.  Fairbanks, as I

           9   noted earlier, is working with NTIC with a written

          10   partnership to change their ways.  J. P. Morgan,      
10:00:08

          11   however, refused.

          12            I'm sure you know how good it feels when

          13   everything appears to be going well in your life.

          14   Approximately ten years ago, I was very excited

          15   because, as a single parent, I was able to purchase   
10:00:22

          16   a home.  I just knew this was the American dream

          17   until what happened in July 2001.

          18            Fairbanks Capital, my loan servicing

          19   company, totally rocked my world.  I received a

          20   phone call on my job indicating that my home was      
10:00:38

          21   going into foreclosure.  I immediately wrote them a

          22   letter and included copies of my cancelled checks

          23   and receipts of my Western Union payments.

          24   However, this loan servicing company still insisted

                                                                 76




           1   my payments were late and forced me to file Chapter

           2   13.

           3            After my involvement with ESOP, I found

           4   out why my loan servicing company felt my payments

           5   were late.  It took Fairbanks Capital two years to    
10:01:08

           6   explain to me that they did not honor two Western

           7   Union payments sent to Conti Mortgage in December

           8   1999, even though I had receipts and even though

           9   Fairbanks purchased Conti Mortgage.

          10            You're probably wondering why I am           
10:01:24

          11   speaking of Conti Mortgage and Fairbanks and this

          12   is about a hearing on J. P. Morgan and Chase?  The

          13   simple fact is J. P. Morgan owned my loan and so

          14   does servicing to Fairbanks.  When I received legal

          15   documentation indicating my loan was going into       
10:01:40

          16   foreclosure, it was indicated that J. P. Morgan or

          17   its affiliate versus Catherine Haynesworth.  It

          18   would seem that J. P. Morgan would be happy to

          19   originate and purchase garbage loans, but they

          20   don't have the guts to service them.  Instead, they   
10:01:56

          21   distance themselves by selling servicing rights to

          22   others.

          23            When I attempted to contact the actual

          24   owner of my mortgage, I was referred back to

                                                                 77




           1   Fairbanks.  The problems I have experienced with my

           2   loan servicing company has shown me that a national

           3   point person needs to be designated by J. P. Morgan

           4   and Bank One to resolve complaints with servicing

           5   agreements.

           6            This experience has affected my life in a

           7   negative sense as well as my associates at ESOP of

           8   Cleveland.  Allow me to say that I know God can do

           9   exceedingly and abundantly above anything we can

          10   ask or imagine.  I say this because in July 2001 I    
10:02:40

          11   thought I lost my home.  However, in March 2004, my

          12   home was taken out of foreclosure.  It's because of

          13   a signed agreement with Fairbanks Capital through

          14   the efforts of ESOP and NTIC, my loan with

          15   Fairbanks is in the process of being restructured     
10:03:00

          16   or modified.

          17            In addition, Third Federal Savings and

          18   Loan has contacted --

          19       MS. BRAUNSTEIN:  Ms. Haynesworth, excuse me.

          20   I'm sorry, can I ask you to wrap up, please.          
10:03:08

          21       MS. HAYNESWORTH:  I'm about to -- has contacted

          22   me because they read about my misfortune in the

          23   local newspaper, and they told me that they would

          24   like to assist me with the refinancing on my loan.

                                                                 78




           1   Again, it's because of a signed agreement in the

           2   creation of a product for home loans.

           3            I urge the Federal Reserve to deny this

           4   merger until CRA concerns have been dealt with in a

           5   meaningful way.  Certainly, Mr. Harrison would        
10:03:36

           6   never agree to make a mortgaged loan without a

           7   signed agreement.

           8            In closing, I would like to alert the

           9   media of a press conference that will be happening

          10   at 10 o'clock a.m. in the Iowa Room on the third      
10:03:48

          11   floor.  Thank you.

          12       MS. BRAUNSTEIN:  Thank you very much to all our

          13   panelists, and could the next panel please come

          14   forward.

          15            A quick review of the ground rules.  Five    
10:04:30

          16   minutes per speaker and please pay attention to the

          17   timekeepers.  We've got a lot of people to hear

          18   from today, so we're trying to stay as close to

          19   schedule as possible.  And if you have a written

          20   copy of your testimony and can leave that with the    
10:04:46

          21   court reporter, that would be appreciated.  And,

          22   lastly, before you begin speaking, please make sure

          23   to state your name and organization for the record.

          24            Ms. Burke, would you like to lead us off?

                                                                 79




           1       MS. BURKE:  Good morning.  Thank you for the

           2   opportunity to testify.  My name is Clara Burke.  I

           3   am the Executive Director of the Lafayette Council

           4   on Aging.

           5            The mission of the Lafayette Council on      
10:05:10

           6   Aging is to enhance the well-being of the elderly

           7   by providing and expanding an innovative range of

           8   services delivered with respect, care and

           9   compassion, upholding the dignity and independence

          10   of the individual.  Some of the services that we      
10:05:26

          11   provide to accomplish that mission are meals to

          12   senior citizens, 600 senior citizens per day;

          13   homemaking and transportation of homebound senior

          14   citizens, over 5,000 transportation trips per year;

          15   a monthly newspaper; employment and training          
10:05:44

          16   program; a foster grandparent program; wellness and

          17   recreational programs; and affordable housing.

          18            In 1985, we were awarded a grant for our

          19   Foster Grandparent Program but had no place to

          20   house the program.  In our search for in-kind space   
10:06:00

          21   in our community, the president of Bank One

          22   provided space in one of their buildings, and we've

          23   occupied this in-kind space for over five years.

          24   The president of the bank also coordinated

                                                                 80




           1   volunteers from employees and delivered meals to

           2   several homebound persons in close proximity to the

           3   bank.  This delivering program continues to today

           4   and is very successful.

           5            A community investment officer is a          
10:06:34

           6   founding member of ACHDO, the Greater Arcadian

           7   Community Housing Development Organization, which

           8   is sponsored by the Lafayette Council on Aging.  He

           9   also worked with the Council on Aging and secured a

          10   grant from the Federal Home Loan Bank out of          
10:06:50

          11   Chicago.  I believe that the merger would certainly

          12   be advantageous to J. P. Morgan Chase Bank and

          13   Bank One as well as the employees, customers and

          14   investors of both financial institutions.

          15            In summary, some of the benefits from the    
10:07:08

          16   community involvement by Bank One are helping us to

          17   provide opportunities for low-income senior

          18   citizens to remain physically and mentally active

          19   and to enhance their self-esteem through continued

          20   participation in needed community services as         
10:07:28

          21   foster grandparents.

          22            Bank One has assisted us in enabling

          23   children with either exceptional or special needs

          24   to achieve improved physical, mental, emotional,

                                                                 81




           1   and social development with the assistance of the

           2   foster grandparent volunteer.

           3            Bank One continues to help us feed senior

           4   citizens by volunteering to deliver meals.

           5   Bank One has helped us in keeping senior citizens     
10:07:56

           6   healthy and in shape by sponsoring our Senior

           7   Olympic Games.  Bank One also provides houses in

           8   providing affordable housing to low-income and

           9   disadvantaged persons.

          10            Some of the projects that we're presently    
10:08:12

          11   working on, we're about to break ground on a

          12   60-unit complex for senior citizens.  We're working

          13   on the closing of a 14-unit complex for physically

          14   handicapped persons.  We're constructing

          15   25 affordable houses for home ownership for           
10:08:30

          16   low-income and disadvantaged persons.  We're also

          17   working on the closing for 88 units of housing for

          18   elderly persons.  We're also doing 1.5 renovations

          19   on a 175-unit complex that we own.  And we're also

          20   refinancing a Section 202 senior citizens complex     
10:08:52

          21   and expanding 14 efficiencies to be one-bedroom

          22   apartments, totaling over $18 million.

          23            Based on Bank One's concern for serving

          24   the needs of our community, I support the merger of

                                                                 82




           1   Bank One and J. P. Morgan Chase bank.  Thank you.

           2       MS. BRAUNSTEIN:  Thank you.

           3       MR. AZIOS:  Good morning.  My name is

           4   Victor Azios.  I'm a senior associate testifying on

           5   behalf of The Annie E. Casey Foundation.              
10:09:26

           6            I appreciate the opportunity to speak to

           7   you today.  My remarks will focus on the areas of

           8   convenience and needs of communities to be served

           9   and the thriving partnership of this humanitarian

          10   endeavor between Making Connections-San Antonio and   
10:09:38

          11   Bank One.

          12            I serve as the Site Team Leader as part of

          13   my responsibilities with the Foundation.  Making

          14   Connections is the Foundation's effort to partner

          15   with entire communities, rather than with one or      
10:09:50

          16   more singular organizations, to help improve the

          17   chances of children having positive life outcomes.

          18   The aim of the local effort is to bolster

          19   supportive communities and to help create an

          20   environment that provides greater economic            
10:10:04

          21   opportunities for children and families.

          22            Our function then is to bring together the

          23   myriad of organizations already improving the lives

          24   in San Antonio's West Side in order to bring about

                                                                 83




           1   faster and more efficient change.

           2            Making Connections-San Antonio launched a

           3   process in San Antonio that culminated with the

           4   Annie Casey Foundation's commitment to a ten-year

           5   community-change effort to improve the lives of       
10:10:28

           6   underprivileged children by improving the lives of

           7   their families and communities.

           8            Our target area, known as San Antonio's

           9   West Side, is considered the most economically

          10   depressed center of the city.  With a can-do          
10:10:40

          11   attitude and deep faith to motivate us, we rolled

          12   up our sleeves and dove into the initial process of

          13   identifying common goals and eliciting the

          14   commitment of beneficiaries.

          15            Making Connections sponsored a series of     
10:10:52

          16   forums to "bring to the table" residents, local

          17   officials, community organizations, businesses,

          18   faith leaders, funding groups and civic leaders.

          19   These sessions enriched the process of gathering

          20   information, identifying resources, and mapping our   
10:11:06

          21   target area.

          22            The findings which resulted from these

          23   initial forums of community leaders led to the

          24   identification of the community's goals.  Another

                                                                 84




           1   important aim of these summits was to secure the

           2   committee's firm commitment to work towards meeting

           3   those goals.

           4            With the community's mandate in hand, our

           5   next step was to identify community partners          
10:11:26

           6   willing to work with the community and civic

           7   organizations.  Bank One became an active and

           8   willing partner as we explored opportunities for

           9   co-investments that impact, influence and leverage

          10   the efforts that strengthen families, transform       
10:11:40

          11   neighborhoods and enhance the quality of life in

          12   the communities that we both serve.  Shortly

          13   thereafter, Bank One became one of our nine

          14   Community Partners seeking common purpose through

          15   co-investment in the Making Connections               
10:11:52

          16   neighborhoods.

          17            Specifically, Bank One focuses on

          18   supporting nonprofit organizations by supporting

          19   youth through education, encouraging economic

          20   empowerment and self-sufficiency, enriching           
10:12:04

          21   community life and encouraging innovations in

          22   philanthropy.  All of these efforts were a good fit

          23   with Making Connections-San Antonio's mandate from

          24   The Annie Casey Foundation.

                                                                 85




           1            I am here to support -- I am here to state

           2   our support of the proposed merger of J. P. Morgan

           3   Chase and Bank One.  Bank One's commitment to the

           4   Making Connections-San Antonio effort has

           5   demonstrated its understanding of this community's    
10:12:28

           6   needs and its willingness to co-invest and

           7   collaborate with other agencies as the residents of

           8   San Antonio's West Side make important strides

           9   towards achieving their full potential in society.

          10            Making Connections Initiatives throughout    
10:12:40

          11   the country help "tough neighborhoods" so

          12   identified because of the negative stressors that

          13   impact the lives of children.  Our work is carried

          14   out in three major strands; Family Economic

          15   Success, Efficient and Effective Services, and        
10:12:54

          16   Social Networks.

          17            I feel that our strong collaborative

          18   relationship with Bank One would be strengthened by

          19   J. P. Morgan Chase's track record of strong support

          20   for affordable housing, one of the stated goals of    
10:13:04

          21   our family summits.

          22            Under the Community Reinvestment Act and

          23   with the vision and leadership of the Community

          24   Reinvestment Officer, Lisa Rodriguez, common ground

                                                                 86




           1   was identified between Bank One and Making

           2   Connections.

           3            I will now briefly describe some of the

           4   areas of the joint effort.

           5            Bank One in San Antonio has a proven         
10:13:22

           6   record of supporting the community not only with

           7   financial literacy but also success through their

           8   products.  Bank One is a co-member of the Tax

           9   Coalition aimed at increasing earned income tax

          10   credits.  The efforts of this coalition last year     
10:13:36

          11   helped net over $22 million in earned income tax

          12   credit refunds, a return to the pockets of

          13   San Antonio's poor, working families.

          14            Bank One has provided support to the local

          15   job training agency, Project Quest, and is a          
10:13:50

          16   partner with the Alamo Workforce Development.

          17   This, of course, has an impact on the building

          18   capacity for job-training programs.

          19            Bank One is a co-investor in Accion Texas,

          20   a microenterprise investor, along with Community      
10:14:00

          21   Development Loan Fund.

          22            Bank One is also in partnership with our

          23   Lady of the Lake, one of our local learning

          24   partners, to provide comprehensive financial

                                                                 87




           1   literacy programs.

           2            In addition, Bank One is in conversation

           3   with officials of the City of San Antonio on IDA

           4   programs to help individuals achieve educational

           5   and home ownership goals.                             
10:14:24

           6            Bank One initiated a product called a

           7   Direct Card, a pre-paid debit card that was used in

           8   conjunction with the earned income tax credit

           9   program.

          10            In conclusion, I feel the merger of          
10:14:34

          11   J. P. Morgan Chase and Bank One would be beneficial

          12   and I support it.  Thank you very much.

          13       MS. BRAUNSTEIN:  Thank you.

          14       MS. ANDREWS:  Thank you for the opportunity to

          15   testify this morning.  My name is Nancy Andrews.  I   
10:14:44

          16   am the President and CEO of the Low Income

          17   Investment Fund, and my testimony is in favor of

          18   this merger.

          19            My organization is a community development

          20   financial institution that works across the United    
10:14:56

          21   States, but our activities are concentrated in New

          22   York, in the San Francisco Bay area and in Southern

          23   California.

          24            Our mission is one of poverty alleviation,

                                                                 88




           1   and we particularly focus on poor kids.  And in the

           2   19 years of the existence of my organization, we

           3   have made about $400 million in loans for

           4   community-based projects.  That capital has

           5   supported about 46,000 units of housing.              
10:15:24

           6   80 percent of those go to families that are

           7   considered very poor.

           8            We've financed 14,000 units of childcare,

           9   all of which are serving low-income kids.  We've

          10   financed about 2,000 spaces in educational            
10:15:40

          11   facilities in low-income communities serving,

          12   again, poor children; and we've financed about

          13   1.6 million square feet of commercial space in the

          14   distressed communities.

          15            J. P. Morgan Chase was instrumental in       
10:15:54

          16   making the track record of accomplishments that I

          17   just cited possible; and they have done that in two

          18   ways.

          19            First, in the very, very early stages of

          20   my organization's life, they provided a combination   
10:16:08

          21   of financial capital and human capital.  The

          22   financial capital came in the form of loans that

          23   supported our lending activity and in a way fueled

          24   the accomplishments that I just described.  But the

                                                                 89




           1   human capital, human talent, came in the form of

           2   the people within the organization, within

           3   J. P. Morgan Chase, that helped mentor and grow my

           4   organization into what it has become today.  And I

           5   particularly want to express appreciation to both     
10:16:42

           6   Joe Riley and Mark Willis of this organization who

           7   have put in hours and hours of time on the board of

           8   my organization as well as serving on the loan

           9   committee and actually making some of the loans

          10   that I just described.                                
10:16:58

          11            And last year, Chase was instrumental in

          12   allowing us to open up a new childcare program in

          13   New York City.  They provided leadership support,

          14   both in the form of grant support as well as

          15   leading a public effort to announce a New Child       
10:17:16

          16   Care effort that my organization has launched in

          17   New York City.  And in just the last 18 months,

          18   that effort has led to the creation of about a

          19   thousand spaces of childcare in the City of New

          20   York and has supported training for dozens of         
10:17:30

          21   childcare providers across that city.

          22            Over the years, Chase has provided about

          23   $5 and a half million in support to my

          24   organization; but, most important, I think, is the

                                                                 90




           1   leadership that they have provided within New York

           2   and California around the projects that we have

           3   launched.  Often they have taken the role of

           4   believing in us and making a bet on our work even

           5   when we didn't know that it was going to come out     
10:18:00

           6   well.

           7            What this means is that while we

           8   appreciate the capital that's being invested in

           9   communities, there's also no substitute really for

          10   the people; and people within organizations make      
10:18:14

          11   all the difference.

          12            I want to close by saying that we

          13   appreciate the good citizen work that has been done

          14   and the efforts that we think this merger will lead


          15   to in promoting it and improving that.  I do urge     
10:18:30

          16   that there be continued attention and concern

          17   around subprime lending practices and would urge

          18   that the new institution exercise corporate

          19   leadership around that as well.

          20            Thank you very much for the opportunity to   
10:18:46

          21   testify.

          22       MS. BRAUNSTEIN:  Thank you.

          23       MS. BASS:  Good morning.  Can you hear me?

          24       MS. BRAUNSTEIN:  Yes.

                                                                 91




           1       MS. BASS:  Good morning.  My name is

           2   Barbara Washington Bass.  I'm the Executive

           3   Director of Community Development Advocates of

           4   Detroit, better known as CDAD.

           5            On behalf of CDAD, I would like to thank     
10:19:10

           6   the Federal Reserve Bank for providing the

           7   opportunity to comment regarding the merger between

           8   J. P. Morgan Chase and Bank One.

           9            CDAD consists of over 100 member

          10   organizations, representing more than 60 Detroit      
10:19:30

          11   Community Development Corporations and

          12   40 supporting organizations, including technical

          13   service providers and related organizations.  When

          14   taken in total, over 700,000 residents are

          15   represented by CDAD member organizations.             
10:19:46

          16            Our members have produced well over

          17   75 percent of all new and rehabilitated units of

          18   housing as well as serving as a catalyst for

          19   neighborhood commercial development efforts.  CDAD

          20   engages in policy analysis and public education       
10:20:06

          21   around a host of public policies that affect our

          22   members and their real estate development efforts

          23   in low- and moderate-income neighborhoods.

          24            These accomplishments and many others

                                                                 92




           1   would not have been achieved without the dedicated

           2   support and partnership with Bank One.

           3            Throughout CDAD's inception, Bank One has

           4   been a supporter of CDAD's efforts to revitalize

           5   the City of Detroit.  With hard-working bank          
10:20:32

           6   officers, such as Jack Schwab and Nancy Walker,

           7   Bank One has been a trailblazer in connecting with

           8   the community and leveraging dollars throughout our

           9   city.  Our nonprofit developers value the support

          10   demonstrated by Bank One when leveraging public       
10:20:50

          11   sector dollars with loan products offered by the

          12   bank.  Bank One not only provides the resources to

          13   help spearhead development, but they participate at

          14   the table as partners.

          15            CDAD's mission is to increase the            
10:21:06

          16   effectiveness of community-based development

          17   organizations in their efforts to revitalize and

          18   rebuild Detroit's communities by providing a

          19   vehicle for information-sharing technical

          20   assistance, advocacy and common action on issues      
10:21:20

          21   affecting our members.

          22            Over the years, Bank One has been an

          23   unwavering partner that has held firm on its

          24   commitment to sustainable development efforts in

                                                                 93




           1   the City of Detroit.  In this spirit, Bank One has

           2   made a three-year commitment to finance up to

           3   $3.1 billion in the City of Detroit.

           4            Indeed, when we learned of the proposed

           5   merger, we were pleased as we are certain that the    
10:21:44

           6   assets of J. P. Morgan Chase merged with Bank One

           7   will more than help to promote further development

           8   in the City of Detroit.  Our members will continue

           9   to monitor this commitment and discern how best to

          10   support J. P. Morgan Chase and Bank One's efforts     
10:22:02

          11   should the need arise.

          12            In conclusion, CDAD is not only a partner

          13   with Bank One -- I'm sorry, CDAD is not only a

          14   partner with Bank One but does its banking with the

          15   company as well.  CDAD members share a common         
10:22:20

          16   commitment towards serving the needs of consumers,

          17   small businesses and communities in our city.  We

          18   are confident from our past experiences that by

          19   approving the merger, J. P. Morgan Chase and

          20   Bank One will more than exceed your expectations      
10:22:36

          21   not only in Detroit but in every community served

          22   by these fine institutions.

          23            Again, we thank you for this opportunity

          24   to speak.  If additional information is needed,

                                                                 94




           1   feel free to contact me directly.  Thank you.

           2       MS. BRAUNSTEIN:  Thank you very much.

           3       MR. PRITSCHER:  Hello.  I am John Pritscher,

           4   the president of Community Investment Corporation

           5   in Chicago.  I am here to testify in support of the   
10:23:02

           6   merger.

           7            My remarks are going to focus on

           8   multi-family rehabilitation lending to lower income

           9   communities in the Chicago metro area because

          10   that's what I know best; and I think it also points   
10:23:20

          11   out an example of how things have evolved and how

          12   banks -- a bank and all banks can play a central

          13   role in helping this to evolve in other areas of

          14   the country as well.

          15            When I started at CIC 20 years ago, it was   
10:23:46

          16   practically impossible to get a multi-family rehab

          17   loan in lower income, lower rent neighborhoods of

          18   the metro area with the exception of South Shore

          19   where South Shore Bank was active.

          20            Later that year, at the gentle               
10:24:10

          21   encouragement of Gale Cincotta, Bank One also

          22   became -- started their neighborhood lending

          23   program and began, along with some other banks, to

          24   play a major role in making banks partners with

                                                                 95




           1   local community development efforts in very active

           2   ways.

           3            Chicago is a rental city.  About

           4   56 percent of the housing units in the city are

           5   rental, most of them in multi-family apartment        
10:24:48

           6   buildings.  It might not be the situation in the

           7   rest of the country, but that's the case here.  And

           8   the lower the income of the household, the more

           9   likely it is that they're renters.  And, yet today,

          10   so far, you have heard no criticism about the         
10:25:08

          11   presence of banks or -- you know, in multi-family

          12   housing.  Twenty years ago, it probably would have

          13   been the prime point of discussion.

          14            But this is not surprising because Chicago

          15   is the home of Gale Cincotta and NTIC; the            
10:25:28

          16   Woodstock Institute; Shore Bank, a great

          17   neighborhood housing service organization;

          18   Community Investment Corporation, which I will tell

          19   you a little more about in a few moments.  But the

          20   banks themselves and a creative Department of         
10:25:48

          21   Housing of the city, which has, because of the

          22   availability of the bank money in part and of other

          23   very flexible types of money, has been able to be

          24   creative in partnership with them, as well as

                                                                 96




           1   effective housing community-based activists have

           2   brought Chicago to a place that I'm very proud to

           3   say is a leader in financing the hands-on owners of

           4   buildings in low-rent neighborhoods.

           5            I think we should give credit where credit   
10:26:26

           6   is due and recognize that Bank One has played a

           7   leadership role in this.  And I see no reason based

           8   on the $800 billion commitment and the people that

           9   they have had and the history of what they have

          10   done that there's any reason to suspect that this     
10:26:44

          11   will change and that it can be patterned in other

          12   places.

          13            Maybe an example of what -- Community

          14   Investment Corporation that I am the president of

          15   is a $550 million revolving loan pool funded          
10:26:58

          16   primarily by the banking community.  And to do

          17   something like that -- and last year we made 120

          18   multi-family rehab loans totaling $70 million for

          19   the rehab of just over 2300 rental units, over

          20   90 percent of which were affordable and, after        
10:27:26

          21   rehab rents, under 90 percent of area median

          22   income; and that this number of units that were

          23   benefited last year was less than the average of

          24   the prior six years.  So it's an ongoing type of

                                                                 97




           1   operation.

           2            It's possible because of bank leadership.

           3   Not only is Bank One, as the largest bank in the

           4   area, our largest investor sharing in -- already?

           5   Well, anyhow, you got the point, and I think that     
10:28:04

           6   there's every reason to believe that this will

           7   continue, and I support the merger.

           8       MS. BRAUNSTEIN:  Thank you.

           9       MR. MARZAHL:  My aim is to avoid being beeped

          10   here today.                                           
10:28:22

          11            I really want to commend, first of all,

          12   the Federal Reserve Bank for holding this

          13   hearing --

          14       MS. BRAUNSTEIN:  I'm sorry, please state your

          15   name.                                                 
10:28:26

          16       MR. MARZAHL:  My name is David Marzahl.  I'm

          17   the Executive Director of the Center for Economic

          18   Progress.

          19            I believe the hearing last week in

          20   New York and the one here in Chicago are very         
10:28:34

          21   important as part of building the kind of public

          22   discourse that's needed around significant changes

          23   brought about by mergers such as this.

          24            The Center For Economic Progress is a

                                                                 98




           1   Chicago-based organization that seeks to increase

           2   economic opportunities for low-income families,

           3   children and individuals by improving access to

           4   financial resources and services, something that

           5   we've heard a lot about today.  Specifically, we      
10:28:56

           6   seek to promote economic empowerment and encourage

           7   self-sufficiency through our direct service,

           8   advocacy, outreach and technical assistance

           9   programs.

          10            We at the Center have the privilege of       
10:29:08

          11   having strong corporate partnerships with companies

          12   such as Bank One, while also participating in

          13   numerous coalitions that promote community

          14   reinvestment and responsible financial services

          15   practices including the Chicago CRA Coalition, the    
10:29:20

          16   Monsignor John Egan Coalition to Stop Payday

          17   Lending, and Financial Links for Low-Income People,

          18   among others.  The Center also houses the National

          19   Community Tax Coalition, a 300-affiliate coalition

          20   that promotes access, opportunity and                 
10:29:36

          21   asset-building through the tax code for the working

          22   poor.

          23            Sophie Guerra, who's a CRA officer for

          24   Bank One out of Dallas, Texas, serves on the

                                                                 99




           1   Steering Committee of the National Community Tax

           2   Coalition and actually is the only banker on the

           3   Steering Committee.

           4            The Center has a unique vantage point

           5   given our dual service and advocacy mission.  Our     
10:29:56

           6   Tax Counseling Project is the largest free-income

           7   tax preparation program in the country.  It is

           8   volunteer-driven and it is a community-based

           9   service program that recently surpassed

          10   $100 million in tax refunds generated as mentioned    
10:30:10

          11   earlier.  With 28 locations statewide and more than

          12   1000 volunteers, the Project would honestly not be

          13   so successful without incredibly strong support

          14   from local government and from local foundations

          15   and corporations, Bank One among them.                
10:30:26

          16            Having just completed our tenth year of

          17   service on April 15th, Thursday of last week, the

          18   Project's volunteers this year prepared more than

          19   22,000 federal income tax returns and an equal

          20   number of state income tax returns.  Bank One has     
10:30:38

          21   been outstanding in its support for the Project,

          22   recruiting volunteers, promoting our programs and

          23   services, and providing in-kind and financial

          24   support; and also one of our longest standing

                                                                100




           1   volunteers with the Tax Counseling Project and a

           2   board member of the Center is Marilyn Williams

           3   Feldt, a recently retired Bank One employee.

           4            During our 2003 tax filing seasons,

           5   97 Bank One employees donated over 3,277 hours,       
10:31:04

           6   equivalent to 10 percent of our agency's total

           7   volunteer pool.  During 2003, Bank One employees

           8   directly assisted almost 3,000 families directly,

           9   bringing back $3.8 million in tax refunds.

          10   Preliminary numbers from the 2004 tax filing season   
10:31:20

          11   indicate significant growth in the commitments by

          12   Bank One volunteers.

          13            Based on the bank's proven commitment and

          14   support, the Center will be recognizing Bank One

          15   with its Corporate Leadership Award at a special      
10:31:32

          16   luncheon we're holding here on May 25th.

          17            As the possible Bank One, J. P. Morgan

          18   merger has been moving forward, the Center has

          19   received direct and forthcoming communication from

          20   the bank about its commitment to Chicago's            
10:31:44

          21   nonprofit sector, future economic development

          22   investments, and its support for free tax

          23   assistance for the working poor, not only in

          24   Chicago and throughout Illinois but in other parts

                                                                101




           1   of the country as well.

           2            We are particularly pleased by the

           3   recently announced commitment the bank has made to

           4   a financial education office in the future.

           5            The Center has also participated as a        
10:32:06

           6   member of the Chicago CRA Coalition in negotiations

           7   with J. P. Morgan Chase and Bank One and has been

           8   pleased in the "good faith" they have demonstrated

           9   in agreeing to a memorandum of understanding about

          10   CRA goals for the future with an emphasis on          
10:32:20

          11   special products for specific low-income customers

          12   as well as additional branches in low- and

          13   moderate-income communities throughout the

          14   metropolitan area and additional community grants

          15   and investments.  As director of a statewide          
10:32:32

          16   organization, I could only wish -- as director of a

          17   statewide organization, I only wish the bank would

          18   have similar memorandums of understanding for

          19   downstate Illinois cities, some of which are

          20   severely distressed.                                  
10:32:46

          21            Based on the evidence presented, the

          22   Center supports the merger from our vantage point

          23   here in Chicago.  However, we do not feel qualified

          24   to comment on the bank's overall CRA and

                                                                102




           1   fair-lending performance across the many states in

           2   which Bank One and J. P. Morgan Chase maintain a

           3   presence.  I think other people are much more

           4   equipped to testify.

           5            I want to thank everyone for the             
10:33:04

           6   opportunity to testify today.

           7       MS. BRAUNSTEIN:  Thank you, and you did beat

           8   the buzzer.  Thank you to our entire panel, and

           9   will the next panel please come forward.

          10            Welcome to our next panel.  As before,       
10:34:08

          11   please state your name and organization when you

          12   begin speaking, and please be mindful of the

          13   timekeeper.  Each speaker has five minutes.  And

          14   with that, we'll get started.

          15       MS. WILLIAMS:  Good morning.  My name is          
10:34:28

          16   Marva Williams, and I am Senior Vice President of

          17   the Woodstock Institute.

          18            The Woodstock Institute is a nonprofit

          19   located here in Chicago that is dedicated to

          20   increasing credit and capital to lower income and     
10:34:36

          21   other underserved communities.  The Woodstock

          22   Institute convenes the Chicago CRA Coalition, which

          23   is an association of about 100 community

          24   organizations throughout the Chicago region.  The

                                                                103




           1   Institute is also a member of the National

           2   Community Reinvestment Coalition, the Coalition for

           3   CDFIs, the Illinois Coalition Against Predatory

           4   Lending, and the Monsignor John Egan Campaign for

           5   Payday Reform.                                        
10:35:04

           6            As you all know, Chicago has a long

           7   history of CRA activism, and the birth of the

           8   movement was here in the city spearheaded by

           9   Gale Cincotta, and that led to the HMDA Act in 1975

          10   and to CRA in 1977.                                   
10:35:18

          11            In 1983, the first reinvestment agreements

          12   in the country were signed here in Chicago with

          13   Northern Trust, Harris, and First Bank of Chicago.

          14   Since then, there have been regular agreements as

          15   First Chicago and the successor bank, including a     
10:35:34

          16   tax breaking agreement with the Chicago CRA

          17   Coalition in 1998 on the occasion of this merger

          18   with Bank One.

          19            On hearing the news of the proposed

          20   Bank One and J. P. Morgan Chase merger, the Chicago   
10:35:46

          21   CRA Coalition approached both banks to renew that

          22   agreement which would have expired at the end of

          23   this year.  Both banks agreed to discuss their

          24   future CRA activity at a public meeting convened by

                                                                104




           1   the Coalition attended by over 100 people.

           2            The banks and the Chicago CRA Coalition

           3   have negotiated a memorandum of understanding of

           4   CRA goals for the six-county region for 2004

           5   through 2009.  In contrast to national budgets,       
10:36:18

           6   which are often nonquantifiable or tailored to meet

           7   the local needs of lower income consumers, the

           8   memorandum establishes concrete goals for home

           9   loans, small business loans, branches and lower

          10   income communities, and community development         
10:36:32

          11   grants and investments.  The bank will also provide

          12   details of any bulk purchases of mortgage loans for

          13   the purpose of improving its CRA performance so

          14   that the coalition can subtract those numbers with

          15   considering the bank's overall performance.           
10:36:48

          16            Since the living goals are based on market

          17   share ratios and since Chicago is an increasingly

          18   competitive market, the goals also include the bank

          19   aspiring to be one of the top five mortgage

          20   originators in this region.  The goals also contain   
10:37:02

          21   details including down payment assistance, a strong

          22   real estate workout unit, and the continuation of

          23   SBA loans, including the Community Express Program.

          24            Thus, Chicago CRA Coalition considers that

                                                                105




           1   the targets set in this memorandum are strong and

           2   sound and will lead to significantly increased

           3   loans, services and investments.  We do not,

           4   however, agree on everything, and we will continue

           5   to discuss with the bank its involvement in payday    
10:37:32

           6   lending, offering of refund anticipation loans, and

           7   the way in which the bank performs due diligence on

           8   warehouse and trustee loans.

           9            We are pleased with the goals set out in

          10   the memorandum of understanding; however, we regret   
10:37:48

          11   that the bank did not enter similar discussions

          12   with community stakeholders and other markets.  In

          13   our view, such local specific goals increase CRA

          14   activity, a view supported by a recent study by the

          15   Joint Center for Housing Studies at Harvard.          
10:38:06

          16            I would also like to add that we regret

          17   that the Federal Reserve Board and other bank

          18   regulators do not consider bank performance in

          19   relation to CRA agreements and exams.  It is

          20   interesting that the regulatory agencies also         
10:38:18

          21   complain about the girth of community input on CRA

          22   examinations.  Yet, regulators will not consider

          23   agreements based on considerable community input

          24   that very much reflect local conditions and needs.

                                                                106




           1            The Chicago CRA Coalition and the

           2   Woodstock Institute very much welcome our

           3   memorandum of understanding.  However, the

           4   Coalition neither supports nor opposes the merger.

           5   Large bank holding companies are very complex         
10:38:44

           6   organizations and are involved in a multiplicity of

           7   activities that impact lower income communities.

           8   The Chicago CRA Coalition nor the Woodstock

           9   Institute cannot possibly examine all of the

          10   activities of the largest banks and, therefore,       
10:39:00

          11   cannot comment on the merger application.

          12            I appreciate the opportunity to testify at

          13   this hearing.  I think that the Federal Reserve and

          14   other regulator hearings for bank mergers and

          15   acquisitions are very important, and I thank you      
10:39:14

          16   for the opportunity.

          17       MS. BRAUNSTEIN:  Thank you.  Bruce?

          18       MR. GOTTSCHALL:  Good morning.  My name is

          19   Bruce Gotschall.  I'm the Executive Director of the

          20   Neighborhood Housing Services of Chicago.  Thank      
10:39:24

          21   you for the opportunity this morning to be able to

          22   comment on the merger and be here this morning.

          23            NHS has had a strong partnership with

          24   Bank One for more than 25 years, and I would like

                                                                107




           1   to outline some of the highlights.

           2            Bank One has been a substantial investor

           3   in NHS in the Chicago neighborhoods.  They have

           4   been a significant investor in NHS's Chicago Family

           5   Housing Fund, helping families become homeowners      
10:39:48

           6   and in providing purchase rehab financing for new

           7   homebuyers.  In addition, they have invested in the

           8   NHS NORMAL Loan Fund to refinance borrowers from

           9   problem predatory and subprime loans.  Most

          10   recently, Bank One made a $9 million investment to    
10:40:04

          11   NHS of Chicago $100 million community development

          12   loan fund.

          13            In addition, Bank One employees

          14   participate on NHS boards both at the city-wide

          15   level and our neighborhood offices and on the NHS     
10:40:16

          16   Redevelopment Corporation.  NHS provides homebuyer

          17   education for Bank One employees in the bank's

          18   Employer-Assisted Housing Program; and, last year,

          19   NHS of Chicago provided education and counseling

          20   for more than 50 Bank One borrowers.                  
10:40:32

          21            NHS refers counseled and prepared

          22   potential borrowers to Bank One for lending as part

          23   of the Employer-Assisted Housing Program of the

          24   University of Chicago and the University of Chicago

                                                                108




           1   Hospitals, the North Lawndale IDA program and the

           2   Section 8 "Choose to Own" program.  And very

           3   importantly, Bank One has helped NHS's mission

           4   through generous contributions to its general

           5   operations as well as by funds to match the Steans    
10:40:58

           6   Family Foundation for the NHS activities in the

           7   North Lawndale neighborhood.

           8            NHS appreciates the strong partnership

           9   relationship it has with Bank One.  The local

          10   presence, market understanding and commitment have    
10:41:12

          11   been important to that partnership.  Community

          12   development lending and investment require this

          13   commitment and capacity, and we hope for a strong

          14   continuation of this presence.

          15            Our hope is that the partnership with NHS    
10:41:22

          16   of Chicago and Chicago's neighborhoods will grow as

          17   J. P. Morgan Chase and Bank One Corporation merge

          18   into a new enterprise.

          19            I would like to emphasize an issue of

          20   great importance to the neighborhoods of the City     
10:41:36

          21   of Chicago and to NHS.  That issue is the high

          22   foreclosure rate that threatens to undo the home

          23   ownership and community development gains made over

          24   the last several years and threatens to destabilize

                                                                109




           1   the city's low- and moderate-income neighborhoods.

           2            Foreclosures in Chicago are huge.  In 2002

           3   alone, 9,427 foreclosures were initiated, which is

           4   up 91 percent from 1993.  A vast majority of these

           5   foreclosures are concentrated in low- and             
10:42:06

           6   moderate-income neighborhoods.  Both J. P. Morgan

           7   Chase and Bank One, in their origination loan

           8   servicing and trustee capacities, have a major

           9   presence in the financial transactions that provide

          10   the capital for many of these loans that make up      
10:42:20

          11   the high foreclosure statistics.

          12            The City of Chicago, in partnership with

          13   NHS's Home Ownership Preservation Initiative,

          14   recently unveiled an innovative program that allows

          15   Chicago residents to call the City's 311              
10:42:32

          16   nonemergency number for help at the first sign of

          17   mortgage delinquency.  At a press conference last

          18   month, Mayor Daley stated, "Foreclosures can

          19   devastate neighborhoods . . . Just one or two

          20   vacant, boarded-up houses can send a residential      
10:42:48

          21   block on a downhill spiral.  So we are making it as

          22   easy as possible for families to get help."

          23            We are glad to say that Bank One and

          24   J. P. Morgan Chase are already participating as

                                                                110




           1   part of this Home Ownership Preservation

           2   Initiative.  In fact, they have been some of the

           3   first to work at special loss mitigation efforts to

           4   save families from foreclosure and have provided

           5   foreclosed buildings to NHS of Chicago for rehab      
10:43:14

           6   and resale to homeowners.

           7            But foreclosure is a significant and

           8   complex issue that requires ongoing collaboration

           9   and innovation on the part of major players in the

          10   mortgage servicing industry.  J. P. Morgan            
10:43:26

          11   Chase/Bank One can act as a model by providing

          12   high-level decision-making authority, resource

          13   commitment and local staffing dedicated to the

          14   issues of foreclosure prevention through loss

          15   mitigation and responsible REO disposition.  We       
10:43:42

          16   need J. P. Morgan Chase and Bank One's help and

          17   expanded partnership to stem the negative impact of

          18   foreclosures on neighborhoods and families.

          19            We are extremely glad to hear of the Home

          20   Ownership Preservation office announced last week     
10:43:56

          21   by J. P. Morgan Chase and Bank One.  We look

          22   forward to working with the new enterprise to

          23   increase the effort to help people and to keep

          24   people in their homes whenever possible and

                                                                111




           1   disposing of foreclosed properties responsibly.  An

           2   increased level of partnership would represent a

           3   value added to both Chicago's neighborhoods and

           4   J. P. Morgan Chase/Bank One.

           5            Thank you very much for the time.            
10:44:22

           6       MS. BRAUNSTEIN:  Thank you.

           7       MS. BOOKER:  Good morning.  I'm Jan Booker, and

           8   I'm a retired teacher and a long-time ACORN leader

           9   from North Lawndale.  This morning, I thank you for

          10   the opportunity to speak.  I'm taking Mary Hollis's   
10:44:36

          11   place.  She's with housing at the ACORN.

          12            ACORN is the nation's largest community

          13   organization of low- and moderate-income families

          14   with over 150,000 member families organized in more

          15   than 60 cities across the country.  In the late       
10:44:52

          16   '70s in St. Louis, Missouri, ACORN filed the first

          17   protest against the Community Reinvestment Act.

          18   Since then, we have developed CRA partnerships with

          19   dozens of lenders throughout the United States.

          20   These partnerships have delivered billions of         
10:45:08

          21   dollars to underserved communities.

          22            ACORN has been in productive discussions

          23   with the senior management of J. P. Morgan Chase

          24   and Bank One for the past two months.  We have good

                                                                112




           1   things to say about the opportunities created by

           2   this proposed merger.  The bottom line is that

           3   Chase and Bank One are looking at community-based

           4   organizations as the way to deliver credit to

           5   underserved communities.                              
10:45:34

           6            We do have two areas of concern that we

           7   are still discussing with the bank.  One of these

           8   areas is the Refund Anticipation Loans.  These are

           9   expensive loans supplied through tax preparation

          10   offices based on tax refunds and earned income tax    
10:45:48

          11   credits.  Low-income working families lose hundreds

          12   of millions a year to these loans, even though tax

          13   filers can get their refunds deposited in their

          14   accounts in ten days to two weeks without paying

          15   anything extra.  As we began these discussions,       
10:46:04

          16   Bank One has heard our concerns in this area, and

          17   we hope that we will be able to make progress on

          18   these concerns.

          19            We have been in discussions with Chase on

          20   their best practices with regard to subprime loans.   
10:46:14

          21   There are some elements of their best practices

          22   that we think are very good, like the fact that

          23   they do not sell any add-on products like credit

          24   insurance or auto security plans with their

                                                                113




           1   subprime loans; also the fact that they do not have

           2   mandatory arbitration clauses; and the fact that

           3   they have a policy requiring net benefit to the

           4   borrower.  There are other areas where we think

           5   they should do better with their best practice        
10:46:44

           6   standards needs.  Okay.  They need to have these

           7   clear limits, but Chase on these limits are silent.

           8            For example, they continue to sell

           9   pre-payment penalties which extend up to five

          10   years, and it has not followed the example of some    
10:47:02

          11   other lenders which limit total points and fees on

          12   subprime loans to 3 percent.  In this area, we

          13   expect to continue talking with them and hope to

          14   make further progress on these concerns.

          15            Our communities need more investment         
10:47:16

          16   capital.  We want to recognize that the Bank One

          17   and Chase leadership have stepped forward to make

          18   funds available and to expand their support and use

          19   of community-based organizations.  We at ACORN will

          20   continue to push for more mortgage lending for our    
10:47:32

          21   neighborhoods and more housing that our people can

          22   afford.  Chase and Bank One have shown that they

          23   are going to be part of this push, too, and we

          24   thank them for that.

                                                                114




           1       MS. BRAUNSTEIN:  Thank you.

           2       MR. SHALLOO:  My name is Marty Shalloo, and I

           3   am the Director of Development at ACORN Housing.

           4            ACORN housing is an 18-year-old

           5   organization established to build and preserve        
10:47:58

           6   affordable housing.  Since its inception, we

           7   assisted over 55,000 families to become first-time

           8   homeowners and have built or rehabilitated over

           9   900 housing units.  We thank the Board for holding

          10   these public hearings and providing us with an        
10:48:16

          11   opportunity to express our views.

          12            ACORN housing has had a long relationship

          13   with Chase.  It has provided innovative products

          14   and projects.  They were one of the first banks to

          15   develop a multi-state lending and counseling          
10:48:32

          16   program with ACORN housing.  Unlike other banks,

          17   they apply the same mortgage program to both the

          18   bank and the mortgage company products.  And in

          19   New York, Chase's community development team has

          20   financed many of our development ventures.            
10:48:46

          21            We're pleased to see that the bank is


          22   planning to launch an ambitious mortgage program

          23   for low- and moderate-income in minority

          24   communities.  This program will incorporate the

                                                                115




           1   strengths of community-based organizations and

           2   housing counseling organizations.  The underwriting

           3   will be responsive to the needs of qualified

           4   underserved borrowers.  The product will reflect

           5   the housing stock of urban America, including         
10:49:14

           6   single-family, two- and three-unit

           7   homeowner-occupied houses, condominiums and co-ops.

           8   The program will benefit first-time borrowers and

           9   breaks new ground on immigrant and low-income

          10   borrower credit issues.                               
10:49:30

          11            The program will also benefit existing

          12   homeowners in older urban areas.  They will have

          13   access to affordably priced refinance mortgages,

          14   both for rate reduction and for debt consolidation

          15   and home repair.  These loans allow prime borrowers   
10:49:44

          16   to access more of their equity without paying an

          17   interest premium.

          18            In the past, mortgage lenders have left

          19   these higher LTV debt consolidation loans, even

          20   those to prime borrowers to the subprime lenders      
10:49:58

          21   which ate up the home equity with fees and with

          22   higher interest rates.  The new product would allow

          23   qualified homeowners to tap their home equity for

          24   long-term expenses by working with trained housing

                                                                116




           1   counselors to manage these expenses.  This will

           2   fill a major gap in the urban credit marketplace

           3   and establish an affordable alternative to

           4   predatory lenders.

           5            The bank and ACORN Housing are continuing    
10:50:26

           6   to work toward a top-notch subprime product that

           7   will benefit low- and moderate-income and minority

           8   borrowers.  This product will have loan-to-values

           9   up to 95 percent in affordable pricing.

          10            Although our discussions are far from        
10:50:42

          11   complete, Chase has engaged in good faith, and it

          12   is our expectation that they will reach a

          13   satisfactory conclusion.

          14            Putting the Chase community development

          15   team in front and letting them drive the affordable   
10:50:56

          16   housing development financing answered one of the

          17   concerns we had about the merger.  To increase the

          18   stock of affordable housing, the critical need in

          19   all of our cities, the bank will expand the highly

          20   successful New York City based Recoverable Grant      
10:51:12

          21   Program and other development financing programs

          22   into other bank cities.  For years, the Recoverable

          23   Grant Program has provided flexible funds that have

          24   been critical to the success of our New York

                                                                117




           1   project.

           2            We applaud the Chase J. P. Morgan team for

           3   expanding both the geographical reach of this

           4   program and for key underwriting changes that will

           5   enable the funds to be used for additional uses.      
10:51:34

           6   We also look forward to the bank providing much

           7   needed development capital through equity

           8   investments and tax credit purchases.

           9            Chase has been a value partner in our

          10   development and home finance work for many years.     
10:51:50

          11   We look for Chase to continue to provide financing

          12   for affordable housing development opportunities

          13   and to provide affordable mortgages for low- and

          14   moderate-income borrowers we work with.  Thank you.

          15       MS. BRAUNSTEIN:  Thank you.                       
10:52:04

          16       MR. GORDON:  Hi.  My name is Andy Gordon, and

          17   I'm President and CXO -- that's Chief Xeroxing

          18   Officer -- of the Arizona MultiBank Community

          19   Development Corporation.  I appreciate the Federal

          20   Reserve Bank of Chicago holding this public           
10:52:22

          21   meeting.

          22            I want to take this opportunity to bring

          23   to your attention Bank One's tremendous leadership

          24   in creating and supporting Arizona MultiBank.

                                                                118




           1   Arizona MultiBank does not take exception to the

           2   proposed merger; and, as you will hear, we have

           3   benefited for over a decade from Bank One's strong

           4   commitment to addressing credit needs in the

           5   community that are legitimate but undermet by         
10:52:40

           6   traditional banks.

           7            Bank One's commitment to Arizona

           8   MultiBank's efforts in the enterprise community

           9   development finance is above and beyond its

          10   substantial $3 million share of our initial           
10:52:52

          11   capitalization of $10.4 million.  Furthermore, I

          12   have seen over the years Bank One play a

          13   significant role in a wide variety of important

          14   community development initiatives and forge

          15   meaningful partnerships in our community.             
10:53:06

          16            By way of background, Arizona MultiBank is

          17   a nonprofit corporation certified by the Department

          18   of Treasury as a CDFI.  It provides financing to

          19   small businesses, affordable housing projects,

          20   nonprofit organizations, and economic development     
10:53:20

          21   initiatives.  Our first loan was the development of

          22   a then-only residential facility in Arizona to

          23   serve homeless families, and we partnered with

          24   Bank One to fund the acquisition and renovation of

                                                                119




           1   this multi-family complex and day-care facility.

           2            Since, Arizona MultiBank has provided

           3   $25 million to over 300 projects throughout the

           4   State of Arizona.  When combined, the senior debt

           5   provided by the banks and equity funded by            
10:53:44

           6   borrowers, nearly $100 million have been invested

           7   in these community development projects.  Arizona

           8   MultiBank's loans have ranged from $500 to

           9   $800,000.  15 percent of the dollars have gone to

          10   affordable housing projects; 31 percent to            
10:54:02

          11   nonprofits; and over half to small businesses.

          12   Two-thirds of the small business loans have been to

          13   women- and minority-owned managed firms; and

          14   three-quarters of the loans are less than $50,000.

          15            In the beginning, Bank One almost            
10:54:18

          16   singularly led the conceptualization of development

          17   of Arizona MultiBank and, along with the Arizona

          18   Bankers Association, pioneered its equity

          19   equivalent capitalization.  That, to this day,

          20   provides the financial muscle and stability           
10:54:32

          21   necessary for us to be effective in our line of

          22   work over the long term.

          23            MultiBank's board is proactive without

          24   being reactive.  And Bank One has always been there

                                                                120




           1   to expand MultiBank's financial products in order

           2   to address and reach undermet needs in the

           3   community.  Bank One has been there to work with us

           4   on a range of important projects from the

           5   construction of the largest Boys and Girls Club in    
10:54:56

           6   Arizona to financing a start-up lemonade vendor at

           7   the Diamondback's new baseball stadium to the

           8   development of single-family residents of hundreds

           9   of families of migrant farm workers in the Mexican

          10   border community of San Luis to the funding of the    
10:55:10

          11   first SBA licensed small business investment

          12   company that had a new market emphasis.  Bank One

          13   was there and is the largest bank in Arizona and

          14   I'm confident it will continue to be there.

          15            We are counting on their commitment to       
10:55:24

          16   MultiBank and the community; and, together with

          17   Bank One and our other financial community

          18   partners, we will grow and do more for the people

          19   and the economy of Arizona.

          20            Arizona is more than sunshine, great         
10:55:34

          21   weather, the Grand Canyon, wealthy retirement

          22   communities, and Cubs' fans.  Also, it's one of the

          23   widest gaps between the rich and the poor, and our

          24   brand of community development finance serves as an

                                                                121




           1   economic engine to help again to build wealth for

           2   small business owners, families and communities.

           3            There's much to be done in Arizona.  We

           4   will have new opportunities to partner with Bank

           5   One, J. P. Morgan Chase, and we will be as            
10:55:58

           6   successful as our collective strength.

           7            The credit culture of community

           8   development is one of disciplined flexibility.  In

           9   my experience, the most successful banks in the

          10   area of community development in Arizona have been    
10:56:10

          11   those that have a specialized credit chain with

          12   seasoned community development lenders working

          13   locally and relying on their relationships and

          14   market instincts to seize upon opportunities and

          15   support projects that are not only important to       
10:56:24

          16   themselves but are important as building blocks for

          17   scaleable impact and systemic change in the way

          18   capital reaches low- and moderate-income persons

          19   and communities.

          20            The credit decisions that are made locally   
10:56:34

          21   tend to be timely, responsive, and push the

          22   envelope without compromising the credit quality.

          23   Bank One community development lenders have

          24   effectively utilized Arizona MultiBank to help

                                                                122




           1   mitigate the financial risk of these kind of deals,

           2   to spread the expense of high-touched due diligence

           3   and administration and to provide concentrated and

           4   complimentary expertise in the area of community

           5   development and finance.                              
10:56:58

           6            It is important to build on our successes,

           7   accelerate our impact, and it looks like the

           8   announced $800 billion commitment of the merge

           9   banks provides a framework for that to happen soon

          10   in Arizona.  Overall, Bank One -- is good.            
10:57:10

          11       MS. BRAUNSTEIN:  Nice wrap-up.  Thank you.

          12       MR. GORDON:  Does anybody want to yield their

          13   time to me?

          14       MS. LANGENDORF:  Good morning.  My name is

          15   Jean Langendorf, and I serve as Executive Director    
10:57:32

          16   of the United Cerebral Palsy of Texas, or UCP

          17   Texas.

          18            UCP Texas serves as the lead agency for

          19   the Texas Home of Your Own, HOYO, Coalition, a

          20   private -- public private partnership designed to     
10:57:44

          21   provide home ownership opportunities to Texans with

          22   disabilities.  I'm here today to speak to you about

          23   the partnership UCP Texas has had with Bank One

          24   over the past five years.

                                                                123




           1            Bank One Texas continues to demonstrate

           2   its corporate citizenship and support for improving

           3   the quality of life for people with disabilities as

           4   a major partner in the Texas HOYO Coalition.  Texas

           5   leads the nation in the number of people who reside   
10:58:08

           6   in state-run institutions, group homes, nursing

           7   homes, and similar settings.  Because of a critical

           8   shortage of affordable and accessible housing in

           9   our state, UCP Texas formed the Home of your Own

          10   Coalition in 1995 as a collective effort to           
10:58:20

          11   increase housing options for people with

          12   disabilities who want to live in the community.

          13            Today, the Coalition comprised with

          14   disability and advocacy organizations, state and

          15   local service providers, state agencies, community    
10:58:34

          16   groups, statewide lending organizations and others

          17   is recognized nationally as a model home ownership

          18   program used by people with disabilities.

          19            The road to owning a home can be a

          20   challenge for anybody, but it can be especially       
10:58:46

          21   difficult for people with disabilities who often

          22   have a limited income and high disability-related

          23   expenses.  However, some of the biggest obstacles

          24   have less to do with finances than they do with

                                                                124




           1   stereotypes and attitudes about where and how

           2   people with disabilities should live.

           3            Bank One Texas has always viewed people

           4   with disabilities who seek home ownership as a

           5   valued customer market.  Bank One Texas has stepped   
10:59:14

           6   forward with some financial contributions that are

           7   used for direct services and empathy to address the

           8   housing and home-buying needs of people with

           9   disabilities in Texas.  Their investment in UCP's

          10   mission allows us to continue developing innovative   
10:59:28

          11   programs, keeping us on the cutting edge of an

          12   ever-changing disability services field.

          13            Bank One's support has provided the

          14   resources to publish information for people with

          15   disabilities, like the resource guide I have          
10:59:40

          16   distributed with this testimony, and I provided you

          17   all with copies.

          18            It hasn't just been about funding support.

          19   It's about having Bank One representatives in the

          20   community where we work to call and provide           
10:59:54

          21   guidance.  It's dedicated positive Bank One

          22   employees like Dave Woods, Steve Stokes,

          23   Shirley Penn and Sophie Guerra who make an

          24   important difference in our ability to serve and

                                                                125




           1   provide housing opportunities to people with

           2   disabilities in Texas.

           3            Bank One Texas was selected as the

           4   recipient of the UCP Texas 2002 Tribute Award for

           5   outstanding corporate support of UCP programs and     
11:00:16

           6   services.  The UCP Texas Annual Tribute Award

           7   recognizes and honors volunteers, corporate

           8   sponsors and other partners that have excelled in

           9   their contribution to advance the mission of United

          10   Cerebral Palsy of Texas.                              
11:00:30

          11            We appreciate the partnerships we've had

          12   with Bank One and we will look forward to working

          13   together in the future.  We have not had the

          14   opportunity to have a partnership with Chase, and

          15   we hope with perhaps the merger that can open up      
11:00:42

          16   some additional doors.

          17            We wanted to bring to the attention of the

          18   Federal Reserve Bank and others about this

          19   population and the need for programs to address the

          20   home ownership options and regular housing options    
11:00:56

          21   for people with disabilities in an integrated

          22   community.

          23            Thank you, and I will be happy to answer

          24   any questions.

                                                                126




           1       MS. BRAUNSTEIN:  Thank you very much.  Thank

           2   you to the entire panel.  Before starting the next

           3   panel, we are going to take a short break.  We'll

           4   take a ten-minute break until ten after 11.  11:10

           5   we will reconvene.                                    
11:01:20

           6                        (Recess taken.)

           7       MS. BRAUNSTEIN:  I would like to get started

           8   with the next panel.  I think what we'll do is get

           9   started with Mr. Taft, and then we can always

          10   backtrack when our other panelists show up.           
11:14:08

          11            Again, just to state the ground rules,

          12   please keep your eye on the timekeeper.  Five

          13   minutes per speaker.  And state your name and

          14   organization at the beginning of your statement.

          15   Thank you.                                            
11:14:20

          16       MR. TAFT:  My name is Bill Taft.  I'm the

          17   President of Southeast Neighborhood Development,

          18   which is a neighborhood-based community development

          19   corporation serving the near southeast area of

          20   Indianapolis.                                         
11:14:34

          21            I'm here to talk about the relationship

          22   that we have had with Bank One over the past, more

          23   than a decade, and what a positive impact that has

          24   made in our community.

                                                                127




           1            Our organization is, as I said, a

           2   nonprofit neighborhood-based organization where

           3   people in the community determine the priorities

           4   for neighborhood revitalization.  We have been

           5   involved in affordable housing development,           
11:15:00

           6   commercial revitalization, public space

           7   development, neighborhood planning and, ultimately,

           8   have invested more than $30 million into the

           9   community through many small projects.

          10            Over the past 15 years, we have actually     
11:15:12

          11   been working with Bank One and its predecessor

          12   banks in various kinds of neighborhood development

          13   work.  The one project of note was our first large

          14   project we did as an organization which was the

          15   Fountain Block Building.  Bank One and a couple of    
11:15:28

          16   other banks partnered to provide the first mortgage

          17   on this renovation of the historic building into

          18   apartments for low-income senior citizens and a

          19   public library branch.

          20            They also were brave enough to be partners   
11:15:40

          21   with us in the revitalization of an old theater

          22   building that had sat vacant for many years, the

          23   public Fountain Square Theater building, where a

          24   limited liability corporation of our organization

                                                                128




           1   and a neighborhood entrepreneur came together to

           2   revitalize a 1920s theater building into a

           3   mixed-use project that has been very successful,

           4   and the bank was our partner in that project

           5   providing a first mortgage.                           
11:16:10

           6            Also the bank has provided financing for

           7   many people to purchase homes from our organization

           8   as well as other buyers in our community.  This has

           9   been both through being part of a loan pool through

          10   the Indianapolis Neighborhood Housing Partnership,    
11:16:24

          11   one of our neighborhood partners that works

          12   citywide, as well as direct loans from people who

          13   are purchasing homes from us.

          14            And also they have been very responsive to

          15   our desires to reach out in very creative ways in     
11:16:36

          16   our neighborhood to low-income renters and get the

          17   message out about how they can become homeowners,

          18   and they have been very supportive of those efforts

          19   as well as both financially and with many

          20   volunteers.                                           
11:16:50

          21            A key area with the bank that has been a

          22   supporter of our organization and partner really is

          23   through providing lines of credit for our home

          24   ownership development efforts.  We have purchased,

                                                                129




           1   rehabbed and sold more than 100 homes in our

           2   neighborhood; and the bank has, at various times,

           3   had a line of credit with us between 100 and

           4   $400,000 that has been a key piece of working

           5   capital to allow us to keep that effort going.        
11:17:16

           6   Again, it's a relatively small but very sustained

           7   effort.  It has made a big difference in the home

           8   ownership market in our neighborhood.

           9            The bank has also been a very responsive

          10   partner in the sense it has been our banker for our   
11:17:30

          11   organization's accounts and also providing

          12   volunteers and other types of sort of great

          13   personal support and advice.  It has some great

          14   local staff who have been very supportive of our

          15   organization in many intangible ways as well.         
11:17:46

          16            I'm not really qualified to comment on the

          17   business aspects of this merger, but I have been

          18   through two previous mergers of basically what

          19   started out as Indiana National Bank and then NBD

          20   and then Bank One and really ended up working with    
11:18:02

          21   the same people throughout all those three steps;

          22   and I guess that experience makes me feel very

          23   comfortable moving forward with this merger and

          24   that we will continue to have these relationships

                                                                130




           1   with the bank because of this sort of a track

           2   record and the history through these previous

           3   experiences.

           4            In these previous mergers, we continued to

           5   have excellent local staff who cared about            
11:18:28

           6   community development and who are partners who are

           7   willing to take risks and working with us.  We had

           8   our projects continue to move smoothly during these

           9   times.  The partnerships were maintained, both

          10   those tangible project-related partnerships, but      
11:18:44

          11   also the volunteer relationships; and we have also

          12   just seen them continue to be an important part of

          13   the community that's focused on neighborhood

          14   development in the city.

          15            So just to conclude, we have -- again,       
11:19:00

          16   while there are many aspects of this merger that I

          17   don't feel qualified to speak to, I do feel

          18   qualified to speak to the kinds of relationships

          19   and partnerships that we had at the local community

          20   level and what a difference it has made in our        
11:19:16

          21   neighborhood through the years, and I am confident

          22   that will continue to be true.  Thank you.

          23       MS. BRAUNSTEIN:  Thank you.  Ms. Prychaud,

          24   we'll come back to you.

                                                                131




           1       MS. PRYCHAUD:  Good morning.  I would like to

           2   first thank the Federal Reserve for providing the

           3   opportunity for me to be here and to share with you

           4   the kinds of experiences that I have had in working

           5   with Bank One.  I confess to you as well that I was   
11:19:38

           6   here sitting somewhere at this table when the

           7   Bank One merger happened several years ago.

           8            I'm Rosalind Prychaud, and I'm the

           9   Executive Director of the Neighborhood Development

          10   Foundation.  And as Director, I would be remiss if    
11:19:54

          11   I didn't pass that information to you to tell you

          12   how wonderful we are, how good we are at producing

          13   outcomes.  So I have made sure that you have that

          14   information.

          15            In the efforts my organization has           
11:20:06

          16   referred to, it is a nonprofit 501(c)(3)

          17   organization that was established in September

          18   1986.  Our mission is to educate and assist

          19   low-income families to achieve home ownership.  We

          20   are HUD-approved, the housing counseling agency.      
11:20:20


          21   Our 12-hour curriculum is approved by Fannie Mae

          22   and Freddie Mac, area lenders, local and state

          23   housing finance agencies.  We have had an

          24   independent audit done every year and we're clean.

                                                                132




           1            Since 1986, we have assisted 2300 families

           2   to purchase their first home.  This number

           3   represents over $113 million in permanent

           4   financing.  We work hard to prepare our clients to

           5   achieve and sustain home ownership.  Our record of    
11:20:50

           6   two foreclosures is also an indication of the

           7   success and quality of the program that we provide.

           8   Our services include homebuyer training, financial

           9   fitness, landlording, and homebuyer advocacy.

          10            I'm here today because I want you to know    
11:21:08

          11   that Bank One is a good partner and that we're

          12   proud to have them as one of our partners.

          13   Louisiana continues to serve the low- and

          14   moderate-income families; and, as we do that, we

          15   need good corporate partners of which Bank One has    
11:21:22

          16   been for quite some time.

          17            Bank One supported this demonstrating, not

          18   only in the form of improving and providing quality

          19   -- I mean, operating dollars, but people resources

          20   as well.  Lazelle Scott has been an active            
11:21:36

          21   participant in the Neighborhood Development

          22   Foundation, serves on our board.  They provide

          23   volunteer assistance and technical assistance when

          24   we need it.

                                                                133




           1            We believe that the merger will increase

           2   our capacity to have access to resources, and

           3   that's very important when you are working in the

           4   lower income market.

           5            I have learned a lot of things here          
11:21:56

           6   recently about J. P. Morgan Chase that I did not

           7   know.  You're not far enough down south where I am,

           8   so I have not been able to take advantage of any of

           9   the benefits that you bring.  So I am looking

          10   forward to the expansion.                             
11:22:08

          11            I understand that J. P. Morgan Chase has

          12   demonstrated commitment in providing mortgage

          13   products that will serve my clients.  I understand

          14   that J. P. Morgan Chase has an organization that

          15   has the sensitivity to working with low-income        
11:22:22

          16   clients.  I also understand from Mark Willis that

          17   the underwriters for J. P. Morgan Chase will be

          18   accessible, and they, too, have experience with

          19   underwriting mortgages, mortgage loans for the low-

          20   and moderate-income families.  That's important to    
11:22:38

          21   us.  That's important for what we do.

          22            You see, the organization -- the

          23   origination of underwriting of affordable mortgage

          24   loans will make the difference in whether poor

                                                                134




           1   people will have the opportunity to achieve their

           2   American dream.  This merger will give J. P. Morgan

           3   Chase a presence in Louisiana.  The merger will

           4   expand mortgage opportunities for low- and

           5   moderate-income families in our area.  So we          
11:23:02

           6   welcome it.

           7            In Louisiana you all give us a lot of

           8   credit for a lot of different things.  We have an

           9   open-door policy.  We're not all about partying.

          10   We need to have this kind of corporate expansion in   
11:23:12

          11   our area so that we can better serve our people.

          12            Thank you again for the opportunity to

          13   come before you and share my experiences with

          14   Bank One and encourage you and ask you to support

          15   the merger.                                           
11:23:26

          16       MS. BRAUNSTEIN:  Thank you.

          17       MR. FAFOGLIA:  My name is Ron Fafoglia, and I

          18   am the Executive Director of TSP Hope.

          19            First, I'd like to thank the Federal

          20   Reserve Board for allowing me to have the             
11:23:38

          21   opportunity to testify on behalf of the merger

          22   between J. P. Morgan Chase and Bank One.

          23            TSP Hope is a not-for-profit and

          24   affordable housing developer in Springfield,

                                                                135




           1   Illinois.  Our organization was started in 1999 in

           2   response to the need for safe, affordable and

           3   decent ownership-type housing.  The residents of

           4   the area that we serve compromise 30 percent -- or

           5   comprise 30 percent of our board of directors, and    
11:24:04

           6   they have been instrumental in the development of

           7   our policies and procedures.

           8            The area in Springfield in which we work

           9   is the most depressed area of the city.  When we

          10   started our agency, the rental rate in our            
11:24:14

          11   neighborhoods was over 80 percent.  Drug houses

          12   were common.  Trash littered the streets and the

          13   alleys.  There were many vacant and boarded-up

          14   houses; and even the houses that were occupied,

          15   with rare exception, were substandard housing.        
11:24:28

          16            After several meetings with the residents

          17   of the area, it was determined that an effective

          18   method to improve the quality of life in these

          19   neighborhoods was to improve the

          20   homeowner-to-renter ratio.                            
11:24:44

          21            Hope not only does rehabilitation of

          22   existing homes, where possible, and construction of

          23   high-quality homes where rehab is not possible, we

          24   are also attempting the homebuyer to become a

                                                                136




           1   successful homeowner through education.  Hope

           2   provides at no cost credit counseling, and we are

           3   also a HUD counseling agency; money management

           4   classes and extensive home maintenance classes.  We

           5   provide after-sale consultation and counseling,       
11:25:10

           6   also at no charge.  The new homeowners are also

           7   encouraged to become members of our neighborhood

           8   association which we also support.

           9            Bank One not only provided a line of

          10   credit to assist the start-up of TSP Hope, but they   
11:25:24

          11   also provided valuable and continue to provide

          12   valuable professional expertise regarding the

          13   housing finance aspect of our program.  They have

          14   committed funds to permanent mortgage financing.

          15   They have helped our low-income clients deal with     
11:25:38

          16   their credit issues.  They have been ready to serve

          17   whenever money problems have occurred.  And,

          18   recently, Bank One has awarded Hope a grant to help

          19   with down payment and closing costs.  Also just

          20   before I left, they also awarded -- didn't award      
11:25:54

          21   us, but they committed to financing our new office

          22   building and college classrooms that we're building

          23   in our neighborhood.

          24            TSP Hope feels that the proposed merger of

                                                                137




           1   J. P. Morgan Chase and Bank One will benefit our

           2   organization.  With the combination of these two

           3   financial institutions, we anticipate a synergy

           4   that will make available to us an even greater base

           5   of expertise, programs and financial resources.       
11:26:18

           6   The commitment to the community that these

           7   organizations have demonstrated in the past is

           8   admirable, and we are encouraged by the additional

           9   resources that will become available to us and to

          10   our constituents.                                     
11:26:30

          11            On behalf of our clients and on those who

          12   have benefited from their generosity, TSP Hope

          13   strongly supports the J. P. Morgan Chase/Bank One

          14   merger.  Thank you.

          15       MS. BRAUNSTEIN:  Thank you.                       
11:26:42

          16       MR. HENRY:  Good morning.  My name is

          17   Norman Henry, and I am President of Builders of

          18   Hope CDC in Dallas.  We're a community development

          19   corporation in the West Dallas area of Dallas,

          20   Texas.                                                
11:26:54

          21            Almost 13 years ago, I had my first

          22   experience with Bank One.  We were touring our

          23   community, which is a very low-income community,

          24   looking at the deterioration of the community.

                                                                138




           1   There were a lot of vacant houses.  Over 25 percent

           2   of the land was vacant and abandoned.  Drug dealers

           3   were everywhere.  It seemed like a hopeless

           4   situation.

           5            We asked Bank One would you partner with     
11:27:16

           6   us to help revitalize this community.  And Bank One

           7   stepped up to the table and said, yes, we will.  We

           8   went to Bank One and said, we have some unique

           9   credit needs of our homebuyers and home ownership

          10   needs, and they designed special programs to help     
11:27:32

          11   us overcome the barriers of home ownership that our

          12   families were facing.

          13            The second thing, they came to the table

          14   and said, we need to do something different.  We

          15   need to do a lease purchase program.  And we didn't   
11:27:46

          16   have the financial clout to really do a lease

          17   purchase program, but Bank One said, we'll take a

          18   chance on you and your families and make that a

          19   reality.

          20            And the third thing that happened, we were   
11:27:56

          21   able to get a construction loan to build homes in a

          22   neighborhood that had not had new homes in this

          23   area for 25 years.  There was no lending in our

          24   areas and no foreclosures in this particular area

                                                                139




           1   because the previous banking institutions had not

           2   seen the inner city as a profitable venture; but

           3   Bank One came into Texas and they came in and said,

           4   we want to make a difference in this community and

           5   we want to partner with community-based               
11:28:24

           6   organizations that are committed to making a

           7   difference.  Bank One has been a tremendous partner

           8   in revitalizing our community.

           9            I'm speaking from the heart because

          10   Bank One is an organization that has a heart.  And    
11:28:36

          11   they are about changing communities in a way that

          12   makes a difference.

          13            When we built the first home 12 years ago,

          14   we sold it for $54,000.  We basically had to give

          15   it away almost to get somebody to move to the         
11:28:50

          16   neighborhood.  But since then, 12 years now, that

          17   same home will sell for $92,000.  We have more

          18   families interested in moving to the area than we

          19   have lots and houses for sale.

          20            It's been a total transformation, and        
11:29:06

          21   Bank One was the catalyst for making that happen.

          22   They took a risk.  They took a chance on coming

          23   into an urban area and investing in that area and

          24   helping it turn around.

                                                                140




           1            So I am excited about Bank One and about

           2   the J. P. Morgan Chase partnership because Chase

           3   also helped us get started with a start-up grant,

           4   and they, too, are investing with us in this

           5   neighborhood.  And these are two caring               
11:29:30

           6   corporations that care about our communities.  And

           7   I see this as a real strength when these two can

           8   come together in a significant way to make

           9   financial resources more available to groups like

          10   ours and to neighborhoods like ours that need it      
11:29:44

          11   the most.

          12            I'd rather see Bank One merge with a

          13   caring partner like Chase than a noncaring partner

          14   because they are one of the key banking

          15   institutions in our community, and we want to make    
11:29:56

          16   sure that they partner with someone that cares as

          17   strong also.  And I believe Chase is that type of

          18   partner that will bring assets and other resources

          19   to the table to help rebuild our community.

          20            So, in conclusion, our organization and      
11:30:12

          21   our neighborhood, we strongly support this effort

          22   and we back Bank One 100 percent because of their

          23   commitment not just in words but by action in

          24   making a difference in communities like ours.

                                                                141




           1   Thank you.

           2       MS. BRAUNSTEIN:  Thank you very much.  Thanks

           3   to the panel, and will the next panel please come

           4   forward.

           5            Just so people in the audience can follow,   
11:31:00

           6   because they say you can't follow the game without

           7   a program, we've had a little bit of change in

           8   agenda, and so the panel that is listed on your

           9   agenda as Panel 7 has now become Panel 5.  So

          10   that's who's up now.                                  
11:31:20

          11            We will get started with this panel.  Just

          12   to state the ground rules one last time -- or not

          13   one last time but one time for you is that each

          14   panelist has five minutes.  There are timekeepers

          15   right there.  Please keep your eyes on those, and     
11:31:44

          16   you will see the lights as well as hear the buzzer

          17   when the time is up.  And, additionally, please

          18   state your name and organization when you begin

          19   your statement.  Thank you.

          20       MS. DRAZEK:  I am Cecelia Drazek.  I am           
11:31:58

          21   representing no one in particular except myself.

          22            Bank One and J. P. Morgan Chase propose to

          23   merge in order to better "compete" both at home and

          24   abroad.  Now that we have experienced the

                                                                142




           1   consequences of the consolidating financial

           2   services industry, we can see that "compete" is

           3   defined as "the ability to eliminate pesky rivals

           4   who may offer lower charges for services or higher

           5   interest rates on savings".                           
11:32:20

           6            To put this in perspective, the merged

           7   institution will have an asset base of

           8   $1.1 trillion.  Correct me if I'm wrong, but

           9   U.S. Treasury receipts were only about $2 trillion

          10   in 2003.                                              
11:32:32

          11            It is time to describe in plain terms the

          12   profound risks and dangers we are being asked to

          13   ignore so that a behemoth financial services

          14   company can be created.

          15            The first danger is obvious.  The heads of   
11:32:42

          16   these companies are fallible human beings.

          17   Allowing the heads of financial services companies

          18   to control such a large portion of the U.S. economy

          19   is asking for trouble.  They want to make the most

          20   money possible, and they simply cannot know           
11:32:56

          21   everything about everything.  We have seen other

          22   CEOs exhibit entirely human traits to the detriment

          23   of their companies.

          24            This merger will create an institution

                                                                143




           1   with arms in investment banking, investment

           2   management, insurance, equities and bond brokerage,

           3   government securities, mutual funds, asset and risk

           4   management, credit cards, as well as traditional

           5   retail and commercial banking.  They will do          
11:33:16

           6   business in more than 50 countries.

           7            Being human, the head of the new bank has

           8   strengths and weaknesses.  Is it possible for him

           9   to know the exact time to limit the bank's exposure

          10   to hedge funds?  Can he be sure that this is the      
11:33:28

          11   right time to buy Argentina's bonds or underwrite

          12   the next trans-Asian oil pipeline?  Is buying a

          13   German submarine company a good idea?  Is he smart

          14   enough to recognize the computer system that is

          15   beyond the reach of terrorists?                       
11:33:40

          16            He has people who do these things, you

          17   say.  Of course you're right, as long as he knows

          18   how to pick the right people and he controls his

          19   entirely human impulse to rely on people who agree

          20   with him.                                             
11:33:52

          21            One only needs to recall the failure of

          22   Long Term Capital Management with its

          23   Nobel Prize-winning geniuses literally at the helm.

          24   They only had one job:  Run a relatively small

                                                                144




           1   hedge fund.  They made a few bad decisions.  When

           2   it became clear that LTCM could collapse,

           3   Alan Greenspan himself was compelled to arrange its

           4   bail-out because its failure could bring down the

           5   entire U.S. economy.                                  
11:34:12

           6            If the CEO of this merged institution

           7   makes a few bad decisions in portions of business

           8   on LaSalle, unraveling the mistakes would

           9   dramatically affect the economy in the regions

          10   where they are dominant players as well as the        
11:34:24

          11   financial arenas in which they are playing.

          12            My second point:  Financial service

          13   companies have difficulty respecting the law.

          14   People here will mention how banks were mandated to

          15   reinvest in communities, and the communities are      
11:34:36

          16   still waiting.  However, behemoths do finance

          17   illegal SPEs of Enron and Dynergy.  Their mutual

          18   fund arms engage in illegal trading practices.

          19   Their research analysts hype the companies favored

          20   by their investment bankers or top managers.          
11:34:48

          21            Citigroup, the new entity's only rival,

          22   provides the textbook example of their difficulty

          23   with the law.  Citigroup announced the purchase of

          24   Travelers Insurance almost a year before the

                                                                145




           1   Glass-Steagall Act was repealed.  With the guidance

           2   of then-Treasury Secretary Robin Rubin, the patron

           3   saint of the consolidating financial services

           4   industry, Glass-Steagall was repealed, making the

           5   Citigroup transaction legal.                          
11:35:12

           6            Within mere months of the repeal,

           7   St. Robert Rubin left the Clinton Administration to

           8   join Citigroup.  I imagine that he had some input

           9   into writing the rules that govern the industry

          10   today.  Normally rules are written into the law,      
11:35:24

          11   but rules governing financial services were written

          12   after this law was passed with the assistance of

          13   the industry.

          14            Point 3:  Behemoths are beyond regulation.

          15   They control too much of the economy for the          
11:35:34

          16   government to do much more than nibble around the

          17   edges of their business activities.  In a very real

          18   sense, the concept of too big to fail is no longer

          19   the question.  If one of these behemoths has a

          20   problem, the general public will probably never       
11:35:48

          21   know.  The behemoths have unlimited access to the

          22   highest powers in government who realize the

          23   importance of the perception that American banking

          24   is sound and healthy.  My guess is that heaven and

                                                                146




           1   earth will be moved to ensure that problems are

           2   solved without becoming public.

           3            Point 4:  The behemoth is simply not good

           4   for the vast majority of consumers.  People here

           5   will detail horror stories on individual retail       
11:36:10

           6   banking.  Small business is uniquely dependent upon

           7   traditional banking for working capital.

           8            The FDIC reports that commercial lending

           9   dropped from $50 billion in 2001 to $39 billion in

          10   2003.  Banks do not like to lend when rates are       
11:36:26

          11   low.  Small businesses are being denied loans for a

          12   variety of normal reasons, including stringent

          13   underwriting, credit worthiness, the demand for

          14   extreme documentation, conservative appraisals,

          15   strict and unfavorable terms, and requirements to     
11:36:38

          16   purchase other services from the bank.

          17            In a city of behemoths, small business can

          18   be strangled for capital; and, therefore, the

          19   engine of job growth is slow, unless it hits the

          20   roundhouse head on like it has in the past few        
11:36:50

          21   years.

          22            Chicago is supposed to be grateful that

          23   the merged entity is keeping its retail banking in

          24   Chicago.  I would be astounded if they moved.

                                                                147




           1   Midwesterners are known for savings and small

           2   business formation.

           3            I came here today to let you know that a

           4   few of us out here see the consolidation of

           5   financial services in the hands of a few behemoth     
11:37:10

           6   institutions as hazardous and completely

           7   preventable.  Allowing only a few hands of fallible

           8   individuals to control the flow of the nation's

           9   wealth puts at unnecessary risk the country's

          10   financial resources, the country's tax dollars, the   
11:37:24

          11   country's long-term health and stability.  Thank

          12   you.

          13       MS. BRAUNSTEIN:  Thank you.  Mr. Garcia.

          14       MR. GARCIA:  My name is Dan Garcia, and I work

          15   with the Coalition on Homelessness and Housing in     
11:37:36

          16   Ohio.  I want to take time first to thank the

          17   Federal Reserve for having me here.

          18            My primary duty is to give financial

          19   education trainings to low- and moderate-income

          20   populations across the State of Ohio.  My focus on    
11:37:48

          21   these trainings is to educate consumers about

          22   various predatory lending schemes.

          23            Since Bank One moved their corporate

          24   headquarters to Chicago several years ago, Bank One

                                                                148




           1   has essentially abandoned community development

           2   lending and investments in Ohio.  Bank One's CDC is

           3   no longer in operation in Ohio with nothing to

           4   replace this capacity.  Community development

           5   lending through Bank One has essentially dried up     
11:38:12

           6   in Ohio, as has community development investing

           7   with painfully few exceptions.  The mortgage

           8   corporation was sold off with nothing to replace

           9   this capacity.  Virtually all of the staff at

          10   Bank One with strong community development            
11:38:26

          11   connections to networks around the state has left

          12   the bank over the past several years with

          13   essentially no replacements.

          14            Bank One's past record of community

          15   development work has now ground to a virtual halt.    
11:38:36

          16   This violates the understanding and trust that

          17   existed for many years between community groups and

          18   Bank One.  In the past, community groups knew

          19   numerous community development lenders at Bank One

          20   they could call on for potential partnerships.        
11:38:48

          21   This is no longer the case.  In fact, how many

          22   community development lenders actually work for

          23   Bank One in Ohio?  Our sense is there are none.

          24            We want to see this institution make clear

                                                                149




           1   commitments to community development investing and

           2   lending.

           3            In the April 15, 2004, edition of the

           4   Columbus Dispatch, J. P. Morgan Chase spokesman

           5   Thomas Johnson said, "We do not support predatory     
11:39:14

           6   lending in any way, shape or form.  The company has

           7   procedures that prevent it from writing, buying or

           8   backing loans with these characteristics."

           9            Since I have been working with Predatory

          10   Lending in Ohio, I have talked with consumers that    
11:39:24

          11   have had loans through Chase that have had

          12   predatory characteristics in them, such as inflated

          13   appraisals.  I noticed as well that Chase shows a

          14   disregard for basic communication between

          15   themselves and the consumer.                          
11:39:38

          16            The merger application discusses how Chase

          17   has developed a "referral out" system to refer

          18   subprime applicants to prime loans in cases in

          19   which they qualify for prime loans; but the merger

          20   application does not provide numbers or percentages   
11:39:48

          21   of subprime applicants that have been referred to

          22   prime loans.

          23            Given the volume of Chase's subprime

          24   lending and its position as one of the big three

                                                                150




           1   lenders in the industry, the Federal Reserve Board

           2   must require a comprehensive series of reforms and

           3   due diligence procedures for Chase's subprime

           4   lending.  Only comprehensive reforms can assure

           5   that the bank will meet the needs of the community    
11:40:10

           6   consistent with safe and sound lending practices.

           7            Clearly, both of these institutions have a

           8   less than stellar track record in the mortgage

           9   lending area.

          10            In Cincinnati in 2002, 29.6 percent of the   
11:40:20

          11   1,172 loans made by Chase were to LMI borrowers

          12   versus 32.7 percent made by all lenders in 2002.

          13            In Columbus, 20.5 percent of Chase's

          14   1,236 loans were made to LMI borrowers versus

          15   30.3 percent to this group by all lenders.            
11:40:42

          16   9.8 percent of Chase's loans went to LMI tracts

          17   while 12.4 percent of loans by all lenders went as

          18   a whole to LMI tracts in 2002.

          19            In Dayton, 27.1 percent of the 446 loans

          20   made by Chase went to LMI borrowers while             
11:40:58

          21   33.9 percent of the loans made by all lenders went

          22   to this group in 2002.

          23            In rural Ohio, 25.6 percent of the

          24   3,923 loans made by Bank One went to LMI borrowers

                                                                151




           1   while 28 percent of all lenders' loans went to LMI

           2   borrowers.  Bank One made 10.2 percent of its loans

           3   to LMI tracts versus 12.8 by all lenders in 2002.

           4            In Ohio in 2002, Bank One made 32 percent

           5   of its 1,364 loans to LMI borrowers while all         
11:41:28

           6   lenders maybe 36.4 percent of their loans to this

           7   group.

           8            According to NCRC's Best and Worst Lenders

           9   report, in 2001, Bank One ranked 39th out of the 40

          10   top lenders in Cincinnati in percent of loans to      
11:41:44

          11   minority borrowers making 1.18 percent of its loans

          12   to this group.  Bank One ranked 26th in percent of

          13   loans to LMI borrowers and 31st in loans to female

          14   borrowers.

          15            Chase ranked 26th of 40 in loans to          
11:42:00

          16   minority borrowers.  In Cleveland, Chase made

          17   6.6 percent of its 622 loans to African-American,

          18   Hispanic borrowers versus 11.5 percent of the loans

          19   made by all lenders.  Chase made 4.7 percent of its

          20   loans to minority tracts while all lenders made       
11:42:16

          21   7.0 percent in 2002.

          22            According to NCRC's Best and Worst Lenders

          23   report, in 2001, Chase ranked 24th out of the top

          24   33 lenders in Cleveland in loans to minority

                                                                152




           1   borrowers with 6.55 percent going to this group.

           2   Chase ranked 21st in both minority denial disparity

           3   ratio, 3.38, and in percent of loans to minorities,

           4   33.38 percent.

           5            In Columbus in 2002, Bank One made           
11:42:44

           6   24.2 percent of its 330 loans to LMI borrowers,

           7   whereas all lenders made 37.0 of their loans to

           8   this group.  That's it.  Thank you.

           9       MS. BRAUNSTEIN:  Thank you.  You can submit the

          10   rest of your testimony in writing.  Thank you.        
11:43:04

          11   Mr. Davenport.

          12       MR. DAVENPORT:  Yes.  First of all, thank you

          13   very much, representatives of the Federal Reserve,

          14   for having me.  My name is Rudy Davenport, and I am

          15   President of the Springfield Branch of the NAACP,     
11:43:20

          16   and I'm also a member of the Central Illinois

          17   Organizing Project.  We have other members of the

          18   Central Organizing Project, Central Illinois

          19   Organizing Project.  I would just ask that you

          20   would stand for a minute if you happen to be in the   
11:43:36

          21   room.  Thank you very much.

          22            Are there any people from the bank here,

          23   Bank One?

          24       A VOICE:  Yes.  I testified earlier.  I have

                                                                153




           1   been here the whole day.

           2       MR. DAVENPORT:  Thank you.  I did have a

           3   handout.  It's from the NAACP with regard to the

           4   diversity report card, and that should be available

           5   to the panel, to the members.                         
11:44:04

           6            And if you'll notice on that report card,

           7   Bank One received an F.  That is the worst grade

           8   that any bank of the major banks surveyed could

           9   receive.  And with regard to diversity, I think

          10   that that attitude permeates down through the         
11:44:22

          11   organization because we see from the data that we

          12   get, especially in Springfield, that Bank One is

          13   really a company that does not value diversity or

          14   even seeing that there's a modicum couple of

          15   equality existing with regard to their operations.    
11:44:46

          16            In fact, this particular chart -- and of

          17   course the colors that I ask your direction to

          18   happens to be the red.  And the red as you can see

          19   in year 2000, it was pretty well equal to the next

          20   bar on the graphic, which is the white low-income,    
11:45:06

          21   the one to the left; and you could see where that

          22   disparity increased over 2001 where the disparity

          23   rate; that is, the loans actually given to black

          24   people of light income and qualifications were

                                                                154




           1   almost 50 percent more for the white population

           2   than it was for the black population.

           3            So these are major concerns with the

           4   NAACP.  But, again, we think that this merger is

           5   really not in the best interest when we have a bank   
11:45:46

           6   who's shown that they really do not care about

           7   making progress as far as diversity is concerned in

           8   their operations.

           9            Now Central Illinois Organizing Project,

          10   we are a part of it, that is, the NAACP, and we are   
11:46:04

          11   a faith-based community organization that

          12   represents over 20,000 families throughout Central

          13   Illinois through churches at various community

          14   organizations such as the NAACP.

          15            Bank One's history of disparity and          
11:46:22

          16   lending based on race is of great concern to us and

          17   for all of the Central Illinois community.

          18            We have tried to be good partners with

          19   Bank One.  We have tried to work with them.  In

          20   fact, we reached an agreement, a written agreement,   
11:46:42

          21   trying to get that working, but that has always

          22   become stalled.  They seem to -- when it comes to

          23   performance, they seem to be behind the curve on

          24   that.

                                                                155




           1            The data that I showed you is deplorable

           2   enough in itself, but this is in the context --

           3   that's why we need a written partnership with them

           4   as other community organizations need a written

           5   partnership with them, the one that will be in        
11:47:12

           6   force.  In fact, we would like for that written

           7   partnership to be led by someone from a team with

           8   executive authority to see that what we have --

           9   okay, first, the NAACP needs them to respond to our

          10   request for a survey.  They have ignored the NAACP    
11:47:32

          11   for two years, just in providing basic information

          12   that we ask for so that we can provide our

          13   constituents with the resource information that

          14   they so badly need to make informed decisions

          15   concerning their banking.                             
11:47:52

          16            The bank, we need them to get serious

          17   about its commitment to our communities and to come

          18   to Central Illinois so that we can work together to

          19   develop a plan and to make the partnership work.

          20   We do need that decision-maker to come.               
11:48:08

          21            I would just like to close by saying that

          22   CIOP is a part of a national coalition under the

          23   National Training and Informational Center, and

          24   that includes community organizations nationwide.

                                                                156




           1   And we expect and demand that the bank will sign

           2   partnership agreements, otherwise, we have a

           3   problem even asking for any approval of this

           4   merger.  Thank you very much.

           5       MS. BRAUNSTEIN:  Thank you.                       
11:48:38

           6       MR. HUELSKOTTER:  Thank you for letting me come

           7   here today.  I am Larry Huelskotter.  I'm a family

           8   farmer from Logan County, Illinois.  And so

           9   everyone asks, why is a farmer here on a

          10   multimillion-dollar merger?  I am here to tell you    
11:49:04

          11   why.

          12            Agriculture is the backbone of our

          13   community; and, in fact, it is by far the biggest

          14   industry and in a lot of cases the only industry in

          15   rural America.  The power and resources of            
11:49:18

          16   agriculture are just like the problems in urban

          17   America where the power and the resources are

          18   getting into the hands of only a few people.  And

          19   Bank One is helping to make this happen.

          20            Bank One operates the second largest farm    
11:49:34

          21   management group in the entire country.  And

          22   Bank One has a tremendous amount of farmland in its

          23   farm management program in our area.

          24            And what is Bank One doing with this?

                                                                157




           1   Bank One is hurting the family farmer.  How is

           2   Bank One hurting the family farmer?  They are doing

           3   it by structuring the leases so that they favor the

           4   megafarmer completely.  They are raising cash rent,

           5   which is money up front that only the megafarmer      
11:50:10

           6   can afford to pay, to operate these farms.  And the

           7   only way that the megafarmer can afford to pay

           8   these cash rents is to buy his input in large

           9   quantities.  So the megafarmer then operates enough

          10   land that he can buy his inputs in large quantities   
11:50:32

          11   and, therefore, cut the input cost.

          12            What does this do to our communities?  It

          13   bypasses all the businesses in our community that

          14   make their money serving agriculture.  They put no

          15   money into the community and they take all the        
11:50:50

          16   money out.  So actually Bank One is helping the

          17   megafarmer take the biggest natural resource in our

          18   community and are taking it right away from our

          19   community.

          20            One of the things that has happened is       
11:51:06

          21   that we had a third-generation farmer.  These

          22   people have been farming this farm for three

          23   generations.  Bank One had managed this farm for a

          24   long time.  This year they just took off the local

                                                                158




           1   farmer which bought all of his inputs locally and

           2   spent most of his profits locally and gave it to a

           3   megafarmer which travels 75 miles to farm this

           4   farm.

           5            Now there's only one way they can do that,   
11:51:34

           6   and that's do it with shear speed.  So, therefore,

           7   they care nothing about soil stewardship.  In most

           8   cases, they do not fertilize the soil.  If there's

           9   hills in the field, they farm up and down them

          10   because they don't have time to go around them        
11:51:52

          11   because they got to do it with shear speed.

          12            So, therefore, they hurt their community;

          13   they have no soil stewardship whatsoever; and,

          14   therefore, they are very devastating.

          15            And Bank One continues to give a bigger      
11:52:10

          16   and bigger share of the land that they manage to

          17   these megafarmers.  And only for the all-mighty

          18   dollar because they pay a little bit -- a 1 percent

          19   more on the return.  But Bank One never stops to

          20   tell the land owners that their value of their        
11:52:26

          21   property is going down because there is very poor

          22   stewardship practice on this soil.

          23            We are here because we think this is part

          24   of the CRA agreement which all banks have to honor

                                                                159




           1   and because there is disinvestment in our

           2   communities and disinvestment in our Logan County

           3   alone.

           4            We had a study done by the Illinois State

           5   University; and by these megafarmers farming          
11:53:00

           6   6,000 acres in our community and buying none of the

           7   inputs there, they took over $2 million in price of

           8   inputs out of our community alone, not counting the

           9   profits.  And when that kind of money is taken out

          10   of anybody's community, that does a terrible thing    
11:53:18

          11   to the community.

          12            So, therefore, we feel that it is time for

          13   Bank One to honor its CRA agreement and do things

          14   that would put local farmers back to work and rent

          15   this land to local farmers which will build the       
11:53:36

          16   fertility.  They will practice good soil

          17   stewardship practices; and, therefore, make the

          18   property worth more and, at the same time, increase

          19   the quality of living in the community.  And we

          20   also think that they should sign an agreement with    
11:53:52

          21   us to say that.  Thank you.

          22       MS. BRAUNSTEIN:  Thank you.  Mr. Barnes?

          23       DR. BARNES:  Good morning.  My name is Reverend

          24   Dr. Eugene Barnes.  I'm a board member of the

                                                                160




           1   Central Illinois Organizing Project, Co-Founder and

           2   Executive Director of the faith-based community

           3   organization in Champaign known as Metanoia

           4   Centers.  We are busy about the business of social

           5   development and building homes for low- to            
11:54:20

           6   moderate-income families.

           7            Allow me to bring to your attention

           8   something that basically speaks for itself.  These

           9   are low-income -- well, census tract.  The pink is

          10   the low-income census tract.  And what is             
11:54:42

          11   conspicuously absent from the low-income census

          12   tract is business by Bank One.

          13            For me to sit here and say that there are

          14   no good qualities that Bank One has would be a

          15   denial of the great work that they have been able     
11:55:00

          16   to do.  But when I look at the Central Illinois

          17   area, we notice some glaring disparities.  And,

          18   basically, Bank One has not made the necessary

          19   deposits and investment in the community, whereas

          20   everybody, regardless of income or race, would be     
11:55:20

          21   able to benefit from the vast resources that

          22   Bank One has.

          23            And we've spoken with Bank One.  We've

          24   spoke with Chase.  And when we last met with

                                                                161




           1   Mr. Willis, Mr. Willis agreed with us that there

           2   were some glaring disparities.  But we found that

           3   they are unable to commit to a written agreement

           4   with us to change these.

           5            And so here we find ourselves here today     
11:55:48

           6   deciding whether or not we want to reward bad

           7   behavior.  And you don't reward bad behavior.  In

           8   order to change behavior, what is necessary is that

           9   you first must change the way that the thinking --

          10   the thinking of the process, and that's what the      
11:56:04

          11   Central Illinois Organizing Project wants Bank One,

          12   J. P. Morgan to do, is enter into a relationship

          13   with us where we can amenably discuss some of the

          14   issues that we see that they have.

          15            Ofttimes what we find is that in our area    
11:56:20

          16   is that loan originations, they aren't being

          17   undertaken in those communities.  And we can look

          18   at that chart and we can see that.  We can say,

          19   well, there is a need.  There is a need for

          20   Bank One and both Chase Morgan to be able to do a     
11:56:36

          21   better job than what they're doing.  Everybody

          22   could do a better job.

          23            What we're saying is that we would like

          24   for them to come down to Central Illinois, talk

                                                                162




           1   with us and come to an understanding where we can

           2   enact a written agreement.  Otherwise, what we do

           3   is we continue to pat them on the back for not

           4   doing a good job.  And I don't think that's a good

           5   message that anyone, a parent, an educator or a       
11:56:58

           6   businessman, would want to send out a message that

           7   we do reward people for bad behavior.

           8            And I think basically what we're really

           9   looking at is betrayal of mind.  Betrayal of mind

          10   comes about when we can -- when we've mentally        
11:57:12

          11   opposed what we know is morally right.  And, at

          12   that point, what we're doing, we're actually

          13   putting our consciences in a coma.  And I think

          14   that -- you know, while I believe that one day

          15   we're all going to have to give account for the       
11:57:26

          16   deeds that we've done in the flesh, and when that

          17   day comes, I want my conscience to be clear as to

          18   what I tried to do for the weak and the wounded

          19   than without, those who are unable to articulate

          20   what their needs are and lack of necessary            
11:57:40

          21   resources to have access to what we call the

          22   American dream.

          23            And we have institutions such as Bank One

          24   and J. P. Morgan who have not made that necessary

                                                                163




           1   deposit.  And we have offered and we are willing to

           2   work with them.  We work with other financial

           3   institutions, and what those institutions have

           4   discovered is that CRA has been a great mechanism

           5   in terms of bringing in applicants otherwise not      
11:58:06

           6   included in there.  And I think if J. P. Morgan and

           7   Bank One had a little bit more time to consider

           8   their actions, they will probably come to the same

           9   conclusion.  Thank you.

          10       MS. BRAUNSTEIN:  Thank you very much.             
11:58:20

          11   Mr. Porter.

          12       MR. PORTER:  My name is Jack Porter.  I'm also

          13   with the Central Illinois Organizing Project.  I am

          14   affiliated with the First Presbyterian Church in

          15   Normal which is a member congregation of the          
11:58:32

          16   Central Illinois Organizing Project.  As you have

          17   heard, it's a faith-based community organizing

          18   effort in Central Illinois.

          19            We're also here in solidarity with our

          20   sister community organizations and other parts of     
11:58:46

          21   the country, namely, the Communities United For

          22   Action of Cincinnati; the Creston Neighborhood

          23   Association of Grand Rapids, Michigan; East Side

          24   Organizing Project of Cleveland; the Iowa Citizens

                                                                164




           1   for Community Improvement of Des Moines; Pittsburgh

           2   Community Reinvestment Group; Syracuse United

           3   Neighbors; South Austin Coalition Community Council

           4   of Chicago; Lawndale Neighborhood Organization of

           5   Chicago; and Sunflower Community Action of Wichita.   
11:59:12

           6            Some of our testimony has to do with our

           7   particular situation.  And you have seen some of

           8   the graphs.  You've also got the report of National

           9   Training and Information Center that outlines some

          10   of the problems that have existed within our own      
11:59:26

          11   region of Illinois; but we're also part of the

          12   national coalition, and our testimony is in

          13   solidarity with that broader coalition.

          14            We believe in the Community Reinvestment

          15   Act and we want that to work.  Regulators and         
11:59:40

          16   bankers all pay lip service to Gale Cincotta, the

          17   manager of the Community Reinvestment Act,

          18   especially now that she has passed.  What we're

          19   interested in is that being a living statute, a

          20   living concept that results in positive investments   
11:59:56

          21   in our communities' access to credit for home

          22   mortgage -- home ownership for low- and

          23   moderate-income people of all races.

          24            You've heard of the problems that we've

                                                                165




           1   had in Central Illinois with Bank One, and they

           2   have been outlined.

           3            On the other hand, we do have a written

           4   agreement with Bank One and we have an ongoing

           5   relationship with Bank One.  That means that we       
12:00:24

           6   have measurable goals and objectives.  We have an

           7   ongoing monitoring relationship with Bank One.

           8   We're able to talk about particular problems as

           9   they arise.

          10            One of those areas of concern for us has     
12:00:38

          11   been predatory lending.  There have been some

          12   instances in which the bank has been associated

          13   with predatory or abusive loans and, because of our

          14   relationship, that's helped us work out the

          15   problems.                                             
12:00:52

          16            Ron Bragonier of our delegation from

          17   Central Illinois is here.  He is one of those

          18   people standing there whose loan was worked out

          19   because we had an ongoing written relationship with

          20   Bank One.                                             
12:01:04

          21            So we have in place a mechanism for

          22   working on problems.  The bank and we have agreed

          23   that there are disparities, the kinds of things

          24   that have been testified to; but we've been able to

                                                                166




           1   address them and try to figure out strategies.  We

           2   haven't gotten it all accomplished, but at least we

           3   have a mechanism.

           4            When we met with Mark Willis and others

           5   from J. P. Morgan Chase on the national level, it     
12:01:26

           6   was totally dismissed, the idea of a written

           7   relationship, a written agreement embodying a

           8   relationship by which problems can be addressed

           9   which would include ongoing monitoring of the

          10   achievement of goals and objectives.                  
12:01:44

          11            Our big complaint is that there needs to

          12   be a major attitude adjustment on the part of the

          13   leadership of the banks if this merger is to be

          14   approved.

          15            We want -- we do have one year left on our   
12:01:58

          16   agreement with Bank One.  We've been told that the

          17   merged bank would honor that agreement.  Of course,

          18   we would expect them to do that.  But if this bank

          19   is to become a much larger entity, we want some

          20   responsible person at the national level with a       
12:02:16

          21   positive attitude toward written agreements with

          22   community groups, which we haven't seen from

          23   J. P. Morgan Chase.  We want someone with a

          24   positive attitude to an ongoing relationship with

                                                                167




           1   community groups to come meet with us in Central

           2   Illinois so we can discuss the final year of our

           3   agreement in the light of the new entity that may

           4   be created.  We also -- there should actually be a

           5   delegation from the banks that would include          
12:02:48

           6   someone who is able to make decisions regarding the

           7   farm management issues that Larry identified.

           8            So we want some work done on the final

           9   year of our agreement.  We want to negotiate a

          10   relationship that will continue beyond the next       
12:03:06

          11   year with this large banking entity; and we want to

          12   be part of a national relationship put in writing

          13   with this merged bank, if that's what happens, so

          14   that goals can be accomplished.

          15            How does CRA get enforced?  Regulators       
12:03:24

          16   have a role, but it's really the community groups

          17   on an ongoing basis that monitor the failures and

          18   successes of CRA.  The regulators can help

          19   establish the rules and provide data; but, without

          20   an ongoing relationship with community groups, it     
12:03:44

          21   doesn't happen.

          22            So we're asking that you deny the merger

          23   unless there's a major change in attitude and a

          24   commitment to new behavior.  Thank you.

                                                                168




           1       MS. BRAUNSTEIN:  Thank you, Mr. Porter.

           2   Mr. Van Tol, you are back again.

           3       MR. VAN TOL:  I'm not Matthew Lee, but I hope

           4   to play one of the bad guys when it makes it to

           5   Hollywood.                                            
12:04:08

           6            Thank you for allowing me to testify on

           7   behalf of Inner City Press & Fair Finance Watch.

           8   My name is Hubert Van Tol.  I'm testifying for

           9   Matthew Lee.

          10            This is testimony in opposition to this      
12:04:20

          11   proposed merger from the nonprofit organization,

          12   Inner City Press & Fair Finance Watch, which is

          13   based in South Bronx of New York City.  ICP and its

          14   members believe that there are a number of reasons

          15   that this merger should be denied.  It would limit    
12:04:36

          16   competition and raise prices.  It would create

          17   another to-date-to-fail scandal plague megabank

          18   base, for example, on J. P. Morgan Chase's conduct

          19   in the Enron and stock research scandals.  But in

          20   the five minutes allotted, this ICP testimony will    
12:04:52

          21   focus on the predatory lending from payday lenders

          22   to check cashiers in the Bronx and elsewhere, and

          23   then even pawn and gun shops nationwide.  The

          24   bank's eleventh-hour pledge does nothing to address

                                                                169




           1   these issues.

           2            In Bronx County, the lowest income county

           3   in Chase's headquarter city and state, Chase has

           4   closed more than a dozen branches and now finances

           5   check cashiers in the neighborhood in which it        
12:05:18

           6   closed its bank branches.  ICP's written

           7   submissions have included as evidence copies of

           8   UCC, uniform commercial code, filings both of

           9   Chase's financing of check cashiers and rent-to-own

          10   businesses and of Chicago-based Bank One's            
12:05:36

          11   financing of payday lending and even pawn and gun

          12   shops.

          13            Here not disputed by Bank One or Chase are

          14   the names of just some of these Bank One finance

          15   companies:  Illinois Payday Loans, Incorporated,      
12:05:48

          16   and, separately, Cash Advance, Incorporated, of

          17   Springfield, Illinois; Golden Diamond Exchange Pawn

          18   Shop of Urbana, Illinois; First Cash Financial

          19   Services, a top-ten pawnshop chain with 130

          20   storefronts in 11 states; and First American Cash     
12:06:06

          21   Advance, a top-ten payday lender with 330

          22   storefronts in 11 states, a company which has been

          23   extensively criticized for its high-cost lending,

          24   particularly to members of the military.

                                                                170




           1            ICP has submitted for the record the

           2   Washington Post article of December 29th concerning

           3   this issue.  As you hear in more detail from others

           4   today, including members of the Chicago CRA

           5   Coalition, Bank One is also directly engaged in       
12:06:32

           6   controversial high-cost tax refund anticipation

           7   lending.

           8            The two banks' responses on these issues

           9   including since the April 15th public meeting at

          10   the Federal Reserve Bank of New York have been        
12:06:46

          11   evasive to put it mildly.  The Columbus Dispatch of

          12   April 15th as submitted by ICP reported, "Bank One

          13   is aware of concerns about the type of businesses

          14   that ICP has cited and has a small number of

          15   lending relationships with those firms," Spokesman    
12:07:04

          16   Jeff Little said.  "We require our customers to

          17   comply with the law," he said.  "If they comply

          18   with the law, we do business with them.  A number

          19   of community organizations will be speaking in

          20   favor of the merger at today's hearings and at the    
12:07:20

          21   one set for April 23 in Chicago," Little said.

          22            With all due respect to those who today

          23   testify "in favor of the merger" as the Bank One

          24   spokesman put it, ICP questions whether such

                                                                171




           1   testimony rebuts in any way the payday and other

           2   predatory lending connections that have been shown.

           3   ICP has returned to the research salt mines and

           4   found that the connections are even more extensive

           5   than presented in ICP's April 15th testimony.         
12:07:48

           6            Here are a few additional exhibits that

           7   ICP is today submitting by fax to the FRB in

           8   Washington:  An Ohio UCC filing dated December 24,

           9   2001, showing Bank One's relationship with

          10   AmeriPawn of Hainesville, Illinois.  And there's a    
12:08:06

          11   list of ten more.  And I know since I don't speak

          12   anywhere nearly as fast as Matt, I will have to

          13   skip over those.

          14            There are many more, including A-1 EZ

          15   Pawn, Peoria Pawn, South Side Pawn and 24-Hour        
12:08:16

          16   Pawn.  I am stopping there because, as it turns

          17   out, Bank One, just like J. P. Morgan Chase, is

          18   also a funder of check cashiers.  For example,

          19   Quitties Check Cash, Incorporated -- some of these

          20   names you just can't make up -- T&T Check Cash,       
12:08:30

          21   Incorporated, and AA-Action Check Cashing, LLC.

          22            This last company is based in Houston,

          23   Texas, where this merger would be anticompetitive

          24   as ICP's comments along with the most recent FDIC

                                                                172




           1   deposit data show.  Chase is trying to temporarily

           2   move billions of dollars out of Houston.  This

           3   gaming of the system and of antitrust enforcement

           4   should not be allowed.

           5            Now Hubert Van Tol would stop for that       
12:08:58

           6   beep, but I know Matthew Lee would not.  So let me

           7   just finish by saying, in the bank's March 23rd

           8   response to the Federal Reserve, J. P. Morgan Chase

           9   has requested confidential treatment for all list

          10   of payday and other subprime lenders it and           
12:09:16

          11   Bank One do business with, stating that attached to

          12   this confidential Exhibit 10 are names of customers

          13   that J. P. Chase believes are payday lenders or

          14   providers of refund anticipation loans and business

          15   relationships with them.  Their list is labeled       
12:09:32

          16   confidential.

          17            ICP has appealed this under the Freedom of

          18   Information Act and is demanding that the comment

          19   review periods be extended until the bank's list of

          20   payday and other subprime lenders are released.       
12:09:46

          21            On the current record, this merger should

          22   be denied, and you should see what I skipped over.

          23       MS. BRAUNSTEIN:  Thank you very much.  And

          24   please convey that we missed Matthew coming here in

                                                                173




           1   person, although you did a great job in

           2   representing him.  Thank you to the entire panel.

           3            Will the next panel please come forward?

           4            Just to state the ground rules for

           5   everybody, each panelist has five minutes.  Please    
12:10:50

           6   be mindful of the timekeepers and your time.  And

           7   please be sure to state your name and organization

           8   at the beginning of your statement.

           9            And with that, we'll begin with

          10   Mr. Murray.                                           
12:11:04

          11       MR. MURRAY:  Thank you to the Federal Reserve

          12   for providing me the opportunity to comment on the

          13   merger.

          14            My name is Vincent Murray, and I am

          15   Executive Director of Bagley Housing Association, a   
12:11:14

          16   nonprofit housing corporation located in Detroit,

          17   Michigan.

          18            Our organization since 1995 has been

          19   involved in residential revitalization of the

          20   majority Latino southwest Detroit neighborhood        
12:11:30

          21   located at the foot of the Ambassador Bridge, the

          22   nation's busiest international border crossing

          23   connecting Detroit to Windsor, Ontario, Canada.

          24            Over the last seven-plus years, our

                                                                174




           1   organization has built 45 new single-family homes

           2   for sale to low- and moderate-income families.  We

           3   have built a $6 million 65-unit apartment building

           4   for low-income seniors.  We have rehabbed over 100

           5   units of pre-existing housing as part of our          
12:12:06

           6   owner-occupied housing rehabilitation program.  We

           7   have completely refurbished the neighborhood

           8   city-owned park.

           9            We have restored a dilapidated school

          10   building which is now back in use as a charter        
12:12:18

          11   public high school, 9th through 12th grade, for

          12   neighborhood use.  We have transformed a dirty

          13   former industrial building into a very attractive

          14   office, art gallery space which currently houses

          15   three new businesses and has created 15 new           
12:12:34

          16   good-paying jobs in the neighborhood.

          17            Now we are in the midst of constructing

          18   30 additional single-family homes for low- and

          19   moderate-income families and an additional

          20   80 for-sale units for the open market.  In            
12:12:50

          21   addition, we are a leader in the revitalization of

          22   our 15-block neighborhood commercial retail strip.

          23            When we started back in 1995, National

          24   Bank of Detroit, NBD, was first to come to our

                                                                175




           1   table with a small operating support grant to get

           2   us going.  Then came more substantial construction

           3   loans from the bank's Community Development

           4   Corporation on behalf of our first for-sale units.

           5            As NBD merged into Bank One, the bank's      
12:13:20

           6   commitment to our projects and operations remain

           7   strong.  As part of a funders' collaborative, they

           8   contributed mightily to the funding, not only of

           9   Bagley's operations but also to the operations of

          10   15 other Detroit Community Development                
12:13:38

          11   Corporations.

          12            Bank One not only has been a major

          13   construction lender to all of our housing

          14   initiatives, but also in the steady presence and

          15   persons of its CDC president, Don Bailey, and its     
12:13:50

          16   CRA leader, Jack Schwab, has provided valuable

          17   technical assistance and mentoring to me and to

          18   other Detroit Community Development Corporation

          19   executive directors.

          20            Bagley's housing success over the last       
12:14:06

          21   several years has affirmed the good business sense

          22   contained in Bank One's support of us, and it

          23   encourages and enables further investment in our

          24   activities.  I am confident that the commitment

                                                                176




           1   demonstrated by NBD, continued and even

           2   strengthened by Bank One organization, will

           3   continue within the further merged organization.

           4   NBD Bank One has consistently demonstrated concern

           5   for the needs of our community organizations and      
12:14:38

           6   small businesses in Detroit.  We expect no less

           7   commitment and even greater capacity for support

           8   from the larger, stronger merged organization.

           9   Thank you.

          10       MS. BRAUNSTEIN:  Thank you.  Ms. Grossman.        
12:14:54

          11       MS. GROSSMAN:  I am Fran Grossman from

          12   ShoreBank.  I'm going to actually speak mostly

          13   about ShoreBank in Chicago.

          14            I want to thank everyone here, the Fed and

          15   both J. P. Morgan Chase and Bank One, for making      
12:15:08

          16   this happen, for the opportunity to speak.  I'm

          17   also really glad I'm not in your places today.  I

          18   found this absolutely fascinating.  I'm also glad

          19   that I didn't have to follow Matthew Lee's

          20   excellent speech.  I have learned an enormous         
12:15:30

          21   amount today and I trust that everyone in this room

          22   has.

          23            I guess I would begin almost the way I

          24   will end with there really is a lot of work to be

                                                                177




           1   done, and I think what we're seeing here today is

           2   only the beginning of the scratching of the

           3   surface.

           4            I would also like to welcome to Chicago

           5   J. P. Morgan Chase.  I think they will find the       
12:15:50

           6   Midwest different.  We are solid and steady.  We

           7   pride ourselves on not being flashy, but I think

           8   they will find that we persevere.  We're tenacious.

           9   Some of us have broader shoulders than others, but

          10   we will not give up on making this, Chicago and the   
12:16:12

          11   Midwest, an important part of the new world for

          12   J. P. Morgan Chase/Bank One, whatever the new name

          13   would be.

          14            I want to tell you a little bit about

          15   ShoreBank.  ShoreBank is the largest and premier      
12:16:28

          16   and the first community development financial

          17   institution in this country.  We are 31 years old.

          18   We have assets of about $1.5 billion.  In Chicago,

          19   in the past year, we have made loans on 4300 rehab

          20   multi-family, walk-up apartment buildings.  That's    
12:16:54

          21   one of our specialties.  We're not into high-rise.

          22   None of those are subsidized.  Actually, the only

          23   government lending we do is SBA and the Capital

          24   Access Program.

                                                                178




           1            We also are the bank for approximately

           2   400 small not-for-profits, most of them with

           3   revenues under $3 million, some of them under a


           4   million, some of them barely.  We also are the bank

           5   for -- the largest bank for small churches, and I     
12:17:22

           6   think we have a few mosques and a couple of

           7   synagogues; but, mostly, these are small churches

           8   with congregations of approximately 45 to 150.

           9            We do bank some of the megachurches; but,

          10   basically, we see ourselves -- our mission is to      
12:17:40

          11   provide crisp, quality financial services to low-

          12   and moderate-income communities.  We have

          13   approximately 40 to 50,000 retail accounts, and we

          14   have begun much more in the last couple of years to

          15   get into environmental lending.                       
12:18:00

          16            I would like to say that in all honesty

          17   and disclaimer, Bank One is a shareholder.  They

          18   have been since 1993, '95, and that we had one

          19   small grant last year for them when they were

          20   trying to look at some work on individual             
12:18:22

          21   development accounts.

          22            We are very optimistic about this merger.

          23   We have seen in the last three years the kind of

          24   work that Jamie Dimon has done in revitalizing and

                                                                179




           1   redevelopment in some ways of Bank One here.  They

           2   have become a player again in the civic, community,

           3   fabric financial life of this city.  And we are

           4   optimistic that if he can continue to stay at the

           5   helm and provide the kind of leadership that he       
12:18:52

           6   provided in Chicago that we will see some very

           7   interesting and good things.

           8            This is not easy.  The problems are

           9   intense and enormous; but we are committed at

          10   ShoreBank, and I think most of us in this room, to    
12:19:06

          11   keep on working with, pushing, being a partner,

          12   being a nudge, but being there for each other to

          13   make sure that the good people of Bank One and

          14   J. P. Morgan Chase would like to see things better.

          15   We'll work together on this.  And I thank you.        
12:19:24

          16       MS. BRAUNSTEIN:  Thank you.  Ms. Ratner.

          17       MS. RATNER:  Thank you for the opportunity to

          18   present my response to the proposed merger of

          19   J. P. Morgan Chase and Bank One.  I am presenting

          20   today at today's public hearing on economic           
12:19:44

          21   opportunity issues to assist the minority and

          22   women's small business community of the Chicago

          23   area and in support of the merger and their

          24   commitment to the letter and spirit of the

                                                                180




           1   Community Reinvestment Act.

           2            Representing thousands of women- and

           3   minority-owned business owners in the Chicagoland

           4   area, we were thrilled to learn about the

           5   memorandum of understanding negotiated to make        
12:20:04

           6   thousands of residential and greatly increased

           7   small business loans to minority, women business

           8   owners over the next five years.

           9            The WBDC is involved in Bank One's

          10   continuing investments in low- and moderate-income    
12:20:16

          11   families, businesses and neighborhoods and

          12   specifically its efforts to provide access to

          13   credit in those communities.  The Women's Business

          14   Development Center has had positive firsthand

          15   experience with Bank One and its previous             
12:20:30

          16   incarnations since the inception of our

          17   organization which was founded in 1985.

          18            The WBDC provides counseling, training,

          19   financial assistance, business and strategic

          20   planning, marketing and procurement assistance and    
12:20:44

          21   assistance with loans to start-up, emerging and

          22   mature businesses.  I have no humility, so our

          23   organization is now the oldest, largest and most

          24   comprehensive and most successful women's business

                                                                181




           1   assistance center in America.

           2            Bank One has been our partner in economic

           3   development, providing support for our

           4   organization; loans to our clients; funds for our

           5   previous collateral pool to collateralize small       
12:21:08

           6   business loans; program-related investment for

           7   microlending to women and minority start-up

           8   businesses; participation as a lender in our

           9   Bank Loan Program; and participation in our annual

          10   Entrepreneurial Women's Conference since 1991.        
12:21:22

          11            Bank One was the lead financial

          12   institution in Chicago to adopt and support the

          13   Community Express Program through the SBA.

          14            Several years ago, our organization and

          15   Bank One began a partnership to provide business      
12:21:36

          16   development and financial assistance to low- and

          17   moderate-income Hispanic communities.  WBDC is now

          18   providing programs in Spanish at several Bank One

          19   facilities in Little Village and Berwyn.  This

          20   innovative new program brings information and         
12:21:52

          21   services, training, financial assistance as well as

          22   self-employment opportunities to those communities.

          23            The WBDC and Bank One have partnered with

          24   several critical economic and community development

                                                                182




           1   organizations such as ACCION, Action for Children,

           2   Northside Community Federal Credit Union.  It has

           3   worked collaboratively.  I hope it will continue to

           4   work collaboratively.

           5            We have a number of recommendations          
12:22:18

           6   because we looked to the merger to increase their

           7   commitment to supplier diversity and the inclusion

           8   of minority and women business enterprises in the

           9   procurement and purchasing practices of the banks.

          10            We look forward to an increase in small      
12:22:32

          11   business lending for minority- and women-owned

          12   businesses to help them grow their businesses,

          13   especially targeting small loans to companies with

          14   revenues of under a million dollars.

          15            And we look to Bank One to develop new       
12:22:46

          16   lending products in conjunction -- that's great,

          17   okay -- with state and local government to develop

          18   options for contract and contractor financing

          19   assistance extending current underwriting

          20   guidelines when dealing with government               
12:23:02

          21   receivables.

          22            The WBDC and other organizations like

          23   ourselves to truly understand the issues of small

          24   business lending -- and this is directed to the

                                                                183




           1   Feds, if that's okay -- to truly understand the

           2   issues of small business lending in low- to

           3   moderate-income communities and loans to minority-

           4   and women-owned businesses, gender- and race-based

           5   lender data that has been available or housing        
12:23:28

           6   through HMDA has not been available for small

           7   business.  We propose that the bank would

           8   voluntarily collect, voluntarily provide gender-

           9   and race-based information to help develop the most

          10   successful policies and programs to enhance the       
12:23:42

          11   growth of small business lending to our

          12   communities.

          13            What we would like to see is an extension

          14   of Regulation B so that we can collect the data to

          15   help provide better policies.                         
12:23:54

          16            We look to Bank One and J. P. Morgan Chase

          17   to continue to be the precedent setter and lead

          18   national efforts for community and economic

          19   development.  This is a timely window of

          20   opportunity.                                          
12:24:08

          21            The WBDC and many of our colleagues across

          22   the nation are also concerned about the effect

          23   major bank mergers have had on small business

          24   lending.  The standardization of underwriting

                                                                184




           1   criteria, the removal of lending decision-making

           2   from the first line banker, which is the continuing

           3   trend in larger and merged banks, has been

           4   detrimental to the growth of small businesses in

           5   the inner cities.                                     
12:24:32

           6            Although intermediaries like our

           7   organization and many of those who are

           8   testifying -- finish the sentence? -- have had a

           9   major impact on lending to start-up and emerging

          10   business, because of large bank merger underwriting   
12:24:44

          11   policies, we're having a more difficult time with

          12   bank financing.

          13            Withal, we of the Women's Business

          14   Development Center support the merger of Bank One

          15   with J. P. Morgan Chase and welcome them to           
12:24:56

          16   Chicago.  Thank you.

          17       MS. BRAUNSTEIN:  Thank you.  Mr. Holmes?

          18       MR. HOLMES:  I will try not to run out of time.

          19       MS. RATNER:  I was good.

          20       MR. HOLMES:  I'm Calvin Holmes, the Executive     
12:25:08

          21   Director of the Chicago Community Loan Fund.  We

          22   are a mid-sized, private, nonprofit community

          23   development financial institution.

          24            We have extended nearly 100 loans to small

                                                                185




           1   and upstart and mid-sized community development

           2   corporations and other community-based

           3   organizations working to turn around Chicago's most

           4   challenged neighborhoods.  These nearly 100

           5   community development financing have helped           
12:25:30

           6   leverage an additional $212 million in public and

           7   private financing in neighborhoods across our great

           8   city and suburbs.

           9            Bank One has been a very resourceful and

          10   engaged partner that has helped and is helping CCLF   
12:25:44

          11   extend this capital into the farthest reaches of

          12   these neighborhoods.  Over several years, the bank

          13   has rather effortlessly provided CCLF investments

          14   that are extremely hard to come by.  Those are

          15   equity equivalent investments, or EQ2s.  In fact,     
12:26:00

          16   all of Bank One's investments in CCLF have been

          17   EQ2s and have helped us establish one of the

          18   strongest capital structures of a fund of our size

          19   in the nation.

          20            More importantly, the EQ2s from the bank     
12:26:14

          21   have been instrumental in CCLF being able to offer

          22   its customers longer-term products with more

          23   flexible features.  In addition, the EQ2s have made

          24   it possible for CCLF to attract smaller banks and

                                                                186




           1   others less familiar because those EQ2s provide an

           2   extra firewall of protection for such investors.

           3            In addition to helping CCLF provide better

           4   products for our customers and increasing the

           5   amount of capital we do provide to them, Bank One     
12:26:42

           6   has also consistently provided CCLF with very

           7   scarce long-term operating support -- I'm not

           8   supposed to call it operating support -- because

           9   CCLF customers are typically small community-based

          10   entities that require a hell of a lot more            
12:26:56

          11   technical assistance to move their projects to

          12   fruition.  This type of high test lending, as we

          13   all know, is very expensive; and the bank has

          14   helped us absorb those costs for approximately a

          15   decade now.                                           
12:27:10

          16            Among other in-kind contributions,

          17   Bank One has also generously hosted our Real Estate

          18   Development Project Ratings workshops, making it

          19   possible for nearly 80 community groups to better

          20   evaluate their abilities to engage in real estate     
12:27:24

          21   development.

          22            Finally, and as importantly, Bank One has

          23   partnered with CCLF to provide finance indirectly

          24   to community groups.  Unlike Hedy, I'm not so -- I

                                                                187




           1   am not so without humility.  I can tell you that my

           2   staff has learned much about construction

           3   management from the bank's team among other

           4   benefits of our co-lending.

           5            Given the facilitative manner in which the   
12:27:48

           6   bank has partnered with CCLF nearly since our

           7   inception, I am here to encourage the leaders of

           8   J. P. Morgan Chase and Bank One to preserve and

           9   elevate the combined institution's commitment to

          10   the domestic emerging markets that CCLF is serving    
12:28:02

          11   and to also address the concerns of other community

          12   advocates and elevate its commitment to building

          13   the wealth of the families in these emerging

          14   markets by not supporting the wealth-stripping

          15   activities of French lenders.                         
12:28:18

          16            In conclusion, I must note that I

          17   appreciate that both merging banks have the ability

          18   to form a leading international financial services

          19   company but encourage them to take heed and for the

          20   Federal Reserve to help them do so to the concerns    
12:28:32

          21   of my fellow community advocates who have keen

          22   insights, expertise and experience in Chase and

          23   Bank One communities across the nation.

          24            It is my hope that by addressing the

                                                                188




           1   concerns of community advocates, the leaders of

           2   both banks would build a new institution that works

           3   as hard to provide the best products and services

           4   to domestic merging markets and the families that

           5   live within them as it would to its customers in      
12:28:54

           6   its more traditional mainstream markets.  Thank

           7   you.

           8       MS. BRAUNSTEIN:  Thank you.  Mr. Curtiss.

           9       MR. CURTISS:  Good afternoon.  I thank the Feds

          10   for having us here today to be able to provide some   
12:29:06

          11   input into this merger.  I feel kind of like

          12   Billy Martin because I feel very strongly for both

          13   these institutions.  We work very closely with

          14   them.

          15            My name is Polk Curtiss.  I'm the            
12:29:14

          16   Executive Director for Housing Opportunities of

          17   Houston.  We're a 501(c)(3) nonprofit corporation

          18   and have the goal of helping families invest in

          19   home ownership.  We do that through a comprehensive

          20   approach to home ownership through homebuyer          
12:29:28

          21   education, pre-purchase counseling, post-purchase

          22   counseling, and we provide a down payment

          23   assistance via the Federal Home Program.

          24            We offer this assistance to about 1200

                                                                189




           1   families a year.  We help with down payment

           2   assistance, and we educate over 4,000 families a

           3   year as to how to buy a home.  So we work very

           4   closely with both these institutions.

           5            Bank One and J. P. Morgan Chase are part     
12:29:54

           6   of a lending corporation here in Houston that's

           7   called Affordable Lending Partnership, and they

           8   have agreed to provide home mortgage loans under a

           9   much-reduced fee schedule as well as an interest

          10   rate cap.  So they do that providing a very good      
12:30:08

          11   affordable mortgage product to our families that

          12   come through the program.

          13            I have worked with them now for almost ten

          14   years in my capacity as the Director of Housing

          15   Opportunities of Houston.  Dave Wood at Bank One      
12:30:22

          16   and Alva Garza and Ron Brann at J. P. Morgan Chase

          17   have proved to be very valuable partners in

          18   community redevelopment and home ownership

          19   activities in the City of Houston and in Harris

          20   County.                                               
12:30:36

          21            We offer our services through a very

          22   multi-cultural diverse population in Houston.  I'm

          23   sure you're aware of how culturally diverse Houston

          24   is.  So we offer our classes in Spanish, English,

                                                                190




           1   Vietnamese, Chinese, and also Pakistani and a form

           2   of a Mandarin Chinese.  So we have a very cultural

           3   diverse community, and both Chase and Bank One is

           4   very much supportive of all the services provided

           5   through that organization.                            
12:31:06

           6            We have always felt that both the

           7   organizations provide the services to the families

           8   because of their commitment to the neighborhood,

           9   commitment to the community; and we've always had

          10   the opportunity when we have the situations that      
12:31:24

          11   require some help to the community, they have

          12   always stepped forward and provided that to us and

          13   to the families involved.  In fact, for every

          14   dollar that we provide in federal assistance, it

          15   spins off $19 into the community as far as private    
12:31:42

          16   mortgages.

          17            So we feel very strongly that this is a

          18   very good step to the continuing revitalization

          19   efforts in both Houston and both nationally.  And I

          20   would go on record as supporting both.                
12:31:54

          21       MS. BRAUNSTEIN:  Thank you very much, and thank

          22   you for the entire panel.  Would the next panel

          23   please come forward?

          24            Welcome to our next panel.  Once again,

                                                                191




           1   for the record, five minutes per speaker.  Keep

           2   your eye on the timekeepers and you'll see the

           3   lights.  Also please state your name and

           4   organization at the beginning of your statement.

           5            We'll start with Mr. Mooney, please.         
12:33:04

           6       MR. MOONEY:  Thank you.  Good afternoon.  My

           7   name is Andrew Mooney.  I am the Senior Program

           8   Director of the Local Initiatives Support

           9   Corporation here in Chicago.

          10            I'm here today to speak about the            
12:33:14

          11   importance of the partnership we've had with

          12   Bank One and J. P. Morgan Chase over the years and

          13   in support of their proposed merger.

          14            LISC is a not-for-profit financial

          15   intermediary that provides capital and technical      
12:33:26

          16   resources to revitalizing neighborhoods across the

          17   metropolitan area.  We are part of a nationwide

          18   network that serves 35 cities and a similar number

          19   in rural communities.

          20            The work that we and our colleagues in the   
12:33:38

          21   communities we serve is not easy nor is it trivial.

          22   For example, in Chicago alone, we've invested

          23   $103 million-plus and nearly 17,000 units of

          24   affordable housing, some 3 million square feet of

                                                                192




           1   neighborhood commercial space, and a host of other

           2   community building initiatives.  The groups that we

           3   finance are citizen-led community organizations

           4   that are dedicated to revitalizing their

           5   neighborhoods through development.                    
12:34:04

           6            We could not have attained this track

           7   record without the constant support of Bank One and

           8   its predecessors in Chicago or J. P. Morgan Chase

           9   at the national level.  Through the years, both

          10   institutions have proven their commitment to our      
12:34:16

          11   vision of healthy communities filled through

          12   resident involvement and leadership.

          13            In Chicago, Bank One has been and

          14   continues to be our largest corporate sponsor.  But

          15   we work together in a number of different ways.       
12:34:30

          16   For example, Bank One provided the funding for an

          17   innovative program called Banking on Family

          18   ChildCare which was designed to strengthen

          19   home-based childcare in a number of our communities

          20   by improving the financial well-being of the          
12:34:42

          21   providers.  Bank One funded individual development

          22   accounts to match the savings of the participants

          23   in the program.  As we complete the pilot phase,

          24   46 participants who provide daycare to

                                                                193




           1   approximately 450 children have accumulated

           2   $135,000 in personal assets as a result of this

           3   Bank One fund effort.

           4            We also worked side by side with Bank One

           5   on financing difficult housing and commercial         
12:35:08

           6   projects in the neighborhoods we serve.  My LISC

           7   colleagues in Milwaukee, who support this merger

           8   and where Bank One also has a significant presence,

           9   report that the bank has played a strategic role in

          10   community development there as well.                  
12:35:22

          11            Just recently, for example, the bank took

          12   the lead position in a project based on Section 8

          13   conversion with some 58 duplex properties that were

          14   in danger of being lost to the affordable market.

          15   We could name a number of similar projects here in    
12:35:34

          16   Chicago in which the bank took a leading, and I

          17   should add, a risk position.

          18            In all, Bank One has provided LISC with

          19   grants of $7 and a half million, low market loans

          20   of $700,000, and investments of over $97 million in   
12:35:48

          21   low-income housing projects through our sister

          22   agency, the National Equity Fund.

          23            Bank One is important to us for other

          24   reasons, however.  As an institution, it has always

                                                                194




           1   encouraged the active participation of its chief

           2   executives in civic affairs.  This continues to be

           3   the tradition today.

           4            For instance, senior representatives of

           5   the banks sit on our local advisory committees in     
12:36:12

           6   Chicago, Milwaukee and several other cities in

           7   which both LISC and the bank have a presence; and

           8   they are actively and personally engaged in major

           9   civic issues from the transformation of public

          10   housing to the quality of education in our public     
12:36:26

          11   schools to community safety.

          12            While J. P. Morgan Chase has not until now

          13   had a major presence in the Chicago market, I can

          14   report that they have had a similar track record

          15   with LISC in the cities in which we are both          
12:36:38

          16   located.  In fact, at the national level,

          17   J. P. Morgan Chase has been our single largest

          18   financial partner for over 24 years.

          19            Both Bank One and J. P. Morgan Chase have

          20   proven their mettle over the years.  They have set    
12:36:52

          21   an example in the financial industry for excellence

          22   in community development.  They have established a

          23   high standard for good corporate citizenship.

          24            We have seen that both banks know how to

                                                                195




           1   commit themselves strategically and financially in

           2   the many markets in which they operate.  We expect

           3   that this will not only continue but that their

           4   presence could, in fact, strengthen as a result of

           5   the proposed merger.                                  
12:37:16

           6            For all these reasons, therefore, we are

           7   pleased to go on record in support of the merger of

           8   Bank One and J. P. Morgan Chase, and I thank you

           9   for your consideration.

          10       MS. BRAUNSTEIN:  Thank you very much.             
12:37:26

          11   Ms. Newsom.

          12       MS. NEWSOM:  Good afternoon.  I'm

          13   Caroline Newsom, the Executive Director of

          14   Self-Employment Loan Fund in Phoenix, Arizona.

          15   Thank you for allowing our agency to express its      
12:37:38

          16   support of this merger.

          17            We believe that this merger is a healthy

          18   union.  We also believe the two corporations,

          19   Bank One and J. P. Morgan Chase, have complementary

          20   strengths and that their goal is to bridge            
12:37:54

          21   resources that will further communicate development

          22   opportunities.

          23            SELF is celebrating ten years in the

          24   microenterprise industry.  Our mission is to

                                                                196




           1   promote self-sufficiency by encouraging individuals

           2   to start or expand existing businesses.  We provide

           3   financial literacy, business plan development,

           4   education, as well as professional support and

           5   microloans up to $15,000.                             
12:38:22

           6            Prior to opening our doors, we introduced

           7   this model to Bank One ten years ago.  They

           8   embraced this concept immediately and responded by

           9   providing our organization with 2300 square feet of

          10   donated space for seven years.  They also provided    
12:38:40

          11   more leadership, a half million dollars in

          12   financial support, countless volunteer hours in the

          13   area of financial literacy and credit worthiness,

          14   training to our clients.  They are also a referral

          15   source and have just recently covered all of the      
12:38:58

          16   associated costs establishing a state

          17   microenterprise association.

          18            There are more than a thousand

          19   microenterprise developers throughout our country,

          20   and we have a unique charge in that our return on     
12:39:12

          21   investment comes through job creation and retention

          22   through contributing taxpayers -- creating

          23   contributing taxpayers and demonstrating our

          24   ability to build economic health, wealth and assets

                                                                197




           1   of underserved communities.

           2            Bank One is a leader in supporting

           3   microenterprise efforts, and their generosity has

           4   afforded through our agency more than 3700 aspiring

           5   entrepreneurs access to alternative, intellectual     
12:39:42

           6   and financial resources.

           7            Again, we support this merger, and we

           8   believe that Mr. Harrison's $800 billion community

           9   development growth plan is a viable plan.  Thank

          10   you.                                                  
12:39:56

          11       MS. BRAUNSTEIN:  Thank you very much.

          12   Ms. Hadley.

          13       MS. HADLEY:  Good afternoon.  My name is

          14   Erma Johnson Hadley.  I'm here today officially

          15   representing the Fort Worth Metropolitan Black        
12:40:06

          16   Chamber of Commerce in Fort Worth, Texas.  Thank

          17   you for the opportunity to speak with you today

          18   about the proposed merger of J. P. Morgan Chase and

          19   Bank One.

          20            I have lived in Fort Worth, Texas, for       
12:40:18

          21   over 35 years and have been affiliated with

          22   J. P. Morgan Chase Bank for over 10 years.  I knew

          23   Texas Commerce Bank, Chase Bank and now

          24   J. P. Morgan Chase Bank.

                                                                198




           1            I have had an opportunity to observe the

           2   bank from up close and personal from several

           3   vantage points:  As a member of a number of

           4   community boards, as a member of the bank's North

           5   Texas Advisory Board, as a member of the bank's       
12:40:42

           6   North Texas Community Reinvestment Act Advisory

           7   Board; as a member of the National Community

           8   Reinvestment Act Advisory Board; as a member of

           9   various community boards that partner with

          10   J. P. Morgan Chase; and as a customer.  I am          
12:40:56

          11   well-acquainted with the bank, its people and its

          12   commitment to providing a substantial, meaningful

          13   service to its service area.

          14            I said my official capacity here today is

          15   as a representative of the Fort Worth Metropolitan    
12:41:12

          16   Black Chamber of Commerce, but I can also speak

          17   from personal knowledge about J. P. Morgan Chase.

          18   In addition, I can speak on a less personal basis

          19   about Bank One.

          20            We are most supportive of the merger.  The   
12:41:24

          21   Fort Worth Metropolitan Black Chamber of Commerce

          22   has partnered with J. P. Morgan Chase Bank to bring

          23   more economic development to our community.  The

          24   bank invested considerable resources in a

                                                                199




           1   faith-based initiative led by the Chamber.  Senior

           2   staffers participated in the initiative that

           3   resulted in several projects led by faith-based

           4   institutions.

           5            Our Chamber members were especially          
12:41:48

           6   impressed with the projects we saw on a visit to

           7   Dallas when Chase hosted a day-long tour for our

           8   members to meet with the leaders of three economic

           9   and housing development projects that were financed

          10   in whole or in part by Chase Bank.  In each           
12:42:04

          11   project, not only did Chase finance the deal but

          12   also provided assistance to the organization in

          13   packaging the deal.  In some cases, Chase provided

          14   major consultative services to the organization.

          15            J. P. Morgan Chase is also a good            
12:42:22

          16   corporate citizen that has consistently supported

          17   the arts, education, grass-roots community

          18   organizations, ethnic chambers, and other social

          19   service groups.  This commitment to community

          20   support has resulted in an overall improvement in     
12:42:36

          21   the quality of life for the citizens in its service

          22   area.

          23            As a member of the North Texas Community

          24   Reinvestment Act Advisory Board, I have had the

                                                                200




           1   opportunity to keep abreast of the many economic

           2   development projects financed by J. P. Morgan

           3   Chase.  Very often a client requires significant

           4   hand-holding in order to make the loan bankable.

           5   Chase has been masterful in hand holding less than    
12:43:00

           6   prepared clients and walking them through the maze

           7   of paperwork and technical hurdles that so many of

           8   them find difficult.

           9            Perhaps one of the foremost reasons the

          10   bank has experienced such good success is because     
12:43:16

          11   of its people.  The people who are charged with

          12   community reinvestment take their work seriously.

          13   As a matter of fact, you may say they have turned

          14   their work into a religion.  I have seen key

          15   bankers hold clients' hands through the long          
12:43:30

          16   application process that they find so difficult.

          17            J. P. Morgan Chase Bank understands that

          18   if it truly is to be a partner in the community and

          19   make real gains in the redevelopment and

          20   maintenance of communities, it cannot sit by the      
12:43:44

          21   sidelines and say, here we are, come and get the

          22   loans if you can.

          23            There are numerous projects to attest to

          24   my statement, and a few examples of them include a

                                                                201




           1   $1 million line of credit for construction of

           2   townhomes by Fort Worth South Side Development; a

           3   $3.5 million apartment arts complex by Victory Arts

           4   Project; a $1 million line of credit for the

           5   construction of single-family homes; and another      
12:44:10

           6   $2.7 million for mid to moderate single-family

           7   homes that will totally revive a declining once

           8   very prominent area in southeast Fort Worth.

           9            And last I want to mention a $40,000 line

          10   of credit to Near North Side Partners.  And I         
12:44:26

          11   mention that one because $40,000 is such a

          12   miniscule numbers of dollars.  However, if not for

          13   a J. P. Morgan Chase loan in this case, that

          14   organization would not have been able to make their

          15   deal work.  When this fact is coupled with the        
12:44:42

          16   reality that a grass-roots, community-based

          17   organization may be the only source of help a

          18   community has, $40,000 stands between a dream and a

          19   reality.

          20            My experience with Bank One has not been     
12:44:58

          21   as intimate as J. P. Morgan Chase; however, I am

          22   generally quite familiar with Bank One's place in

          23   the North Texas community.

          24            A few years ago, Bank One partnered with

                                                                202




           1   the Fort Worth Metropolitan Black Chamber of

           2   Commerce and other community organizations, stepped

           3   up when no other bank would, and constructed a

           4   branch bank in an economically abandoned low- to

           5   moderate-income community of Fort Worth.  Bank One    
12:45:20

           6   also committed to building a support structure

           7   required to make the branch a success and, today,

           8   we tout that as one of Bank One's greatest success

           9   stories.

          10            Finally, I am convinced that the merger      
12:45:32

          11   between J. P. Morgan Chase and Bank One will be

          12   good for the individual customer, good for the

          13   customer's community, and good for America.

          14       MS. BRAUNSTEIN:  Thank you very much.

          15   Ms. Werkmeister.                                      
12:45:46

          16       MS. WERKMEISTER:  Wendy Werkmeister, and I'm

          17   President of Wisconsin Women's Business Initiative

          18   Corporation.  I think I'm between your lunch; I'm

          19   the last testimony?

          20            Also I have to clarify that Hedy Ratner      
12:45:54

          21   before -- who was here before -- runs an excellent

          22   women's business center and she claims best in the

          23   nation.  It might be true, but that's south of the

          24   Wisconsin border.

                                                                203




           1            I do have handouts for you, too.

           2            As I said, President of the Wisconsin

           3   Women's Business Initiative Corporation.  We're a

           4   statewide economic development corporation.  Plain

           5   and simple, we impact lives on an economic basis,     
12:46:14

           6   and we do that by providing two basic services:

           7   Quality business education and access to capital.

           8            I have had the honor of being president

           9   for the last ten years.  And I will start out my

          10   story with the senior vice president of Bank One.     
12:46:28

          11   He and three other vice presidents or presidents of

          12   banks in the Milwaukee area and I toured on a very,

          13   very hot August morning because I needed $85,000

          14   for a loan loss reserve to pull out SBA money.

          15   They had their nice suits on and their nice shoes,    
12:46:44

          16   and I put them in a loaned client's van.  It was

          17   85 degrees out.  It was in the morning and humid,

          18   and the air conditioning didn't work, and there was

          19   a throw rug on the back of the van where they sat.

          20            I drove them around the heart of Milwaukee   
12:46:56

          21   and I pointed out what microlending is, how it

          22   creates jobs, how it makes a difference in what

          23   these stories are.  And as we rolled back to the

          24   community center in the parking lot, I locked the

                                                                204




           1   door, I turned to the four gentlemen, and I said, I

           2   need $85,000 -- you can all figure out how this is

           3   going to happen -- for a loan loss reserve.  It was

           4   the senior vice president of Bank One that stood to

           5   the table and said, you're in; and, by that           
12:47:18

           6   afternoon, I had that commitment for $85,000.

           7            Ten years ago, it was me, myself and I and

           8   a budget of $200,000, and I had great hope and

           9   promise of not just this organization but of

          10   commitment of microlending.  Ten years later, we're   
12:47:30

          11   a $2 million operational budget.  We're lending

          12   close to $2 million annually to very small

          13   businesses with an average loan size of $20,000; 25

          14   staff people and two offices, one in Milwaukee and

          15   one in Madison.                                       
12:47:44

          16            We serve about 1,600 unduplicated clients

          17   a year and, again, lend to approximately 70 to 75

          18   businesses a year directly but then package another

          19   100 deals at banks, Bank One being one of them, and

          20   other quasi-government, nontraditional loan           
12:48:00

          21   sources.

          22            Bank One has played a role with us

          23   significantly, and I do support the merger as well

          24   as I really welcome some of the innovative things

                                                                205




           1   that I believe J. P. Morgan has done in the past as

           2   it relates to microenterprise development.  I think

           3   that will really mix very well with Bank One where

           4   they have been to date.

           5            A couple individuals that have been          
12:48:18

           6   significant, Deb Neubauer, who is here today in the

           7   audience, serves formally on our South Central

           8   Advisory Team from Bank One; Andy Cole formally

           9   serves on my finance committee; and then I have new

          10   numerous other bankers from Bank One that are not     
12:48:30

          11   just sharing again their treasure with our

          12   organization but, more importantly, that of

          13   resource of time and talent.

          14            In addition, we bank with Bank One, and I

          15   actually put out a RFP about five years ago with      
12:48:42

          16   the other major banks in the Milwaukee area.  I

          17   felt Bank One had the best package.  They also

          18   extended us a line of credit.  They provided

          19   investments with our organization yearly; and we're

          20   also looking at an EQ2 investment for long-term       
12:48:54

          21   capital from Bank One.

          22            I think that's really all I have to say.

          23       MS. BRAUNSTEIN:  Thank you very much and thank

          24   you to our panel.  We are going to break now for

                                                                206




           1   lunch.  We are going to reconvene earlier than what

           2   your agenda says.  We'll be back, yes, at 1:20.

           3   We'll take a 30-minute break.  And we will start

           4   with the next panel at 1:20.

           5                        (Recess taken.)                  
13:22:46

           6       MS. BRAUNSTEIN:  I think we're going to get

           7   started.  I know our full panel is not here yet,

           8   but they can take their seats.  Their names are up

           9   there.  So as they walk up -- I'm sure they'll be

          10   wandering in soon and it may be our own fault that    
13:25:48

          11   they're a little late because of security, getting

          12   through security downstairs.  But since you're

          13   here, we might as well get started.

          14            Just to restate the ground rules for this

          15   meeting is that we do have a five-minute limit on     
13:26:04

          16   testimony, on oral testimony.  We have timekeepers

          17   over there that have a box that will flash yellow

          18   when you have two minutes left and will flash red

          19   when your time is up and also emit a very annoying

          20   noise.  So you'll know.  We would ask that you pay    
13:26:22

          21   heed to the timekeepers.

          22            And, lastly, please state your name and

          23   organization at the beginning of your statement for

          24   our court reporter for the record.  And with that,

                                                                207




           1   Ms. Rand, do you want to start?

           2       MS. RAND:  Sure.  Thank you.

           3            Good afternoon.  I'm Dory Rand.  I'm the

           4   Supervising Attorney for Community Investment at

           5   the Chicago-based Sargent Shriver National Center     
13:26:46

           6   on Poverty Law.  I'm also the coordinator of the

           7   statewide Financial Links for Low-Income People, or

           8   FLLIP Coalition.

           9            As a member of the Chicago CRA Coalition,

          10   I was here in 1998 testifying after we negotiated     
13:27:00

          11   an agreement with Bank One and First Chicago NBD,

          12   and I have had the opportunity to work with

          13   Bank One on a number of issues since then related

          14   to implementation and monitoring of that agreement.

          15   I also participated in negotiation of the CRA         
13:27:18

          16   Coalition's current 2004 memorandum of

          17   understanding with Bank One and J. P. Morgan Chase.

          18            I am not here to support or oppose the

          19   merger but rather to comment on issues relating to

          20   the convenience and needs of the communities to be    
13:27:34

          21   served.  My comments relate primarily to Bank One's

          22   performance under the Community Reinvestment Act

          23   service and investment tests and do not reflect the

          24   banks' performance in other areas around the

                                                                208




           1   country.  I urge the Federal Reserve to carefully

           2   consider the comments of other National Community

           3   Reinvestment Coalition members and people in

           4   communities that were not able to negotiate CRA

           5   agreements with Bank One and Chase.                   
13:28:02

           6            The 1998 agreement with Bank One included

           7   commitments to support financial education through

           8   grants and investments; to establish full-service

           9   branches in low- and moderate-income communities;

          10   to consider establishment of low-cost Electronic      
13:28:16

          11   Transfer Accounts for recipients of federal benefit

          12   payments; and explore the development of a pilot

          13   program to expand access to basic banking services.

          14            Bank One met or exceeded those commitments

          15   by generously supporting financial education and      
13:28:32

          16   free tax counseling programs by establishing

          17   branches in LMI communities, offering ETAs, and

          18   creating the Alternative Banking Program.

          19            Through the Alternative Banking Program,

          20   Bank One made it possible for over 3,000 consumers    
13:28:48

          21   in eight of Chicago's LMI communities to open

          22   checking or savings accounts despite a lack of

          23   credit history or with a blemished credit history

          24   with opening deposits of $10 instead of $100.  By

                                                                209




           1   working with Bank One to develop, monitor and

           2   expand the program, we were able to document that

           3   offering accounts on these terms made good business

           4   sense and generated sales and profits across

           5   multiple product lines.  This pilot program           
13:29:14

           6   positively influenced Bank One in development of

           7   more flexible eligibility requirements for opening

           8   accounts across its national footprint.

           9            The Shriver Center and the FLLIP Coalition

          10   community members have benefited from Bank One        
13:29:30

          11   grants in support of the FLLIP Financial Education

          12   and Individual Development Account Programs; and,

          13   more recently in 2003, Bank One made a substantial

          14   five-year commitment as the Shriver Center's local

          15   financial partner in the SEED Initiative where        
13:29:46

          16   they're providing program operating support and

          17   other support for elementary school children and

          18   parents to participate in financial education and

          19   college savings.

          20            Bank One should be commended for its         
13:29:58

          21   leadership in establishing branches, offering

          22   affordable accounts, and supporting these model

          23   programs.

          24            I am pleased that under the 2004

                                                                210




           1   memorandum of understanding, the banks have agreed

           2   to establish 12 new LMI branches; aspire to a ratio

           3   of branches in LMI to upper-income communities

           4   similar to that for all banks in the region; and to

           5   evaluate the feasibility of expanding the             
13:30:22

           6   Alternative Banking Program to the bank's whole

           7   market; and to attempt to retain strong, affordable

           8   checking and savings account products.

           9            But while Bank One's performance in some

          10   areas has been outstanding, I would be remiss if I    
13:30:34

          11   did not mention some of the areas in which there is

          12   room for improvement.

          13            I have expressed strong opposition to

          14   Bank One's involvement in high-cost tax Refund

          15   Anticipation Loans which strip earned income tax      
13:30:46

          16   recipients of significant work support benefits and

          17   undermine the bank's support for free tax

          18   counseling program.  I also strongly oppose

          19   Bank One and Chase involvement in commercial

          20   relationships with high-cost lenders such as payday   
13:31:00

          21   lenders and rent-to-own stores.

          22            We were not able to resolve these issues

          23   in the 2004 MOU, but the bank has agreed to

          24   consider its community responsibilities in

                                                                211




           1   determining whether to continue or establish these

           2   relationships and to explore creation of a direct

           3   deposit advance program to serve the needs of LMI

           4   households.

           5            I urge the Federal Reserve to require the    
13:31:22

           6   banks to fully and publicly disclose in writing

           7   their relationships with high-cost lenders and to

           8   hold the banks to the highest standards in

           9   evaluating such relationships and involvement in

          10   Refund Anticipation Loans.                            
13:31:36

          11            The banks should also be required to fully

          12   disclose the terms of the recent $800 billion CRA

          13   pledge and to respond in writing to the community

          14   group testimony and comments, and it would be

          15   appropriate to extend the comment period until        
13:31:48

          16   after such full disclosure and response.

          17            In closing, I look forward to a continued

          18   strong partnership with Bank One, Chase and to

          19   continuing to challenge our bank partners and

          20   regulators to do the right thing.  Thank you.         
13:32:00

          21       MS. BRAUNSTEIN:  Thank you very much.

          22   Mr. Raymundo.

          23       MR. RAYMUNDO:  Buenos tardes.  Thank you for

          24   allowing me the opportunity to comment on this

                                                                212




           1   pending merger.  I'm Raul Raymundo.  I'm the

           2   founder and CEO of the Resurrection Project.

           3            The Resurrection Project is a faith-based

           4   community development organization primarily

           5   serving the Latino communities in Chicago in the      
13:32:20

           6   southwest side of Little Village, Pilsen and Back

           7   of the Yards.  These communities have had a high

           8   poverty and unemployment rate and low educational

           9   attainment rates.  As a result of these challenges,

          10   the neighborhoods have been designated in the past    
13:32:36

          11   as Empowerment Zone areas and Enterprise

          12   Communities.  The Resurrection Project serves these

          13   communities through community organizing, home

          14   ownership education, housing development, and

          15   economic development.                                 
13:32:46

          16            The Resurrection Project has had an

          17   excellent relationship with Bank One.  We have

          18   benefited from annual grants, mortgages, affordable

          19   rental investments for tax credit projects and

          20   other activities that the staff participated in in    
13:33:02

          21   our community.

          22            Bank One has been an important partner

          23   since our founding in 1990.  In fact, it dates back

          24   when it was First Chicago.

                                                                213




           1            The Resurrection Project has chosen not to

           2   offer other comments regarding this proposed merger

           3   between Bank One and J. P. because we have no

           4   relationship with J. P. Morgan.  We would like to

           5   take this time to urge the regulators to listen       
13:33:26

           6   carefully to other groups such as the Woodstock

           7   Institute who are more knowledgeable about the

           8   potential impacts this merger will have nationally.

           9            Of course, the Resurrection Project wants

          10   to encourage the new company to increase and expand   
13:33:40

          11   its commitment to affordable housing and community

          12   development in Chicago.  Also, given the fact that

          13   the new company will have a stronger national

          14   presence rather than a regional one, it is

          15   important that the new leadership of the proposed     
13:33:54

          16   institution further expands their community

          17   development commitments throughout the country.

          18   This new company must take seriously the commitment

          19   to invest in affordable housing and community

          20   development.  Thank you.                              
13:34:08

          21       MS. BRAUNSTEIN:  Thank you.  Mr. Brown.

          22       MR. BROWN:  Good afternoon.  Thank you.  My

          23   name is Donnie Brown.  I am the Executive Director

          24   of Genesis Housing Development Corporation.  We are

                                                                214




           1   a South Side organization, faith-based, working to

           2   build houses in the Bronzeville area.  We also are

           3   engaged in housing education activity for local

           4   residents, also financial education programs for

           5   local residents.                                      
13:34:40

           6            I just wanted to thank you.  At this time,

           7   we are not prepared to oppose the merger; but, at

           8   the same time, we do want to list reservations we

           9   have as regards -- relates to the merger.

          10            As a native Chicagoan, I have been           
13:35:00

          11   intrinsically linked with Bank One and its many

          12   predecessors.  My first professional job was as a

          13   reconcilement clerk at Continental Bank.  As a

          14   result of their outreach program to inner city

          15   youth, my first real estate deal was with First       
13:35:20

          16   National Bank as a part of its community lending

          17   program.

          18            My work with Bank One has been very

          19   phenomenal and as successful for my organization.

          20   We have mostly recently been funded repeatedly for    
13:35:34

          21   our financial literacy program.  We also have great

          22   working relationships in terms of how Bank One

          23   makes presentations to the community, informing the

          24   community of what services they offer,

                                                                215




           1   understanding the bank process and the road within

           2   home purchasing and housing development.  So I

           3   really thank Bank One for their success and

           4   support.

           5            I believe that this success is based on      
13:36:04

           6   the perception reality that the bank has always

           7   been a Chicago institution.  Regardless of how

           8   large Bank One was, it was always felt that its

           9   roots was Midwest and that it was an essential U.S.

          10   state bank.  That merger that's now being proposed    
13:36:26

          11   is going to change their perception and raise

          12   questions of what would be the bank's commitment in

          13   the long term as it relates to Chicago

          14   neighborhoods, both to its residents and to the

          15   nonprofit groups that depend on a strong, stable      
13:36:44

          16   institution.

          17            I am not opposed to the merger.  I only

          18   want to voice my concern and need for reassurance

          19   that the CRA agreement worked out with the Chicago

          20   CRA Coalition becomes the model for low-income        
13:37:02

          21   communities across America as this will now be an

          22   American bank.  Large banks are the trend in

          23   America.  They are for both a bonus and also a

          24   concern.  It's just important that we spend time to

                                                                216




           1   address both.  Thank you.

           2       MS. BRAUNSTEIN:  Thank you very much.

           3   Mr. Jackson.

           4       MR. JACKSON:  Good afternoon and welcome to

           5   Chicago.  It's an honor to be here today because of   
13:37:36

           6   all of you who have joined together for this

           7   opportunity to participate, listen and comment on

           8   the proposed merger of Bank One with J. P. Morgan

           9   Chase, as well as to be in the history of those who

          10   have made such process of public review and comment   
13:37:56

          11   possible.  Our neighborhoods are better for it, and

          12   that is why local leaders and nonprofit community

          13   development corporations worked for its passage in

          14   the 1977 era as well as continue to review and

          15   participate in it today.                              
13:38:16

          16            Democracy succeeds with these forums and

          17   opportunities to consider, review and evaluate the

          18   practices that enhance freedom.  It was FDR in 1941

          19   speaking to the Congress who articulated these

          20   freedoms quite well:  Freedom of speech, freedom of   
13:38:36

          21   worship, freedom from want, and freedom from fear.

          22            I am not here today to account for the

          23   history of FDR but to remind and state again the

          24   want for affordable housing is, as we all know,

                                                                217




           1   very, very real today.  There is no GI bill today.

           2            Our 2003 Affordable Housing Fact Book

           3   indicates 800,000 households in Illinois struggle

           4   with affordability.  A new trend evidenced in the

           5   fact book over the last decade is the growth in       
13:39:14

           6   cost-burdened homeowners.  Another feature is the

           7   stagnation of the rental market.  There is

           8   virtually no new multi-family rental housing to

           9   speak of in Chicago or throughout the region.  In

          10   fact, analysis about the City of Chicago indicate     
13:39:34

          11   that the city is one of the top-ten cities, the

          12   only one of the top-ten cities in America to

          13   actually lose rental stock over the last decade.

          14            240,000 households are cost-burdened in

          15   the City of Chicago as of the 2000 census.  We know   
13:39:50

          16   that number has risen.  The multi-family rental

          17   stock is further experiencing risk because of the

          18   loss of federally assisted housing.  There has been

          19   much comment in the housing community, rightfully

          20   so, about predatory lending, payday loan              
13:40:08

          21   operations, destabilizing communities and families.

          22            At the Chicago Rehab Network, we share

          23   those concerns.  However, we believe that an

          24   overemphasis on home ownership at the expense of

                                                                218




           1   multi-family housing should be considered.

           2            Bank One has played a significant role in

           3   multi-family investments for affordable housing.

           4   This new merger should significantly grow our

           5   combined ability to support multi-family housing      
13:40:40

           6   that's affordable.

           7            I am attaching our comments about the

           8   products that we would recommend and we requested

           9   earlier in the year.  Significantly on that, I

          10   would just outline that those products were a tool    
13:40:54

          11   for preservation of the federally assisted stock.

          12            There's new legislation likely to be

          13   passed in the state that a bank and this new merged

          14   bank could significantly enhance preserving that

          15   important stock by tailoring our tool or product      
13:41:12

          16   for preservation.  We believe this should be a

          17   product especially for owners, not-for-profit

          18   owners, and new product for not-for-profit owners

          19   of affordable housing, particularly one that would

          20   enable them to refinance to up to 25-years terms,     
13:41:28

          21   and the rest will be submitted with the testimony

          22   today.

          23            Finally, this new bank can continue its

          24   critical tradition and that tradition of Bank One,

                                                                219




           1   previously First America NBD, previously First

           2   National Bank, of building communities by, one,

           3   committing to local decision-making here in Chicago

           4   for the State of Illinois; and, two, by

           5   implementing the memorandum of understanding agreed   
13:41:56

           6   to with the Chicago CRA Coalition and, again, by

           7   continuing the 25-year history of review of

           8   investments with community participation and,

           9   again, by creating new products for preservation of

          10   affordable housing in support for nonprofits in the   
13:42:10

          11   affordable housing business.

          12            We look forward to building on the

          13   important contributions and collaborations that

          14   Bank One has made with our members and communities

          15   over the last 25 years.  Thank you very much.         
13:42:26

          16       MS. BRAUNSTEIN:  Thank you very much, and thank

          17   you to the entire panel.  Would the next panel come

          18   forward, please?

          19            For those of you joining us, just to

          20   restate the ground rules, each speaker has five       
13:43:12

          21   minutes allotted to them.  We have timekeepers with

          22   lights.  A yellow light will light up when you have

          23   two minutes left, and then a red light and, as I

          24   said before, an annoying sound will occur when the

                                                                220




           1   time is up.  Also could you please remember to

           2   state your name and organization at the beginning

           3   of your statement for our reporter.

           4            And with that, would you like to start,

           5   please.                                               
13:43:40

           6       MS. HASLIP:  Good afternoon.  My name is

           7   Monica Haslip.  I am the founder and Executive

           8   Director of Little Black Pearl Workshop.  We are a

           9   not-for-profit organization housed on the south

          10   side of Chicago.                                      
13:43:52

          11            One of our -- I am here this afternoon to

          12   support the merger.  Our organization was founded

          13   ten years ago in the basement of a graystone on the

          14   south side of Chicago.  And a lot of our efforts

          15   have been to teach youth the connection between art   
13:44:08

          16   and business.

          17            As a result of that, we developed a

          18   relationship with Bank One a couple years ago in an

          19   effort to really begin to expand our programs so we

          20   can do even deeper work with the youth that we've     
13:44:24

          21   been working with over the years around the

          22   business of art, as well as understanding financing

          23   relationship to art.  And over the years, Bank One

          24   has done a tremendous job with working with our

                                                                221




           1   organization and other organizations throughout the

           2   community in support of the development of business

           3   concepts, as well as other activities happening in

           4   our neighborhoods.

           5            We have had no experience with Chase; but    
13:44:52

           6   one of the things that we are most excited about

           7   with the merger is it gives us an opportunity to

           8   work with a banking institution that is made up of

           9   two successful financial institutions merging to

          10   bring about even more aggressive and innovative       
13:45:12

          11   ways to serve our community.

          12            The community that we're housed in on the

          13   south side of Chicago is North Kenwood/Oakland.

          14   And that particular neighborhood is going through a

          15   tremendous amount of redevelopment; and, as a         
13:45:26

          16   result of it -- I have been there ten years myself,

          17   and at the beginning of the ten-year period before

          18   the renovation and redevelopment occurred, that

          19   neighborhood did not have a lot of support and

          20   resources in it.                                      
13:45:42

          21            And what we have experienced with

          22   Bank One, as the neighborhood has evolved, Bank One

          23   has evolved.  It has stepped up and made an effort

          24   to not only be progressive in lending and

                                                                222




           1   supporting the revitalization of the neighborhood,

           2   but they have also supported a number of us that

           3   are running not-for-profit organizations that are

           4   really supporting the infrastructure of that

           5   community.                                            
13:46:10

           6            So we are very excited as an organization

           7   to have a partnership with Bank One who has a

           8   tremendous history in the African-American

           9   community, in particular; and we're also looking

          10   forward to the relationship of an institution that    
13:46:24

          11   would have even greater potentials for supporting

          12   institutions and organizations throughout the City

          13   of Chicago and throughout the country as we

          14   continue to build our communities and the

          15   partnerships between the corporate community and      
13:46:42

          16   the partnerships between the not-for-profit

          17   communities that are really serving these

          18   communities.

          19            So thank you very much.

          20       MS. BRAUNSTEIN:  Thank you very much.             
13:46:52

          21   Mr. Barno.

          22       MR. BARNO:  Good afternoon.  It looks like I'm

          23   going to have to lean forward a little bit.

          24            My name is Gil Barno.  I'm Executive

                                                                223




           1   Director of Buckeye Community Hope Foundation in

           2   Columbus, Ohio.  I want to thank you for the

           3   opportunity to speak today.

           4            In addition to being Executive Director of

           5   Buckeye, I also hold a variety of positions with      
13:47:12

           6   regard to something called Youth Build which is a

           7   program for high school dropouts where they spend

           8   half their time earning a high school degree and

           9   half their time building housing for low-income

          10   families.                                             
13:47:26

          11            I am Director Emeritus of the affiliated

          12   network, the national organization, also chair of

          13   the Ohio Youth Build Coalition and chair of the CRA

          14   Youth Build Collaborative, which doesn't mean

          15   Community Reinvestment Act.  In that context, it      
13:47:38

          16   means Columbus/Rockford/Austin.  Before I joined

          17   Buckeye and got an honest job, I was a lawyer in

          18   Boston.

          19            Ever since Buckeye was formed in 1992,

          20   Bank One has been our most valuable partner.  We      
13:47:50

          21   have developed over 2,000 units of affordable

          22   housing across six states using the low-income

          23   housing tax credit program.  Bank One has

          24   participated in more than $25 million of debt

                                                                224




           1   financing for those projects.

           2            Bank One has also been extremely

           3   supportive of our Youth Build Columbus Program that

           4   we operate, having given us charitable funding to

           5   establish a computer learning center and also         
13:48:16

           6   having given us debt financing to fund a school

           7   building for our charter school.  With exception of

           8   the U.S. Department of Housing and Urban

           9   Development, no other organization has supported us

          10   more financially than has Bank One.                   
13:48:28

          11            On top of that, Bank One personnel have

          12   been extremely free and giving of their time and

          13   experience.  We have had community boards that

          14   Bank One personnel have served with distinction;

          15   and any time I need some sort of help or guidance,    
13:48:46

          16   I know who I can call and be pointed in the right

          17   direction or to a proper connection.

          18            The reason why we are supportive of this

          19   merger is because we operate in several states in

          20   which Bank One has never had a presence before and    
13:49:02

          21   we see this merger as an opportunity to broaden our

          22   partnership to cover those geographic areas where

          23   before we haven't been able to partner with them;

          24   and also because of the recent international

                                                                225




           1   movement that our organization has undertaken to

           2   try to get some of our Youth Build Program

           3   graduates into foreign exchanges, and we see this

           4   merger as something that could help to bring that

           5   about.  Thank you.                                    
13:49:26

           6       MS. BRAUNSTEIN:  Thank you very much.

           7   Mr. Downing.

           8       MR. DOWNING:  Good afternoon.  My name is

           9   Phillip Downing.  I am Director of the Enterprise

          10   Foundation's Columbus office and also the Executive   
13:49:36

          11   Director of the Community Development Collaborative

          12   of Greater Columbus.

          13            The Enterprise Foundation appreciates the

          14   opportunity to testify in support of the

          15   application by J. P. Morgan Chase and Company to      
13:49:46

          16   merge with Bank One.  I commend the Federal Reserve

          17   Board to agreeing with the recommendations of both

          18   the banks and the community advocates to hold

          19   public hearings on this important proposed merger.

          20            Enterprise is a national nonprofit           
13:49:58

          21   organization.  The foundation and its subsidiary

          22   organization, the Enterprise Social Investment

          23   Corporation, or ESIC, have committed more than

          24   $5 billion in financing to more than 160,000 homes.

                                                                226




           1   Almost all of them have been for low and very

           2   low-income families in very low and very low-income

           3   communities.  Most of the resources we bring to

           4   bear support the activities of community-based

           5   organizations.  Enterprise's network of grass-roots   
13:50:22

           6   groups numbers 2,500 and is in more than 850

           7   locations nationwide.

           8            Enterprise strongly supports the proposed

           9   merger between J. P. Morgan Chase and Bank One.

          10   Our support is based on a long-working relationship   
13:50:36

          11   with both institutions on a variety of initiatives

          12   in multiple locations.  Our partnerships with

          13   J. P. Morgan Chase and Bank One have been critical

          14   to our ability to achieve our mission of helping

          15   people up and out of poverty by providing             
13:50:48

          16   affordable housing and revitalizing communities.

          17            One example is these institutions'

          18   extraordinary commitment to affordable housing for

          19   low-income families through the low-income tax

          20   credit program.  Since 1994, J. P. Morgan Chase in    
13:51:02

          21   partnership with ESIC has invested more than

          22   $247 million to finance nearly 23,000 affordable

          23   houses through the housing credit.  Bank One has

          24   worked with ESIC to finance housing credit

                                                                227




           1   departments since 1989 and has invested more than

           2   $101 million to create more than 19,000 affordable

           3   homes.

           4            Enterprise has also worked with

           5   J. P. Morgan Chase and Bank One to provide            
13:51:26

           6   innovative, low-cost financing for housing and

           7   community development activities around the

           8   country.  J. P. Morgan Chase has provided more than

           9   $8 million in low-interest funds which Enterprise

          10   has leveraged with other private public funds to      
13:51:36

          11   make more than $54 million in loan commitments.

          12   These funds have helped over 150 community-based

          13   groups develop 21,000 affordable homes in ten

          14   cities.

          15            In addition, J. P. Morgan Chase has been     
13:51:48

          16   our partner in a large-scale neighborhood

          17   transformation initiative in Baltimore, Maryland.

          18   The bank provided credit enhancement of $3 million

          19   to ESIC bond financing to help the construction of

          20   75 low-income apartments at the Award Heritage        
13:52:02

          21   Crossing HOPE VI development.

          22            In Columbus, Bank One was a founding

          23   investor in the Community Development Collaborative

          24   of Greater Columbus, a community-funding

                                                                228




           1   intermediary, and has accurately participated since

           2   1996.  This investment has been in the form of

           3   financial support as well as corporate leadership.

           4   As the community development industry in Columbus

           5   matures, Bank One strongly supports efforts to        
13:52:24

           6   evaluate the capacity of organizations and make

           7   funding available based upon a criteria that

           8   fosters durable and sustainable nonprofit

           9   development entities.

          10            Locally, Bank One executives have            
13:52:36

          11   dedicated countless hours serving on boards of

          12   community development organizations and helping to

          13   shape the industry's future.  Additionally, capital

          14   has been made available to support projects

          15   developed by CDC in neighborhoods and the central     
13:52:48

          16   city that have not seen significant investment in

          17   over 40 years.  Successful stabilization and

          18   subsequent revitalization in Columbus' distressed

          19   neighborhoods hinges on the leadership from the

          20   public and private sectors that promotes clearer      
13:52:58

          21   vision.  We are optimistic that Bank One will

          22   continue to be a driving force in this critical

          23   effort.

          24            It has been Enterprise's experience that

                                                                229




           1   J. P. Morgan Chase and Bank One are committed to

           2   community reinvestment, willing to work with

           3   community-based organizations, and able to bring

           4   tremendous capital and expertise to tough community

           5   development challenges.  We understand, as we heard   
13:53:18

           6   here today, that many other organizations have

           7   similar views and share our recommendations for

           8   that approved merger application.

           9            We also understand, as we've heard today,

          10   that folks have some concerns about the proposed      
13:53:30

          11   merger.  We encourage the Fed to take seriously

          12   these concerns and encourage the banks to continue

          13   to listen and to work with those who have raised

          14   them.

          15            Thank you for this opportunity to testify.   
13:53:40

          16       MS. BRAUNSTEIN:  Thank you very much.

          17   Mr. Tanaka.

          18       MR. TANAKA:  Thank you for the opportunity to

          19   speak at this hearing this afternoon.  My name is

          20   Les Tanaka.  I am the Chief Staff and Executive       
13:53:54

          21   Director of the Greater Dallas Asian-American

          22   Chamber of Commerce.

          23            I'll be brief, but I think I have a

          24   significant story to tell.  Our chamber is the

                                                                230




           1   largest Asian-American Chamber in the United States

           2   with over 1200 members, a budget of just under a

           3   million dollars, and paid staff of eight.

           4            Just over three years ago, J. P. Morgan

           5   Chase approached our chamber to manage its own        
13:54:18

           6   microbusiness program.  Since that time, we have

           7   developed this program under the mentoring and

           8   tutoring of J. P. Morgan Chase executives

           9   developing our credit policy manual and operational

          10   manual.  We believe that we are the only ethnic       
13:54:34

          11   chamber in the United States that manages its own

          12   microbusiness program.

          13            This program has given access to capital

          14   to many not only Asian but Hispanic and

          15   African-American businesses in the North Texas        
13:54:48

          16   area.  The microbusiness program is funded through

          17   a line of credit of $1 million guaranteed by the

          18   Greater Dallas Asian-American Chamber through the

          19   auspices of J. P. Morgan Chase.  Chase also

          20   provides pro bono back office servicing for the       
13:55:08

          21   loan portfolio which now sits just under $600,000.

          22            We believe that this program can be a

          23   model program for banks and the merged bank to take

          24   across the country to make capital accessible to

                                                                231




           1   small, emerging businesses for business expansion,

           2   equipment and inventory acquisition and growth of

           3   our economy.

           4            For that reason, the Greater Dallas

           5   Asian-American Chamber supports the merger of         
13:55:42

           6   Bank One and J. P. Morgan Chase.  Thank you.

           7       MS. BRAUNSTEIN:  Thank you very much.

           8   Ms. Holston.

           9       MS. HOLSTON:  Thank you.  I am Barbara Holston,

          10   Executive Director of the Fort Worth Housing          
13:55:54

          11   Authority in Fort Worth, Texas.  Thank you for this

          12   opportunity to speak in support of the proposed

          13   merger of J. P. Morgan Chase and Bank One

          14   Corporation.

          15            I am representing the Housing Authority of   
13:56:06

          16   the City of Fort Worth and can tell you that the

          17   Housing Authority has been privileged with a long

          18   and positive relationship with both Bank One and

          19   J. P. Morgan Chase.

          20            As public housing agencies have struggled    
13:56:20

          21   with the challenges to deconsecrate poverty,

          22   revitalize neighborhoods and improve the quality of

          23   life for the families we serve, Bank One has been a

          24   true partner in helping us accomplish our

                                                                232




           1   objectives through better quality housing and

           2   programs that promote self-sufficiency.

           3            Bank One has demonstrated to the

           4   Fort Worth Housing Authority its commitment to the

           5   transformation of low-income housing and has          
13:56:46

           6   supported our efforts to create mixed-income

           7   neighborhoods through new construction and the

           8   revitalization of older neighborhoods and

           9   properties.

          10            Examples that I can share with you in this   
13:56:58

          11   regard include the following:  First in 1994,

          12   Bank One provided a $1.02 million loan to the

          13   Fort Worth Housing Authority to finance the

          14   purchase of a 216-unit apartment complex from the

          15   Resolution Trust Corporation.  That purchase          
13:57:16

          16   increased the inventory of quality, affordable

          17   housing owned by the Housing Authority.

          18            Because of Bank One's willingness to

          19   provide bridge financing, we were able to acquire a

          20   well-located, well-maintained property through the    
13:57:30

          21   RTC's Affordable Housing Disposition Program which

          22   required that 35 percent of the units have income

          23   and rent restrictions.  Fort Worth Housing

          24   Authority committed to maintain the affordability

                                                                233




           1   of 100 percent of the rents for moderate-income

           2   families.

           3            Bank One was great to work with, very

           4   accommodating and willing to provide assistance

           5   throughout the transaction.  After closing the        
13:57:58

           6   loan, the bank issued a press release that

           7   stimulated awareness in the community of the

           8   potential for public, private partnerships in

           9   addressing affordable housing needs.

          10            The bridge loan was paid off with proceeds   
13:58:16

          11   from the issuance of essential purpose tax-exempt

          12   housing revenue bonds.  Bank One serves as the

          13   trustee for the bond holders.

          14            Another example of Bank One's loan history

          15   of providing technical assistance and support to      
13:58:32

          16   public housing agencies goes back to September 1999

          17   when I attended a two-and-a-half-day

          18   Bank One-sponsored workshop on developing housing

          19   in the new funding era.  Presenters provided

          20   hands-on, classroom, practical training on            
13:58:48

          21   developing affordable housing and the many products

          22   available for finance and refinancing.

          23            The final example I would like to give is

          24   Bank One's recent sponsorship and application on

                                                                234




           1   our behalf in which we acquired a $500,000 grant

           2   through the Federal Home Loan Bank's Affordable

           3   Housing Program.  That grant was used along with

           4   low-income housing tax credits to develop 216 units

           5   of housing that includes 54 public housing units.     
13:59:20

           6            Additionally, the Fort Worth Housing

           7   Authority has enjoyed a long and positive

           8   commercial banking relationship with both Bank One

           9   and J. P. Morgan Chase.  Both banks have

          10   consistently provided excellent service with an       
13:59:36

          11   emphasis on public attention by bank

          12   representatives.  These relationships have enhanced

          13   our business efficiency and lessened our exposure

          14   to fraud and counterfeit, which we are very

          15   appreciative.                                         
13:59:56

          16            We support the merger and we look forward

          17   to continuing our relationship and enhancing the

          18   partnerships that currently exist.  Thank you.

          19       MS. BRAUNSTEIN:  Thank you very much.  Ms. Lin.

          20       MS. LIN:  Thank you for this opportunity.  My     
14:00:12

          21   name is Chi-Mei Lin.  I am the Executive Director

          22   with the Chinese Community Center from Houston.

          23   I'm here to support the merger of the J. P. Morgan

          24   Chase and the Bank One Corporation, and I would

                                                                235




           1   like to share with you some real good experiences

           2   the Center had with J. P. Morgan Chase.

           3            The Center's mission is to serve as a

           4   bridge to connect the east and the west.  Our main

           5   population is the new immigrants.  As you know from   
14:00:42

           6   the Census 2000, Houston is the most diverse city

           7   in the United States, and the Asian-Americans is

           8   the fastest growing population in Houston.

           9            Yet when you think of the banking

          10   services, okay, it's very intimidating to new         
14:00:56

          11   immigrants because of the language barrier, and a

          12   lot of time it's a difficult concept like the

          13   credit versus cash.  Oftentimes you see Asian

          14   clients go to a bank with a lot of cash, and they

          15   try to tell them, why don't you use the credit        
14:01:10

          16   system.  And they say, well, we don't know where

          17   you can put our money to.  So they only believe in

          18   cash.  That took a lot of education.

          19            The J. P. Morgan Chase has done a lot of

          20   community outreach through educational programs and   
14:01:24

          21   through really funding, substantial funding

          22   assistance to the Center.

          23            We got the mortgage through J. P. Morgan

          24   Chase to provide our first building which was in

                                                                236




           1   the '90s.  Now as we move on to expand our

           2   services, they help us to give the letter of

           3   support, the credit line letter, and also they help

           4   us with our program development.

           5            The financial literacy is a main focus at    
14:01:52

           6   the Center's educational program right now because

           7   we serve 1,200 adult immigrants each year.

           8   Financial literacy is important because that's the

           9   basic and the necessary component to help them to

          10   obtain self-sufficiency.  We compose different        
14:02:12

          11   workshops each year, and actually all the

          12   instructors are from the local banks from

          13   J. P. Morgan Chase.  They provide us with bilingual

          14   staff members to teach the classes and, oftentimes,

          15   they also help us to prepare the bilingual            
14:02:28

          16   materials.  And we often hear good, you know, like

          17   cases that tell us, oh, we got our refinance

          18   through J. P. Morgan Chase because that member

          19   there is so friendly and they're so helpful.

          20            So what I really want to share with you is   
14:02:44

          21   J. P. Morgan Chase has done more than just the

          22   assistance.  Often times they receive

          23   policy-oriented guidance and they also take us and

          24   walk with us.  So we have a lot of successful

                                                                237




           1   immigrants achieve financial independence through

           2   J. P. Morgan Chase assistance.

           3            The other area I wanted to share with you

           4   is the revitalization of Houston.  As you know, the

           5   Southwest Houston survey, the first half, for most    
14:03:16

           6   of the immigrants, not just the Asian immigrants

           7   but the Hispanics, Bosnians and Eastern European,

           8   they tend to come to Southwest Houston, and then we

           9   really need to make sure that they get adequate

          10   assistance.  So we started the Job Training           
14:03:32

          11   Program, and J. P. Morgan Chase has helped us with

          12   a lot of support by sending us instructors.  They

          13   teach them how to conduct job interviews, and also

          14   they post the job openings.  Okay.  Once they

          15   finish the banking and bookkeeping classes, if they   
14:03:50

          16   get an opening, they will offer us the interview

          17   chances and often times they get hired.

          18            If you come to Houston, and you visit the

          19   Chinatown of Houston, you are going to see a

          20   different dynamics there.  We really think            
14:04:04

          21   J. P. Morgan Chase has done a lot to the

          22   revitalization of Southwest Houston, and especially

          23   they're coming into our outreach department; and

          24   whenever we have a need, they will really offer

                                                                238




           1   their best and oftentimes even, you know, the

           2   program development.

           3            We recently got a funding, a grant through

           4   the J. P. Morgan Chase foundation, to start a youth

           5   program financial literacy.  Our youth has piloted    
14:04:34

           6   this Funny Money Society where they learn how to

           7   do -- conduct saving activities and later on the

           8   budgeting part, and I think that really helps the

           9   immigrant population grow.

          10            So with this, we really support the merger   
14:04:52

          11   of the J. P. Morgan Chase and Bank One.  Thank you.

          12       MS. BRAUNSTEIN:  Thank you very much.  And

          13   Mr. Franco.

          14       MR. FRANCO:  Thank you, Madam Chair, ladies and

          15   gentlemen of the Federal Reserve Board, Federal       
14:05:06

          16   Reserve Bank Chicago.  Thank you for the

          17   opportunity to present to you our testimony in

          18   support of the J. P. Morgan Chase/Bank One merger

          19   that is at this time before you for regulatory

          20   approval.                                             
14:05:18

          21            On behalf of the United States Hispanic

          22   Chamber of Commerce based in Washington, D.C., I am

          23   George Franco, Chairman of the USHCC Finance and

          24   Strategic Planning Committee of our Board of

                                                                239




           1   Directors.  We are the nation's premier Hispanic

           2   business association that today represents the

           3   interest of over 1.6 million Latina- and

           4   Latino-owned businesses.  We do this in connection

           5   with our 158 local affiliates that are in every       
14:05:42

           6   major city throughout the United States.

           7            The mission of the Chamber is to actively

           8   promote, support and advance the growth and

           9   development of the Hispanic enterprise to the

          10   benefit of the entire American economy.  Our          
14:05:50

          11   nationally syndicated weekly television show,

          12   Hispanics Today, airs on networks that include NBC,

          13   CBS, ABC, and Fox.  This high-energy communications

          14   vehicle is the medium through which we drive the

          15   Chamber's entrepreneurial media message in over       
14:06:04

          16   75 major markets that together represent more than

          17   80 percent of the national Hispanic viewer

          18   audience.

          19            In fact, Bank One was our most generous

          20   founding sponsor of this dynamic and bilingual        
14:06:16

          21   component to the United States Hispanic Chamber.

          22   The Bank One executive management team was

          23   graciously willing to step up during the vulnerable

          24   early stage of development and start-up phase of

                                                                240




           1   what has now become one of our most successful

           2   business units with all corporate sponsorship

           3   opportunities currently and completely sold out.

           4            Today, over half of our nation's

           5   Hispanic-owned business are women-owned, while the    
14:06:36

           6   growth in Latina start-ups outpaces all other

           7   groups including white males by a margin of 3 to 1.

           8            In this ever-changing knowledge-based

           9   economy, Latinos are no longer only employees and

          10   consumers.  We now more than ever are employers and   
14:06:50

          11   investors as we fulfill our destiny in great part

          12   thanks to the generosity of J. P. Morgan Chase and

          13   Bank One.  We build wealth, participate in our

          14   nation's political, legislative and regulatory

          15   process -- as we are doing here today -- and live     
14:07:04

          16   out the American dream.  Indeed, it is an exciting

          17   time to be Hispanic.

          18            However, with every new generation of

          19   high-growth Hispanic markets, there are growing

          20   challenges we face every day to meet the needs of     
14:07:14

          21   our very large yet relatively underserved

          22   constituency.  In the last five years alone, the

          23   USHCC has tripled in size.  With the outstanding

          24   participation and assistance of numerous

                                                                241




           1   professionals from Bank One and J. P. Morgan Chase,

           2   we have focused and continue to focus our efforts

           3   on behalf of our members in a number of key areas.

           4   Chamber areas of focus include increased access to

           5   debt and equity capital; increased corporate and      
14:07:36

           6   government procurement opportunities for Hispanic

           7   suppliers; and continued increases in the placement

           8   of Hispanic professionals within corporate

           9   America's executive level work force.

          10            Hispanic leadership at the corporate board   
14:07:48

          11   level is also a top priority, and we look forward

          12   to working with the new J. P. Morgan Chase/Bank One

          13   to identify and bring forward outstanding Hispanic

          14   board member candidates.  We find that our most

          15   successful corporate partners already tap Hispanic    
14:08:00

          16   leadership in this capacity, not because they

          17   should or would or could but because of the

          18   outstanding new and efficient bottom-line revenue

          19   opportunities available with measurable and

          20   sustainable results for American corporations who     
14:08:12

          21   are able to successfully tap our nation's

          22   high-growth Hispanic markets through effective

          23   leadership.

          24            Executives from both J. P. Morgan Chase

                                                                242




           1   and Bank One have walked in step side by side with

           2   us and continue to provide substantial funding

           3   while at the same time volunteer countless hours at

           4   local and national levels.

           5            For example, USHCC in a unique and           
14:08:32

           6   historic partnership with Bank One launched a

           7   nationwide initiative known as Alianza, Gateway to

           8   Capital.  Alianza delivered a debt capital vehicle

           9   via the network of USHCC local affiliate Hispanic

          10   chambers of commerce throughout the United States.    
14:08:46

          11   Alianza also included a national USHCC branch of

          12   small business credit card program that continues

          13   to serve our constituent today.

          14            Further, Bank One's generous multi-year

          15   sponsorship of Alianza that included early-stage      
14:08:58

          16   sponsorship of our television show, as described

          17   above, the bank substantially funded and worked

          18   with our staff over a multi-year period to assist

          19   substantial MIS technology development.

          20            We owe a tremendous debt of gratitude to     
14:09:10

          21   Mr. Ruben Ramos, an outstanding, well-organized

          22   national Hispanic leader who designed and led the

          23   Alianza initiative in great service to this

          24   country's entire Hispanic business community.

                                                                243




           1            For the bankers of Bank One, debt capital

           2   vehicle and bank card credit facilities were simply

           3   not enough.  Bank One surprised us when they

           4   brought forward an exciting leading-edge equity

           5   capital investment strategy.  In fact, Bank One's     
14:09:30

           6   Community Development Corp offered to serve as lead

           7   investor and principal organizer in the First

           8   National Private Equity Fund focused on high-growth

           9   Hispanic small businesses and sponsored by the

          10   USHCC.

          11            For this initiative, Bank One provided not

          12   one but two rounds of hundreds of thousands of

          13   dollars of early-stage organizational costs, and

          14   Hispanic private equity is now approaching $50

          15   million in private equity.  The SBA will supplement   
14:09:52

          16   this by $100 million in a two-tiered SBIC

          17   participating securities leverage which will bring

          18   the fund's total capital to $150 million.

          19            Today, the fund is focused on growing

          20   Hispanic-owned or operated businesses in media        
14:10:06

          21   entertainment, food and beverage, information

          22   technology, telecommunications education,

          23   healthcare and other sectors.

          24            Remarkably, Bank One's development staff

                                                                244




           1   spent hundreds, literally hundreds and hundreds of

           2   hours raising this fund and bringing us together.

           3            Again, to conclude, I just want to state

           4   that we are here in support of the merger, and we

           5   thank you for the opportunity to present to you       
14:10:28

           6   here today.  Thank you.

           7       MS. BRAUNSTEIN:  Thank you very much and thank

           8   you to the entire panel.  If the next panel would

           9   please come forward.

          10            Good afternoon and welcome.  Just for the    
14:11:18

          11   record and for your edification, in case you

          12   haven't been here earlier, I will restate the

          13   ground rules.  Each speaker has five minutes to

          14   speak.  There are two timekeepers over there and

          15   you will see the box with the lights.  The yellow     
14:11:34

          16   light indicates you have two minutes left.  The red

          17   light and the noise means time is up.  If you could

          18   please pay attention to that.

          19            And, additionally, please at the beginning

          20   of your statement state your name and organization    
14:11:48

          21   because we need it for the record.

          22            And with that, we can begin with

          23   Ms. Sanchez.

          24       MS. SANCHEZ:  Thank you.  My name is

                                                                245




           1   Bethany Sanchez.  I work for the Metropolitan

           2   Milwaukee Fair Housing Council.  Our home office is

           3   Milwaukee, Wisconsin, and we have satellite offices

           4   in Madison and Green Bay.  I would like to thank

           5   you for holding the hearings today to provide the     
14:12:10

           6   audience with an opportunity to give our

           7   perspective on the potential merger between Chase

           8   and Bank One.

           9            At the Fair Housing Council, I'm the

          10   Director of the Community and Economic Development    
14:12:24

          11   Program.  The CED program, as we call it, is a

          12   program that works in a proactive way on fair

          13   lending and fair growth and affordable housing

          14   issues.  So it's with that in mind that I would

          15   like to provide my comments.                          
14:12:44

          16            I'm here today to express our gratitude

          17   for Bank One's past community development

          18   activities and involvement in the community of

          19   Milwaukee; but I'm also here to express our grave

          20   concern about the potential merger and the huge       
14:12:58

          21   entity that it would result in if approved.

          22            Bank One and specifically CRA Officer

          23   Gwen Dansby particularly in the past had been very

          24   involved in community development and activities in

                                                                246




           1   Milwaukee.  Gwen was the chair of a city-wide

           2   banker's initiative to increase mortgage lending to

           3   underserved populations.  She was also an active

           4   participant in our strategies to overcome predatory

           5   practices initiatives, STOP for short; our STOP       
14:13:30

           6   legislative work group, which ended up being

           7   successful in passing legislation at the state

           8   level to curb predatory practices in Wisconsin.

           9   Ms. Dansby's assistant, Lynette Gerot (phonetic),

          10   was also a participant in STOP.  She worked in our    
14:13:50

          11   outreach and education work group and the financial

          12   options work group until she was laid off about a

          13   year or so ago.

          14            However, when I recently polled my

          15   community development colleagues in Milwaukee         
14:14:04

          16   regarding Bank One's CRA record, the silence was

          17   deafening.  I sent e-mails to individuals at over

          18   50 community organizations individually as well as

          19   to a LISTSERV that is well-known and well

          20   subscribed to and run by the Urban Economic           
14:14:22

          21   Development Association of Wisconsin.  And most of

          22   the folks on that LISTSERV and all the folks that I

          23   sent individual e-mails to know me and know me well

          24   and aren't afraid to respond to me normally.

                                                                247




           1            I explained that I would be testifying

           2   here today and that I wanted to bring their

           3   comments with me and share them with the group.  I

           4   said that I wouldn't name names, unless they wanted

           5   me to, but I wanted to share positive experiences     
14:14:48

           6   that they had with the bank or if there were

           7   experiences that they had or a cause for concern,

           8   that I wanted to share those as well.  The silence

           9   was deafening.  I didn't hear anything.

          10            Finally, I ended up receiving about a        
14:15:04

          11   handful of e-mails from folks who said that they

          12   hadn't had experiences one way or another with the

          13   bank.  So then I ended up getting on the phone and

          14   started making phone calls to folks.  I got the

          15   same kind of nonresponse answers.                     
14:15:22

          16            I spoke with leaders at Milwaukee's three

          17   largest and most respected nonprofit home-buying

          18   counseling agencies.  Of the three, only one was

          19   familiar with Bank One's mortgage products targeted

          20   to low- and moderate-income buyers.  Those products   
14:15:36

          21   are actually pretty innovative, but only one of the

          22   three biggest ones knew about them.

          23            During a couple of calls, I was told that

          24   the local Bank One staff was good and interested

                                                                248




           1   but that they were powerless to tailor their

           2   products to the specific needs of the Milwaukee

           3   market.

           4            While local flexibility should not be

           5   impossible under the proposed new entity, the fact    
14:16:02

           6   that it does not exist now coupled by -- coupled

           7   with the fact that it will be an even bigger

           8   institution even farther away from Milwaukee is a

           9   matter of concern for us.

          10            As the coordinator an anti-predatory         
14:16:16

          11   lending initiative, I also want to express my

          12   concern about predatory lending.  It's my

          13   understanding that Chase has established some

          14   decent best practice policies regarding the

          15   subprime loans it makes.  However, for the loans      
14:16:28

          16   that it purchases, services and securitizes, the

          17   standard is much lower.

          18            The standard appears to simply be no HOPA

          19   loans or loans that violate state laws.  Well,

          20   that's good as far as it goes, but one of Chase's     
14:16:42

          21   executive has been quoted as saying, "If they

          22   comply with the law, we do business with them."

          23            Hopefully, Chase and Bank One understand

          24   that there are millions of predatory loans out

                                                                249




           1   there that are structured to just barely avoid HOPA

           2   and many more that may be legal but are

           3   unconscionable.  If they do understand it, then

           4   they must understand that the way they participate

           5   in the service and purchasing and securitizing of     
14:17:08

           6   the subprime loans, all too often predatory loans,

           7   is a practice that puts profits before people and

           8   is not a practice that furthers community

           9   development.  These communities are being

          10   destabilized -- and I see it's my time.  I will put   
14:17:24

          11   my comments in writing.  Thank you very much.

          12       MS. BRAUNSTEIN:  Thank you very much.

          13   Mr. Lemonides.

          14       MR. LEMONIDES:  Good afternoon and thank you

          15   for the opportunity to speak today.  My name is       
14:17:34

          16   James Lemonides, and I am Chief Executive Officer

          17   of the Greater North-Pulaski Development

          18   Corporation here in Chicago, a nonprofit community

          19   development corporation founded in 1977 and serving

          20   the west and northwest side communities of the City   
14:17:52

          21   of Chicago.

          22            Our primary service area is 10 square

          23   miles bounded by Chicago Avenue on the south,

          24   Belmont Avenue on the north, Western on the east,

                                                                250




           1   and Oak Park Avenue on the west.  This area is home

           2   to over 215,000 residents, approximately 60 percent

           3   of which are Hispanic; approximately 20 percent,

           4   African-American; and 20 percent, white or other

           5   ethnicities.  This service area has been and still    
14:18:24

           6   is one of Chicago's heaviest concentrations of

           7   industry.

           8            Our primary mission has been to reverse

           9   the trend of capital drain that began to afflict

          10   this neighborhood in the 1960s.  Our primary means    
14:18:38

          11   has been to nurture and retain our base of

          12   industrial companies such that they can grow and

          13   create jobs within one of Chicago's economically

          14   disadvantaged communities.

          15            Since 1978, we have packaged small           
14:18:54

          16   business expansion loans through various programs

          17   of the U.S. Small Business Administration.  We've

          18   packaged over $40 million since our inception and

          19   effected over 3,000 jobs.  Our industrial retention

          20   program, developed jointly with the City of           
14:19:12

          21   Chicago's Department of Planning in 1984, continues

          22   to be a staple program in Chicago's efforts to

          23   retain and grow industrial jobs for its citizens.

          24            Bank One and its earlier incarnations as

                                                                251




           1   First Chicago and First National Bank of Chicago

           2   has been a consistent partner in our efforts ever

           3   since we became a tax-exempt charitable

           4   organization in 1981.  Their grant support has been

           5   consistent and has grown to the point where           
14:19:44

           6   Bank One is now one of our largest annual

           7   supporters.  The bank has continued this support

           8   and its participation in small business lending in

           9   our neighborhood throughout all of the mergers in

          10   its history.                                          
14:20:00

          11            During the past five years alone, the

          12   Bank One/SBA Community Express Program has served

          13   as a fine example of our collaboration resulting in

          14   13 loan packages totaling $1,118,000 for

          15   principally minority clients.  We're still            
14:20:16

          16   utilizing this program with Bank One.

          17            Bank One was the first mortgage lender for

          18   the Chicago/Kedzie shopping mall redevelopment

          19   project developed by the Matanky Realty Group in

          20   partnership with the West Humboldt Park Development   
14:20:30

          21   Council.  This initiative turned a derelict, tax

          22   delinquent eyesore into a vibrant model of

          23   community-based commercial development.  A former

          24   loan officer of the bank was instrumental in

                                                                252




           1   coaching the nonprofit organization in structuring

           2   its participation and really helped beyond the call

           3   of duty in making the collaboration come to

           4   fruition.

           5            I'm here today to state my conditional       
14:20:54

           6   support for the proposed merger of Bank One and

           7   J. P. Morgan Chase.  I say conditional because it

           8   is based upon the expectation that Bank One's

           9   aggressive support of Chicago community

          10   revitalization efforts will continue and even grow    
14:21:10

          11   after the merger.

          12            Like some of my colleagues testifying

          13   today, I'm concerned that a loss of local autonomy

          14   in Chicago could undermine or diminish the strong

          15   record of institutional involvement that has          
14:21:24

          16   characterized our relationship with Bank One over

          17   the years.  Officials of Bank One have repeatedly

          18   assured us of their abiding commitment, and the

          19   support of Greater North-Pulaski Corporation is

          20   based upon these assurances.                          
14:21:38

          21            Again, I thank you for the opportunity to

          22   be heard today.

          23       MS. BRAUNSTEIN:  Thank you very much.

          24   Mr. Kuthy.

                                                                253




           1       MR. KUTHY:  Yes, as you can probably tell, I am

           2   not Deborah Jones, and the sign here says so.  I am

           3   a board member of the Detroit Alliance For Fair

           4   Banking and a former banking commissioner in the

           5   State of Michigan with the dubious honor of having    
14:22:02

           6   been the first regulator to block an acquisition of

           7   another bank using CRA as the rationale of poor

           8   performance.

           9            The letter I'm going to read is from our

          10   president and CEO, Deborah:  My name is               
14:22:18

          11   Deborah L. Jones, President and CEO of the Detroit

          12   Alliance for Fair Banking located in Detroit,

          13   Michigan.  My purpose this afternoon is not to take

          14   a stand in opposition to the J. P. Morgan

          15   Chase/Bank One acquisition but one of neutral,        
14:22:34

          16   unbiased concern.

          17            The Detroit Alliance for Fair Banking is a

          18   civil rights organization comprised of and

          19   representative of a coalition of city-wide

          20   community-based groups within the City of Detroit.    
14:22:44

          21   Our history dates back to 1988 after a

          22   controversial newspaper series based on extensive

          23   research found and reported disparities and unfair

          24   racial patterns in mortgage lending by many

                                                                254




           1   Detroit-area banks.

           2            Incorporated in 1989, our organizational

           3   mission is to monitor CRA activity and to provide

           4   collaborative advocacy in the areas of public

           5   policy and corporate citizenship with local           
14:23:12

           6   financial institutions.  Our purpose is to

           7   encourage and ensure that fair banking services are

           8   being provided and that small businesses, urban

           9   dwellers and minorities who have traditionally been

          10   underserved or underrepresented are provided equal    
14:23:24

          11   access to credit opportunities through a series of

          12   semi-annual reviews between the Detroit Alliance

          13   and local senior bank management.

          14            Through the years, although sometimes

          15   challenged, one of the comforts of the Detroit        
14:23:38

          16   Alliance was that we worked with local senior

          17   management decision-makers who were sensitive to

          18   our discussions in meeting the credit needs of the

          19   Detroit community.  It is within this realm that I

          20   come before you very concerned.                       
14:23:52

          21            Our community is now facing the fourth

          22   merger/acquisition of the formerly known National

          23   Bank of Detroit, NBD:  National Bank of Detroit,

          24   NBD; First Chicago NBD; Bank One; and now another

                                                                255




           1   which may jeopardize the Detroit Alliance's ability

           2   to effectively communicate concerns and expedite

           3   necessary change.

           4            We at the Detroit Alliance are very

           5   concerned that with each merger, high-level senior    
14:24:18

           6   officers with the capacity to authorize resolution

           7   to "city-wide" credit/service needs have been far

           8   removed from the City of Detroit into other states.

           9   It concerns us that the out-of-state bank

          10   authorities may potentially become indifferent to     
14:24:32

          11   understanding and providing solutions to the true

          12   credit and service needs of our community.

          13            Although Bank One has been responsive in

          14   our discussions of the community's credit

          15   requirements, we are concerned that the commitment    
14:24:44

          16   and sensitivity of future discussions may be

          17   weakened by potential indifferences of out-of-state

          18   senior authority.

          19            Our hope is that this merger will break

          20   the pattern of "far-removed", high-level senior       
14:24:56

          21   authority and return the city-wide decision-making

          22   authority to the local state senior officers.  Our

          23   hope is that the merged banks of J. P. Morgan Chase

          24   and Bank One will embrace and recognize the

                                                                256




           1   strength of the Detroit community and the untapped

           2   opportunity that lay within her.

           3            It is our hope and expectation that the

           4   merged banks will continue to collaborate with the

           5   Detroit Alliance and seek out ways to create          
14:25:18

           6   greater equitable services, products and

           7   procurement opportunities for Detroit residents,

           8   small businesses and minorities.

           9            And a postscript from one regulator to

          10   another:  I would suggest that an interesting thing   
14:25:32

          11   that the Federal Reserve might do to help this

          12   process with community action plans is to act as a

          13   examiner of those plans' performance and report

          14   back to the local organizations such as ours that

          15   are using them; and this would be a way to validate   
14:25:54

          16   the assertions of the bank and cut down an awful

          17   lot of flack and discussions.  It would be helpful

          18   as well for the Federal Reserve examiners to get

          19   into the community action plan and understand their

          20   mechanics.                                            
14:26:10

          21            Secondly, I would suggest that the

          22   multi-billion-dollar program acknowledged by --

          23   excuse me, advanced by the J. P. Morgan Chase Bank

          24   be looked at for what it is, an attempt to come up

                                                                257




           1   with credit needs the wrong way, backwards, in my

           2   opinion.  You should be going out and talking to

           3   organizations like ours and others throughout the

           4   service area that you have and then use the data

           5   gathered from that to define products and to define   
14:26:52

           6   quotas and tallies.  It would be a more effective

           7   way than to try to do it from the top down, even

           8   though there is some semblance of sense to having

           9   an advisory committee.  Thank you.

          10       MS. BRAUNSTEIN:  Thank you very much.             
14:27:10

          11   Mr. Brosseau.

          12       MR. BROSSEAU:  Good afternoon.  My name is

          13   James Brosseau, and I reside in North Riverside.

          14   Surprise.  I am here as a customer of Bank One, not

          15   as a member of any organization.  I am very           
14:27:20

          16   disappointed with my recent Bank One experiences

          17   and believe that their acquisition will result in

          18   substantial job losses, decreased services and

          19   increased fees.

          20            I became a First National Bank of Chicago    
14:27:30

          21   checking account and credit card customer in 1967.

          22   I had just returned to the United States from

          23   Vietnam War service.  Building a savings and

          24   retirement plan was not an option at that time.  I

                                                                258




           1   was buying my first home and raising two children.

           2   Income was tight.

           3            When IRAs became available, I started them

           4   with First National.  To the credit of First

           5   National Bank of Chicago, First Chicago and now       
14:27:54

           6   Bank One, not one single error was made on my

           7   accounts from 1967 through 2002.  That's 35

           8   flawless years, probably unheard of in any

           9   business, profession or any other line of endeavor.

          10            Years 36 and 37 weren't so good.  Errors     
14:28:10

          11   are human and I understand that; but how Bank One

          12   handled them and treated me was absolutely

          13   outrageous.  My sense is that there was a corporate

          14   shift in focus and philosophy that is not in the

          15   public interest.                                      
14:28:24

          16            During January 2003, Merrill Lynch

          17   notified me that an IRA CD would now be subject to

          18   quarterly fees that I felt were excessive.  It

          19   seemed prudent to transfer it to Bank One.  I sat

          20   with a relationship banker on January 21st, filled    
14:28:36

          21   out the transfer paperwork and asked if she had

          22   done one of these before.  She had not; and I asked

          23   for a trained senior person.  She said her

          24   supervisor would review it.  Then I was introduced

                                                                259




           1   to a senior investment representative from Banc One

           2   Securities Corporation.  He had a weekly new

           3   deposits quota of $35,000.  I declined to transfer

           4   assets.

           5            Several weeks later, I called for a status   
14:29:00

           6   report and was told everything was handled.  I

           7   should have asked if it was handled properly.  It

           8   wasn't.  My March checking account statement showed

           9   a March deposit in an amount close to the amount in

          10   the transferred IRA.  The phone number on the         
14:29:12

          11   statement was the bank's Michigan call center.

          12   They had no idea of the deposit's origin.

          13            Several heated calls to the Chicago

          14   headquarters resulted in a senior person initiating

          15   an inquiry.  The results were astounding:  The        
14:29:26

          16   Merrill Lynch check went to a Bank One Ohio

          17   processing center and from there to another

          18   processing center in Indianapolis.  It should have

          19   been deposited to the new IRA account.  Or even if

          20   it went into one of my three other IRA accounts, it   
14:29:40

          21   wouldn't be much of a problem.  But they deposited

          22   it into my checking account.

          23            The error was corrected April 4th, two and

          24   one half months after I initiated the paperwork.  I

                                                                260




           1   lost a little bit of interest, $109.52 in

           2   Merrill Lynch fees, five hours of my time, and

           3   incurred substantial emotional distress.  And I

           4   could have had substantial tax difficulties by

           5   having my IRA cashed out.                             
14:30:04

           6            Bank One maintained Merrill Lynch was slow

           7   to act.  The paper trail doesn't support their

           8   view.  Someone should have offered a serious

           9   apology, credited my fees and provided a check for

          10   the lost interest.  I'm still waiting.                
14:30:16

          11            And it gets worse.  I write between 8 and

          12   15 checks with the exception of December when I

          13   write about 70 charity checks.  I have a

          14   Classic One account that requires a daily balance

          15   of $2500 in all accounts to have checks returned      
14:30:28

          16   without a fee.  My balance averages nearly ten

          17   times that amount.

          18            My January statement from Bank One in

          19   Baton Rouge didn't include my checks but miniature

          20   image statements of the fronts, 18 to a page.  I      
14:30:42

          21   called the chairman's office -- in Arizona by the

          22   way -- and complained.  Several experienced Chicago

          23   staffers contacted me, and I was told that I was

          24   given an option to receive my checks without a fee

                                                                261




           1   as long as there was a $35,000 account balance at

           2   Bank One.  I told them I had received no such

           3   option and notification and that I would like them

           4   to provide it.  I asked three people twice, and I'm

           5   still waiting.                                        
14:31:08

           6            It happened again with my February

           7   statement.  I complained to everyone again.  For

           8   the most part, they said it was my problem.  And

           9   then their securities people called to tell me how

          10   lousy Bank One interest rates were and that I         
14:31:16

          11   should dump my IRA CDs.  Again, I declined.

          12            The bank did get me large copies of my

          13   checks printed one to a page.  Last month they sent

          14   me 106 pages when I needed 28.  This mistake cost

          15   me another 12 hours of my time.  I never received     
14:31:30

          16   an apology, the image statement option notification

          17   or the change in fees notification.  And they

          18   refused a request to eliminate fees for more than

          19   three months.

          20            I'm not against increased fees for great     
14:31:42

          21   service, but I am against Bank One's practice of

          22   hiding or obscuring these fees.

          23            Crains Chicago Business on April 7, 2003,

          24   said Bank One sued a vendor real estate firm.  They

                                                                262




           1   alleged that the firm was more interested in

           2   pumping up commissions than serving Bank One.  This

           3   bank should treat customers the way they demand to

           4   be treated; and they need to be fixed and fired,

           5   not acquired.  Thank you.                             
14:32:08

           6       MS. BRAUNSTEIN:  Thank you very much.  And

           7   thank you to the entire panel.  Will the next panel

           8   come forward, please?

           9            Good afternoon, everybody, and welcome.  I

          10   will restate the rules again.  Five minutes per       
14:32:50

          11   speaker.  The timekeepers over here will signal you

          12   with two minutes left and then when your time is

          13   up.  Please state your name and organization when

          14   you begin your statement for the record.

          15            With that, we'll begin with Mr. Radle.       
14:33:06

          16       MR. RADLE:  Thank you.  My name is Rod Radle.

          17   I am the Executive Director of San Antonio

          18   Alternative Housing Corporation, the largest and

          19   most diverse affordable housing 501(c)(3) in

          20   South Texas.  San Antonio Alternative Housing         
14:33:20

          21   currently has 3400 affordable rental properties;

          22   provides housing education for over 200 families

          23   annually; is currently building three subdivisions

          24   for affordable housing; constructs 50 homes per

                                                                263




           1   year for first-time homebuyers; and completed ADA

           2   modifications for physically challenged and/or

           3   elderly in San Antonio.  In 2004, we will complete

           4   three special-housing project developments for

           5   persons who are HIV positive or have AIDs.            
14:33:50

           6            While we're constantly seeking grants,

           7   low-interest loans, federal, city and state monies

           8   to support these often tight-budgeted developments,

           9   the two financial institutions seeking approval for

          10   this proposed merger have been -- they're forced at   
14:34:04

          11   critical times to provide the capital needed for

          12   many of these ventures.

          13            We support the request of the merger of

          14   J. P. Morgan Chase and Bank One and view the

          15   transition as providing enhanced affordable housing   
14:34:18

          16   opportunities from two entities who wholeheartedly

          17   support affordable housing in the Texas communities

          18   that we serve.

          19            To be more specific, Bank One is one of

          20   three financial institutions which provides           
14:34:32

          21   mortgages for our low- and moderate-income

          22   families, most of which are Hispanic.  They are

          23   often the first members in their families to have

          24   the opportunity for home ownership.  The average

                                                                264




           1   annual medium income of the 200 families who have

           2   purchased homes through our People Helping People

           3   Program is 58 percent.

           4            Bank One was also the first bank to come

           5   to the table when we acquired a conversion townhome   
14:34:56

           6   project in San Antonio and started doing loans for

           7   individuals to go ahead and acquire those townhomes

           8   instead of paying high rents for them.

           9            San Antonio Alternative Housing's

          10   experience with J. P. Morgan Chase has been very      
14:35:10

          11   diverse.  We view Chase as the place to go for the

          12   tough development funds.

          13            I'm going to give you three examples.  The

          14   first is a 15,000-square-foot 1930 historic

          15   structure that was about to be demolished by the      
14:35:26

          16   City of San Antonio after years of neglect by an

          17   absentee landlord.  J. P. Morgan Chase provided a

          18   three-year interim construction and stabilization

          19   loan of $600,000 with which the organization

          20   created 11 affordable units that are now online,      
14:35:42

          21   expanded our ADA modification program to four times

          22   its size, and is now creating 4,000 square feet of

          23   commercial space in this low-income community.

          24            A second example of Chase's involvement

                                                                265




           1   with Alternative Housing is they provided us a

           2   $4 million loan to acquire and renovate the

           3   previously mentioned 92-unit townhome development.

           4   Because of the bank's quick response for our

           5   request for a loan, we were able to take advantage    
14:36:10

           6   of sales price which allowed us to sell the units

           7   far below their replacement value.

           8            The first unit was purchased by an

           9   individual, Mr. Black, who had rented a townhome

          10   since the townhomes were constructed in 1984.  He     
14:36:22

          11   now pays $130 less each month to own his townhome

          12   than he was to pay for rented.

          13            J. P. Morgan Chase has provided our

          14   organization with an $8 million bridge loan to

          15   acquire a 200-unit apartment complex in Austin,       
14:36:40

          16   Texas, this during the time when the Austin market

          17   has been very, very tenuous.  The property was a

          18   drug- and prostitution-infested apartment complex

          19   when we acquired it two years ago and is now a

          20   stable, safe, affordable development known for its    
14:36:54

          21   lack of crime and wholesome atmosphere.

          22            In summary, J. P. Morgan Chase has

          23   continued to underwrite more than just the property

          24   for which a loan has been requested.  They

                                                                266




           1   underwrite the credibility and expertise of the

           2   nonprofit developer undertaking the project.  They

           3   have proven time and time again that they're

           4   willing to meet the needs of the low-income

           5   families in South Texas, and we wholeheartedly        
14:37:22

           6   support this proposed merger.

           7            We also would like to state that often, as

           8   we've heard today, there are instances of problems

           9   with any large institution.  What we have seen both

          10   from Bank One's involvement and from Chase coming     
14:37:36

          11   to the table to work with our nonprofit, it is one

          12   of trying to find solutions and create ways of

          13   making the finances available for nonprofits to

          14   operate in South Texas.

          15            We encourage this merger and we think it     
14:37:52

          16   will only help those endeavors.  Thank you.

          17       MS. BRAUNSTEIN:  Ms. Scudo.

          18       MS. SCUDO:  Good afternoon and thank you for

          19   this opportunity to provide testimony in support of

          20   the proposed merger between Bank One and              
14:38:02

          21   J. P. Morgan Chase.

          22            My name is Melissa Scudo.  I'm the

          23   Executive Director of CAMI, Colorado Alliance For

          24   Microenterprise Initiatives.  CAMI is a state

                                                                267




           1   microenterprise association representing over

           2   50 organizations across the State of Colorado that

           3   support microenterprise development.

           4            Our goals as an organization are to build

           5   the capacity of organizations to serve individuals    
14:38:28

           6   that want to start or expand a business but who

           7   lack access to resources such as start-up capital

           8   and training and counseling to make their dream of

           9   starting a business a reality.

          10            A second goal that we have is to raise       
14:38:44

          11   public awareness about the strategy and impact of

          12   microenterprise development on community and

          13   economic development in Colorado.

          14            CAMI supports the proposed merger of

          15   J. P. Morgan Chase and Bank One because Bank One      
14:39:00

          16   has been a leader among financial institutions in

          17   Colorado in supporting our organization and in

          18   supporting the strategy of microenterprise

          19   development in Colorado.  Specifically, Bank One

          20   was the sole sponsor of a resource guide that we      
14:39:16

          21   developed two years ago that provides a list of

          22   over 300 resources for individuals who are looking

          23   for a loan or looking for resources to start a

          24   business and lack access to traditional financial

                                                                268




           1   services.

           2            Not only were they the sole supporter

           3   financially of this resource guide, but

           4   Kim Weaver-McDonald, the community investment

           5   manager at Bank One whom we worked with,              
14:39:42

           6   distributed it to her loan officers, and those loan

           7   officers in turn distributed them to individuals

           8   statewide.  So not only was there a financial

           9   support, but there was also support in getting the

          10   word out and making connections with individuals.     
14:39:56

          11            Second, Bank One took a lead role in

          12   financially supporting an annual conference that

          13   was brought to Denver last year, the National

          14   Conference on Microenterprise Development that

          15   brought over 700 individuals to Denver to discuss     
14:40:08

          16   best practices in the strategy of microenterprise

          17   development.  Not only was Bank One's corporate

          18   office the lead sponsor in supporting CAMI for this

          19   conference, but it was the largest sponsor among

          20   financial institutions but also among foundations     
14:40:28

          21   and other corporations in Colorado in supporting

          22   the conference.

          23            And in addition to support from the

          24   corporate office, we received matching support from

                                                                269




           1   the local organization, the local office of

           2   Bank One; and, again, this support was the first

           3   support that we received, and it was also channeled

           4   to the organization first before other

           5   organizations did so.                                 
14:40:52

           6            In addition to providing financial support

           7   for the conference, Bank One also participated in

           8   workshops in educating individuals at the

           9   conference on best ways for banks to work with

          10   microenterprise organizations.  The support that      
14:41:08

          11   Bank One provided to this conference opened up a

          12   lot of opportunities for microenterprise

          13   development in Colorado, including a recent award

          14   of a quarter of a million dollars that we received

          15   from the State of Colorado's Economic Development     
14:41:20

          16   Commission to provide loan fund capital to

          17   individuals who cannot secure a loan through a

          18   bank.

          19            Finally, Kim Weaver-McDonald at Bank One

          20   has been an active volunteer in CAMI's board of       
14:41:34

          21   directors.  She's been involved in our board of

          22   directors for the past two years and most recently

          23   as treasurer; and for an organization that started

          24   with $10,000 in the bank and now has grown to

                                                                270




           1   $300,000, we're a small organization, but we've

           2   certainly needed her advice and her expertise and

           3   her management and experience in taking our

           4   organization to another level.

           5            Finally, I would like to note that in        
14:41:58

           6   addition to the support that Bank One has given our

           7   organization, Bank One has capitalized microloan

           8   funds in Colorado, has funded operational expenses

           9   of microloan organizations, and has dedicated staff

          10   time to small business advocacy efforts.              
14:42:14

          11            So, in summary, CAMI supports the proposed

          12   merger of J. P. Morgan Chase and Bank One based

          13   upon Bank One's demonstrated commitment to

          14   supporting microenterprise in Colorado, and we look

          15   forward to working with the larger organization.      
14:42:28

          16       MS. BRAUNSTEIN:  Thank you very much.

          17   Mr. Massey.

          18       MR. MASSEY:  Good afternoon.  My name is

          19   Dallas Massey, and I represent White Mountain

          20   Apache Tribe.  I'm the chairman there.  We're         
14:42:42

          21   located in Arizona, northeast side of Phoenix about

          22   200 miles away.

          23            Just to let you know, way back in 1998, I

          24   was in this city.  At that time, Angie Como, a HUD

                                                                271




           1   director from Washington, challenged every tribe in

           2   the United States to leverage money because of the

           3   money being cut back; and we, the White Mountain

           4   Apache Tribe, took that challenge, started

           5   leveraging our money.  And the White Mountain         
14:43:08

           6   Apache Tribe, we have over 13,000 tribal members

           7   enrolled and we have over 1,500 applications for

           8   housing needs.  And the housing that we construct

           9   over the past ten years, only 20 houses per year.

          10            But, in 1999, we took on that challenge.     
14:43:26

          11   The Housing Authority issued a $25 million

          12   tax-exempt bond rated AAA by Moody's Ratings

          13   Service.  The two primary purchasers were Fannie

          14   Mae and Freddie Mac.

          15            In order to construct the individual         
14:43:48

          16   317 Apache townhomes, the Housing Authority secured

          17   commitments from Bank One and the Office of Loan

          18   Guarantee of HUD, National Office of Native

          19   American Program to provide -- guarantee 184 loan

          20   for each home.  The borrowers from each of these      
14:44:08

          21   home loans is the Housing Authority, and Bank One

          22   is our lender.

          23            Because the bond could not be constructed

          24   as mortgage revenue bonds, and because Title 7 of

                                                                272




           1   the HSDA permitted Bank One to do so, the bonds

           2   were constructed as a Ginnie Mae securitized issue;

           3   therefore, Bank One assigned the Housing Authority

           4   184 mortgages to Countrywide Home, Incorporated,

           5   which issued the mortgage-backed Ginnie Mae           
14:44:42

           6   security for purchases by the bond trustee.  The

           7   bond trustee, in turn, would hold the Ginnie Mae

           8   securities for the benefit of bond purchases.

           9            Without the dedication and the hard work

          10   of Bank One, spearheaded by Donna Shueline, First     
14:44:58

          11   Vice President of Bank One in Fishers, Indiana, the

          12   Housing Authority would not have completed the

          13   Apache townhomes.  She and her staff had devoted

          14   thousands of hours of their time in the past five

          15   years in processing our 184 mortgages, coordinated    
14:45:16

          16   their agreement to Countrywide Home, Incorporated,

          17   for a GNMA purchase and assured compliance with all

          18   applicable 184 bond requirements.

          19            As you know, there's other 560 Indian

          20   tribes across the United States.  Indian tribes       
14:45:36

          21   reservation is so special, we really cannot get any

          22   lender to come in and say we're going to lend you

          23   money because of trust status; but Bank One and the

          24   companies that I have met stepped up.  We are the

                                                                273




           1   first Indian tribes to say we did this project by

           2   leveraging our fund.

           3            We highly regard our relationship with

           4   Bank One and hope that we'll be able to enhance our

           5   relationship with the newly constructed               
14:46:08

           6   Bank One/J. P. Morgan Chase organization.  Thank

           7   you.

           8       MS. BRAUNSTEIN:  Thank you very much.

           9   Ms. Lado.

          10       MS. LADO:  Good afternoon.  My name is            
14:46:16

          11   Karen Lado.  I am the Director of the Denver office

          12   of the Enterprise Foundation.  The Enterprise

          13   Foundation greatly appreciates this opportunity to

          14   testify in favor of the merger of J. P. Morgan

          15   Chase and Bank One Corporation.  We thank the         
14:46:28

          16   Federal Reserve for allowing this opportunity for

          17   public comment.

          18            As you heard from my Columbus colleague

          19   previously, Enterprise is a national nonprofit

          20   organization with a 22-year history.  Our mission     
14:46:40

          21   is to see that all low-income people have access to

          22   live in fit and affordable housing and the

          23   opportunity to move up and out of poverty into the

          24   mainstream of American life.

                                                                274




           1            Nationally, Enterprise works with a

           2   network of 2500 local grass-roots organizations in

           3   more than 850 locations throughout the country.

           4   The Foundation has offices in 17 cities, including

           5   Denver, Colorado, where I am based.                   
14:47:02

           6            Since 1982, the Foundation and its

           7   subsidiary organization, the Enterprise Social

           8   Investment Corporation, have committed more than

           9   $5 billion to finance more than 160,000 homes.  In

          10   addition to this investment, the Enterprise           
14:47:16

          11   Foundation also provides capacity-building

          12   assistance to nonprofit housing developers and

          13   helps support community-based collaborations and

          14   promote public education and advocacy around

          15   affordable housing and community development.  Our    
14:47:30

          16   work primarily serves low- and very low-income

          17   families in low-income communities.  Most of our

          18   resources are focused on serving nonprofit

          19   community-based organizations.

          20            Our partnerships with J. P. Morgan Chase     
14:47:42

          21   and Bank One have been critical to our success.

          22   For this reason, Enterprise strongly supports the

          23   merger between J. P. Morgan Chase and Bank One.

          24            Both Bank One and J. P. Morgan Chase have

                                                                275




           1   been strong partners in our investment in

           2   affordable rental housing through the Low Income

           3   Housing Tax Credit Program.  J. P. Morgan Chase in

           4   collaboration with ESIC has invested more than

           5   $247 million to finance nearly 23,000 affordable      
14:48:06

           6   homes through the Housing Credit since 1994.

           7   Bank One has worked with ESIC to finance Housing

           8   Credit homes since 1989 and has invested more than

           9   $101 million to create more than 19,000 affordable

          10   homes.                                                
14:48:22

          11            In Colorado, Bank One is one of

          12   Enterprise's strongest partners.  Bank One and ESIC

          13   together have invested in 20 different developments

          14   that have created 850 homes for low-income Colorado

          15   families.  In one of the most recently completed      
14:48:34

          16   developments, Bank One helped make the project

          17   possible by purchasing the state housing tax

          18   credits, while ESIC brought in additional investors

          19   to purchase the federal credits.  As a result, our

          20   local nonprofit partner was able to create 75 homes   
14:48:48

          21   for formerly homeless and low-income families

          22   located in what is fast becoming one of the most

          23   expensive parts of our city.

          24            Bank One is also an important contributor

                                                                276




           1   to the Housing Development Project, a funding

           2   collaborative that provides essential operating

           3   support and technical assistance to nonprofit

           4   housing developers in Denver.  In addition to

           5   funding, Bank One also contributes the time and       
14:49:10

           6   expertise of its executives to help manage and grow

           7   this collaborative.

           8            Since 1994, the Housing Development

           9   Project has provided $6.4 million in operating

          10   grants that have supported the development of 4,400   
14:49:22

          11   affordable homes.  In addition, these grants have

          12   helped over 1100 families achieve home ownership by

          13   supporting counseling, financial education and

          14   down-payment assistance programs.

          15            In addition to the local support provided    
14:49:34

          16   by Bank One, I should also note that a principal

          17   source of funding for the Housing Development

          18   Project comes nationally from a consortium of

          19   national funders called Living Cities.

          20   Living Cities includes 14 national foundations,       
14:49:46

          21   corporations and federal government agencies.

          22   J. P. Morgan Chase has been a long-standing

          23   investor in the Living Cities consortium and

          24   currently serves as one of the Living Cities

                                                                277




           1   co-chairs.

           2            Locally, Bank One has also demonstrated

           3   its commitment to strengthening the committee

           4   development industry statewide.  Bank One

           5   executives contribute their time as board members     
14:50:06

           6   and volunteers for community-based organizations

           7   and statewide coalitions.  The leadership and drive

           8   of Bank One executives, for example, has helped to

           9   raise the profile of the state's largest affordable

          10   housing conference among corporate leaders            
14:50:20

          11   resulting in more than a tripling of conference

          12   sponsorship.

          13            In our experience, J. P. Morgan Chase and

          14   Bank One are committed to community investment and

          15   able to bring tremendous resources and expertise to   
14:50:30

          16   bear to support community-based initiatives.  We

          17   know that many other organizations share our

          18   recommendation that the Fed approve the merger

          19   application.  We have also heard concerns about the

          20   proposed merger.  We encourage the Fed to listen to   
14:50:42

          21   these concerns and to encourage the banks to work

          22   with those who have raised them.

          23            Thank you for this opportunity to testify.

          24       MS. BRAUNSTEIN:  Thank you very much.

                                                                278




           1   Mr. Dovalina.

           2       MR. DOVALINA:  Thank you.  I want to thank you

           3   for the opportunity to be here today.  We will

           4   submit -- my organization, LULAC, will submit a

           5   formal written statement on our position.             
14:51:04

           6            I'm here today basically to share not

           7   individual experiences that we've had with the

           8   banks but, in general, our relationship with these

           9   two banks.  My name is Rick Dovalina.  I am from

          10   Houston, Texas.  I am the past national president     
14:51:14

          11   of the League of United Latin American Citizens,

          12   also known as LULAC.

          13            LULAC was established in 1929 and is the

          14   oldest and largest Hispanic grass-roots civil

          15   rights organization in the country.  We have over     
14:51:30

          16   800 councils in 41 different states, many, many of

          17   those councils located in the 14 states affected by

          18   this merger.

          19            I want to tell you a little bit about our

          20   lasting relationship with both Bank One and Chase     
14:51:42

          21   bank.  Both banks have corporate members that sit

          22   on our National Corporate Alliance Board of

          23   Directors.  This is an alliance -- it's an advisory

          24   board to our national organization.  They have been

                                                                279




           1   very instrumental in helping the organization raise

           2   funds on a national basis.  They also interact with

           3   our membership and our executive directors

           4   throughout the country in helping them establish

           5   credit lines and do the work that has to be done in   
14:52:16

           6   the grass-roots community.

           7            I'm here to support the merger between

           8   these two banking institutions.  During the past

           9   few years as a national president of LULAC, I've

          10   traveled throughout the country meeting with many,    
14:52:34

          11   many people, many, many grass-roots organizations

          12   in communities and discussing issues with these

          13   communities that affect them.  I know that both

          14   banks are very instrumental in helping the

          15   individual councils, the individuals themselves, in   
14:52:48

          16   their banking needs.

          17            Having said that, our main concern in the

          18   Hispanic community has always been that the

          19   Hispanic community, now 335 million strong in this

          20   country and the fastest-growing community in the      
14:53:04

          21   country, has always been seen by the banking

          22   industry as just consumers and not as potential

          23   partners.

          24            These two banks see us differently, and

                                                                280




           1   that's why I'm here to support this merger because

           2   I want to continue that growth and that involvement

           3   in the Hispanic community.  They understand that we

           4   need to build infrastructures to create wealth in

           5   the Hispanic community.  We need our banks to help    
14:53:32

           6   us also educate our consumers, and not only -- we

           7   don't need anymore credit cards.  We don't need any

           8   discounts.  We need education.  We need them to

           9   reinvest in the particular communities to help us

          10   manage and use our financial institutions to create   
14:53:48

          11   this wealth.  We need the resources to leverage the

          12   system.

          13            We hope that this merger and these two

          14   banks will continue to move forward in that aspect.

          15   We need for them to continue to use nonprofits like   
14:54:06

          16   LULAC, LARASA Hispanic Chamber, and other major

          17   Hispanic organizations to help them join as

          18   partners in helping the Latino community.

          19            We've had a lot of personal experiences in

          20   Houston with Chase and in Texas.  Chase Bank has      
14:54:24

          21   stepped up in El Paso, Texas, that provides space

          22   for our organization to house our financial

          23   executive branch in their bank at Chase Bank.  In

          24   Houston, they have also provided space; and, in

                                                                281




           1   Texas, in Austin, where we have our state office

           2   that does daily work with the legislative branch of

           3   Texas, they have provided an office rent-free for

           4   the last five years.

           5            So we really appreciate what Chase has       
14:54:58

           6   done.  We appreciate what Bank One has done, and we

           7   look forward to that continued relationship.  We

           8   are here to support this merger.

           9            Last week J. P. Morgan announced a

          10   commitment to invest $800 billion into the            
14:55:14

          11   community, and I look forward to working with Chase

          12   and Chase Bank representatives in assuring that the

          13   Hispanic community gets their fair share of that

          14   $800 billion.  Thank you very much.

          15       MS. BRAUNSTEIN:  Thank you very much.             
14:55:28

          16   Mr. Wong.

          17       MR. WONG:  Members of the panel, thank you for

          18   this opportunity to share with the Federal Reserve

          19   Board this perspective on the J. P. Morgan

          20   Chase/Bank One merger.                                
14:55:44

          21            My name is John Yen Wong, and I am the

          22   2004 President of the Asian Real Estate Association

          23   of America.  AREAA, as the organization is more

          24   commonly known, is a national real estate

                                                                282




           1   organization focused on service and support of

           2   those who work with the Asian-American real estate

           3   market.  Founded in late 2002, the organization has

           4   grown to over 1000 members from across the United

           5   States.                                               
14:56:14

           6            The reason for AREAA's existence can be

           7   distilled into three primary purposes, and these

           8   purposes are:  To be the voice of real estate

           9   professionals who serve the Asian-American real

          10   estate market; to be a resource for enhancing an      
14:56:26

          11   understanding of the Asian-American real estate

          12   market; and to be a steward for the ever-increasing

          13   professionalism of practitioners who serve the

          14   Asian-American real estate market.

          15            It is in the context of these purposes and   
14:56:42

          16   how they relate to increasing Asian-American home

          17   ownership that I make the following remarks

          18   regarding the proposed merger of J. P. Morgan Chase

          19   and Bank One.

          20            Early in 2003, Chase reached out to AREAA    
14:56:54

          21   for input on effective ways to reach and serve

          22   Asian-American homebuyers.  In particular, Chase

          23   wanted support for its "Chase Dream Maker

          24   Commitment", a commitment to provide $500 billion

                                                                283




           1   in home financing to minority borrowers through

           2   2010.

           3            Now it's common for institutions to make

           4   grandiose statements regarding what they intend to

           5   do.  It is in the results measured a few years out    
14:57:26

           6   from the press release that speaks to a company's

           7   strength of commitment.  It is now a couple years

           8   out, and Chase has already provided $175 billion of

           9   home financing to minority homeowners.  In just

          10   over two years, Chase has already achieved more       
14:57:46

          11   than one-third of its goal.  Even with the backdrop

          12   of very low interest rates during the past two

          13   years, $175 billion of home financing to minority

          14   homeowners is a monumental achievement.

          15            It is clear that Chase's commitment to the   
14:58:02

          16   minority markets is real.  Chase has heard and

          17   understands AREAA's view that the perception of

          18   Asian-Americans as a "model minority" who can

          19   effortlessly reach ownership is a myth.  It

          20   recognizes that the sparse outreach to the            
14:58:20

          21   Asian-American communities with information on

          22   first-time homebuyer loan programs has resulted in

          23   many Asian-American families pooling together their

          24   resources for that 20 percent down payment so they

                                                                284




           1   can buy a home together.  It is accurate that many

           2   Asian-American families value the support that an

           3   extended family can bring and do want family

           4   members to be close by.   However, this does not

           5   mean that brothers and sisters and cousins and        
14:58:48

           6   distant cousins choose to live together as a first

           7   choice.  Asian-American families value being close

           8   by, but like all American families, they do not

           9   want to be falling all over each other.  With

          10   AREAA's input, Chase is evolving programs to          
14:59:02

          11   support each of the family members into becoming

          12   homeowners of their own home.

          13            J. P. Morgan Chase's merger with Bank One

          14   will enhance these efforts to increase

          15   Asian-American home ownership.  There is little       
14:59:16

          16   overlap in the home finance operations of these two

          17   institutions, so the consolidation of the two

          18   entities will not reduce the efforts to serve

          19   Asian-American homebuyers.  In fact, the addition

          20   of Bank One branches in parts of the country where    
14:59:30

          21   Chase's presence is nominal will greatly increase

          22   outreach opportunities to Asian-American

          23   communities.

          24            This merger also addresses the myth that

                                                                285




           1   Asian-Americans only live on the two coasts of the

           2   United States.  Recent demographics show large

           3   communities of Korean, Hmong, Cambodian, Pakistani,

           4   Chinese, Vietnamese, Indian, Laotian, and

           5   Thai Americans growing throughout the United          
15:00:00

           6   States.  Examples of these communities include over

           7   200,000 Vietnamese and Chinese-Americans in the

           8   Houston area and over 33,000 Hmong-Americans in

           9   Wisconsin.  These are examples of areas where

          10   Bank One's presence will enhance Chase's outreach     
15:00:16

          11   efforts.

          12            When the subject of home ownership arises,

          13   almost everyone has a visceral reaction to the

          14   words.  Some feel adamantly that home ownership is

          15   an absolute right.  Others feel just as strongly      
15:00:30

          16   that home ownership is an earned privilege.

          17            In closing, I would like to share AREAA's

          18   perspective.  We believe that in America, "Everyone

          19   has the right to compete fairly for the privilege

          20   of owning their own home."  We believe that the       
15:00:48

          21   merger of J. P. Morgan Chase and Bank One will

          22   greatly strengthen that right to compete fairly for

          23   the privilege of home ownership, and I hope that

          24   you support us in approving this merger.

                                                                286




           1       MS. BRAUNSTEIN:  Thank you very much.  And

           2   thank you to the entire panel.  Will the next group

           3   of speakers please come forward?

           4            Okay, we'll get started with our next

           5   panel; and first, so everybody knows the drill in     
15:02:06

           6   case you haven't heard it, each speaker gets five

           7   minutes, and you will be signaled.  We have

           8   timekeepers here with a box.  When the yellow light

           9   will go on, that means you will have two minutes

          10   left.  When the red light goes on along with the      
15:02:24

          11   sound, a beep, you will note that your time is up.

          12   If you have more to say, you can submit written

          13   comments into the record.

          14            Please at the beginning of your

          15   statements, state your name and organizational        
15:02:36

          16   affiliation, if you have one, for we need that for

          17   our court reporter for the record.

          18            We'll start with Ms. Grossman.

          19       MS. GROSSMAN:  Thank you.  Thank you for

          20   allowing me this opportunity to testify regarding     
15:02:50

          21   the proposed merger of J. P. Morgan Chase and

          22   Bank One Corporation.  My name is Tammie Grossman,

          23   and I'm the Executive Director of the Illinois

          24   Statewide Housing Action Coalition.  The mission of

                                                                287




           1   the Statewide Housing Action Coalition is to

           2   increase and preserve the supply of decent,

           3   affordable, accessible housing in the State of

           4   Illinois for low- and moderate-income households.

           5            SHAC provides technical assistance to        
15:03:14

           6   Community Housing Development Organizations and

           7   other community-based affordable housing developers

           8   working in Illinois.  SHAC has offered technical

           9   assistance to community-based affordable housing

          10   developers in Illinois for more than ten years.       
15:03:26

          11   This work is funded through contracts with the

          12   U.S. Department of Housing and Urban Development

          13   and the Illinois Housing Development Authority.

          14            Our services include a variety of

          15   workshops, training sessions, facilitation, ongoing   
15:03:38

          16   organization assistance, and project-specific

          17   assistance to all aspects of the affordable

          18   housing/community development process.  Our staff

          19   has firsthand experience in the full range of

          20   affordable housing development, community             
15:03:50

          21   organizing, and management of community-based

          22   organizations.

          23            Over the past several years, Bank One has

          24   supported SHAC by giving us monetary support for

                                                                288




           1   our annual convention in November.  We appreciate

           2   that support.  Additionally, we are generally

           3   supportive of the memorandum of understanding

           4   entered into between the Chicago CRA Coalition and

           5   Bank One/J. P. Morgan Chase.  However, we would       
15:04:12

           6   like to see more investment in communities outside

           7   of the Chicago metropolitan area, especially in the

           8   area of multi-family housing.

           9            We are also concerned about the high rate

          10   of foreclosures on single-family mortgages and        
15:04:28

          11   would encourage a continued effort to work with

          12   borrowers to prevent foreclosures and to develop

          13   innovative ways to decrease foreclosure rates.

          14            We would also like to see corporate

          15   leadership in philanthropy that Bank One is known     
15:04:42

          16   for in the Chicago area to continue by urging

          17   representatives of J. P. Morgan to appoint a

          18   liaison to meet with community groups in the State

          19   of Illinois and to continue to serve on the boards

          20   of community groups.                                  
15:04:56

          21            In conclusion, I would just like to thank

          22   you for the opportunity to express our views here

          23   today.

          24       MS. BRAUNSTEIN:  Thank you very much.

                                                                289




           1   Ms. Feidt.

           2       MS. FEIDT:  My name is Daisy Feidt, and I am

           3   here representing Access Living.  We're a

           4   consumer-controlled Center For Independent Living

           5   that works with people that live in the Chicago       
15:05:14

           6   metropolitan area.  And as a Center For Independent

           7   Living, we provide services to and advocate on

           8   behalf of people with disabilities so that they can

           9   live independently.

          10            Economic disempowerment is really one of     
15:05:26

          11   the primary factors that threatens the independence

          12   of many people in our community.  People with

          13   disabilities are almost three times as likely to

          14   live in poverty as people without disabilities, and

          15   only 32 percent of working-age people with            
15:05:40

          16   disabilities are employed.

          17            These alarming statistics can be largely

          18   explained by significant barriers people with

          19   disabilities face toward economic empowerment.

          20   Some of the most common include attitudinal           
15:05:50

          21   barriers from employers who don't think they can

          22   work; asset limitations placed on Social Security

          23   Income recipients; and, relatedly, inadequate

          24   Social Security Income that's insufficient to cover

                                                                290




           1   even the most basic living expenses; the high cost

           2   of rental housing in Chicago; lack of access to the

           3   resources offered by financial institutions that

           4   could help them achieve economic empowerment

           5   because financial institutions themselves are         
15:06:18

           6   sometimes not accessible to people with

           7   disabilities; and, lastly, people with disabilities

           8   often have no credit or bad credit caused by high,

           9   unanticipated medical bills.

          10            People with disabilities make up over        
15:06:32

          11   20 percent of the population, and this number is

          12   expected to grow as baby boomers age.  So it's

          13   clear that these are barriers faced by a

          14   substantial portion of the population.

          15            Therefore, J. P. Morgan and Chase and        
15:06:46

          16   Bank One really have an opportunity and a

          17   responsibility to play a pivotal role in overcoming

          18   these barriers faced by such a large segment of the

          19   population by working with the disability community

          20   to develop and implement innovative products and      
15:06:58

          21   services to address them.

          22            Some of the issues we expect to explore

          23   with J. P. Morgan and Chase and Bank One in the

          24   near future include promoting business ownership by

                                                                291




           1   people with disabilities; working to promote the

           2   development of affordable accessible housing;

           3   working to increase disabled access to the consumer

           4   bank branches and the services they offer which

           5   could include things like offering outreach           
15:07:20

           6   materials when requested in Braille and large

           7   print, providing telephone access for people who

           8   are deaf and hard of hearing, and improving

           9   physical access to community branches.

          10            And as one of the largest financial          
15:07:34

          11   institutions in the country, J. P. Morgan and Chase

          12   as well as Bank One can play a critical role in

          13   reducing the 68 percent unemployment rate by

          14   affirmatively hiring people with disabilities to

          15   work for them.                                        
15:07:46

          16            Finally, Access Living has been fortunate

          17   to work with Bank One in cooperation with

          18   Fannie Mae to launch products which help people

          19   with disabilities achieve home ownership.  Without

          20   the availability of these products which address      
15:07:56

          21   the most common barriers people with disabilities

          22   face toward home ownership, many people with

          23   disabilities would really be locked out of one of

          24   the most basic American dreams.

                                                                292




           1            As mentioned in the memorandum of

           2   understanding between the Chicago CRA Coalition and

           3   J. P. Morgan and Chase and Bank One, we look

           4   forward to working together to ensure the

           5   continuation of the current affordable products or,   
15:08:18

           6   alternatively, the development of comparable ones.

           7            We're hopeful that a successful working

           8   relationship lies ahead between J. P. Morgan and

           9   Chase and the disability community.  However,

          10   Access Living's position on the merger will remain    
15:08:32

          11   neutral until we determine the response of the

          12   newly constructed J. P. Morgan and Chase and

          13   Bank One to the needs identified by our community

          14   as well as their commitment to the terms of the

          15   memorandum of understanding.                          
15:08:46

          16            Thank you for the opportunity to testify.

          17       MS. BRAUNSTEIN:  Thank you very much.

          18       MR. PUTRICH:  Members of the panel, thank you

          19   for the opportunity to speak today.  My name is Ty

          20   Putrich.  I'm President of TIMM, Inc., formerly       
15:08:56

          21   known as South Bend Lathe in South Bend, Indiana.

          22   Generally, my comments today will be focused upon

          23   Bank One.

          24            In today's economy, business owners and

                                                                293




           1   their employers face pressures from a variety of

           2   resources; foreign and domestic competition,

           3   governmental regulations, and rising costs, just to

           4   name a few.  Business owners generally realize that

           5   the banking landscape has changed from the days of    
15:09:26

           6   good ol' boy loans.

           7            The concept of knowing your loan officer

           8   ensuring that he or she understands your business

           9   as well as the strategic direction for your company

          10   have been employed for a number of years by           
15:09:40

          11   progressive businesses.  The relationships have

          12   evolved into one of a financial partnership.

          13            During the year 2000, Bank One changed its

          14   CEO, removed five directors, replaced numerous

          15   senior managers and modified its loan loss reserves   
15:09:58

          16   calculations resulting in an increase to the loan

          17   loss reserves for commercial loans with

          18   approximately $1.5 billion.

          19            During the first quarter of 2001, Bank One

          20   ushered in a new era of banking.  Gone are the days   
15:10:16

          21   of financial partnering with your lender.

          22   Aggressive, active, commercial loan portfolio

          23   management by the leaders of Bank One has presented

          24   business owners with a new challenge, one that

                                                                294




           1   involves accurately predicting when your lender

           2   will institute a deliberate loan-reduction program.

           3            In the 15-month period ending in early

           4   2002, Bank One's deliberate loan-reduction program

           5   forced their customers to obtain refinancing or       
15:10:48

           6   face liquidation.  Many financial institutions have

           7   instituted conservative lending practices during

           8   economic downturns, but the size and scope

           9   differentiates Bank One's actions.

          10            On-and-off balance sheet exposures in the    
15:11:06

          11   commercial loan area decreased by $40.7 billion

          12   net, or almost 30 percent of their portfolio.  The

          13   effect of their program on businesses was one of

          14   increased cost, substandard refinancing packages,

          15   to liquidation of companies and the loss of jobs by   
15:11:28

          16   their employees.

          17            A substantial number of Bank One's

          18   customers were converted from normal lending

          19   relationships to Bank One's managed assets

          20   department.  The flooding of customers into the       
15:11:44

          21   managed assets department coupled with a

          22   substantial increase in borrowing requests on the

          23   local competing financial institutions left both

          24   the borrower and Bank One ill-prepared to execute

                                                                295




           1   on the deliberate loan-reduction strategy.

           2            Further consolidation in the banking

           3   industry will only limit choices and expose

           4   American businesses to active, exit loan portfolio

           5   strategies during real and forecasted economic        
15:12:18

           6   downturns.

           7            Bank One has since recaptured 600-plus

           8   million dollars of the $1.5 billion loan loss

           9   allowances back into income from the commercial

          10   loan loss reserves since they began negotiations      
15:12:36

          11   with J. P. Morgan.

          12            I urge the committee to oppose the

          13   Bank One and J. P. Morgan merger.  Thank you.

          14       MR. SAADAH:  I'm sorry.  Thank you very much to

          15   let me be here.  I used to work with the Federal      
15:12:54

          16   Reserve Bank in 1972, 1975, so I got feeling for

          17   this group.

          18            I have no statement, nothing, just from my

          19   heart.  I'm a father.  I've got a handicapped

          20   child.  He got a settlement in 1991 from the          
15:13:10

          21   American National Bank.  It was American National

          22   Bank at that time.  And there were some kind of

          23   stock.  I wasn't aware with everything.  I didn't

          24   know about it.

                                                                296




           1            American National Bank, they moved the

           2   account from '97 -- from 1997 to American National

           3   Bank.  They told me it was a different bank, and it

           4   was Bank One stock.  They moved it to the mutual

           5   fund.  I didn't know what the mutual fund was.        
15:13:40

           6   They never told me about the mutual fund.  All they

           7   told me was we put it in some kind of stock or

           8   General Motors or something.  It was their own

           9   stock, Bank One-owned mutual fund stock.

          10            So I don't know anything about it.  And      
15:13:56

          11   they mislead me about my son's age, when he get 18.

          12   The amount was about 659,000, to take it out

          13   without any -- they declare him disabled after

          14   that.

          15            And then I was reading in the paper about    
15:14:10

          16   mutual fund scandal in that thing.  I said, what's

          17   the mutual fund scandal?  What does this have to do

          18   with my son?  So that amount in 2000 was 659,000;

          19   and from 2000 to now -- now the last statement I

          20   have, it was about 444.  So about 300,000 missing     
15:14:32

          21   from handicapped child.  If they steal from -- I

          22   don't know steal.  They misuse the money for

          23   handicapped child.  They have no right to go.  I

          24   don't know about it.  And even if I know, I didn't

                                                                297




           1   know what the mutual fund is.

           2            They are supposed to -- they put in all

           3   mutual fund, in all new stock.  When they lose,

           4   they lose; when they win, they win.  And if it's

           5   somebody normal, he go out with his broker.  He       
15:15:00

           6   call somebody and tell them, listen, I lose

           7   something.

           8            He can't.  And I trust them.  And end up

           9   losing all that money.  And they told me then --

          10   the last time, February 2004, they move his money     
15:15:12

          11   from that account to ABRA account without even

          12   knowing.  All they said, Mr. Saadah, we're going to

          13   move account.  Which account?  Where are you going?

          14   I've been trying to take the account for three

          15   year.  And, since the scandal, the mutual fund, I     
15:15:28

          16   told them I want to take that account.  They

          17   refused to let me take it.

          18            They'll be suing my son, this one.  Judge

          19   order.  From one year, suing my son in same bank,

          20   in same judge for the month.  It was 659 now, now     
15:15:46

          21   they get 444.

          22            Now last February, they went from scandal

          23   to other scandal and ABRA account.  I don't know

          24   what the ABRA account is.  And that's my story.

                                                                298




           1            If they can't control -- this is

           2   handicapped child.  How are you going to trust them

           3   to doing stuff like this?  And the mutual fund, if

           4   it's hundred million dollar from the consumer, it's

           5   a fraud.  They already have investigation for         
15:16:22

           6   American -- for inspector general -- I mean,

           7   attorney general from New York.  They invite

           8   Bank One and other banks.  There's already two

           9   other banks indicted for a hundred million --

          10       MS. BRAUNSTEIN:  Mr. Saadah, you've talked to     
15:16:36

          11   people at the bank about this?

          12       MR. SAADAH:  I talked to the bank.  I talk to

          13   the judge.  I get arrested.  They get into the

          14   judges.  They get into the police.  They even get

          15   into the consumer services, my license.  I'm a        
15:16:50

          16   cabdriver for 20 years.  They took my license,

          17   March 31st.  And I am without job for now and now

          18   Mr. Saadah look for lawyer.  I want to find lawyer

          19   to fight Bank One and the city to get my license.

          20   Thank you very much.                                  
15:17:08

          21       MS. BRAUNSTEIN:  Thank you very much.  Thank

          22   you to the panel.

          23       MR. SAADAH:  I have papers for the record for

          24   you if you want.

                                                                299




           1       MS. BRAUNSTEIN:  You can leave it at the center

           2   table or give it to one of the staff.  Mike, can

           3   you get the papers?

           4            We are going to take a short break right

           5   now before the next panel comes up, and we'll take    
15:17:38

           6   about ten minutes.  So we'll reconvene at 3:30.

           7   And we'll start with the next panel then.

           8                        (Recess taken.)

           9       MS. BRAUNSTEIN:  We're going to get started

          10   with the next session.  And welcome to the panel.     
15:30:02

          11   Once more through the ground rules.  Five minutes

          12   per speaker.  There are timers here with the box

          13   with lights.  When the yellow light goes on, that

          14   means you have two minutes left of your five, and

          15   then the red light and a sound will go off which      
15:30:22

          16   means your time is up.  You are free, of course, to

          17   submit written comments as long as you would like.

          18            Additionally, please make sure and

          19   remember to state your name and your organization

          20   at the beginning of your statement.  We need it for   
15:30:34

          21   the court reporter for the record.

          22            And with that, we will get started.

          23   Ms. Carlstedt.

          24       MS. CARLSTEDT:  Thank you.  Good afternoon, and

                                                                300




           1   thank you for the opportunity to address the

           2   Federal Reserve panel.  My name is Moira Carlstedt.

           3   I'm the President of the Indianapolis Neighborhood

           4   Housing Partnership.

           5            The partnership is a not-for-profit that     
15:30:54

           6   was created in 1988.  Its mission is to provide

           7   access to safe, decent and affordable housing

           8   opportunities and to create healthy, viable

           9   neighborhoods in Indianapolis.  The partnership is

          10   engaged in home ownership education, single-family    
15:31:08

          11   finance, multi-family finance, housing research and

          12   community development.  Our primary customers are

          13   minority households and low- to moderate-income

          14   families.  The partnership is governed by a

          15   25-member board of directors comprised of the         
15:31:26

          16   private sector, community representatives and

          17   mayoral appointees.

          18            Since 1988, Bank One has been an active

          19   and important participant on our board of

          20   directors.  In fact, Al Smith, who is Bank One's      
15:31:40

          21   Central Indiana President, is the past president of

          22   our board of directors and led us through a

          23   significant growth and increased impact in our

          24   community.  Bank One will remain a long-term -- we

                                                                301




           1   believe will remain a long-term, committed member

           2   of our board of directors and we look forward to

           3   continuing to work with them.

           4            The Housing Partnership prepares people to

           5   access a mortgage.  The goal is to enable them to     
15:32:10

           6   access a traditional mortgage at one of our lending

           7   institutions.  For families who are unable to

           8   access a traditional mortgage, they may be able to

           9   access a mortgage financed through the Indianapolis

          10   Neighborhood Housing Partnership.                     
15:32:22

          11            Our mortgage capabilities are the result

          12   of the financial institutions in Indianapolis who

          13   have invested in a multi-bank loan pool which then

          14   is leveraged against philanthropic resources and

          15   government resources.                                 
15:32:36

          16            Since 1988, the Indianapolis Neighborhood

          17   Housing Partnership has developed four multi-family

          18   -- excuse me, four single-family loan pools and one

          19   multi-family loan pool.  The early pools were about

          20   $10 million of investments from local institutions.   
15:32:50

          21   However, Loan Pools 3 and 4 were significantly

          22   higher.  The current loan pool, Loan Pool 4, has a

          23   value of approximately $30 million.

          24            Bank One has been the largest single

                                                                302




           1   investor in both Loan Pool 3 and Loan Pool 4 with a

           2   commitment of $5 and a half million to each pool.

           3   Negotiating the terms of Loan Pool 4 were a bit

           4   challenging because we were dealing with the

           5   Bank One representatives outside of Indianapolis.     
15:33:20

           6   However, with the support and the commitment of the

           7   local leadership in Indianapolis, including

           8   Al Smith and Denny Bassett, we were able to

           9   successfully negotiate terms that are going to be

          10   very advantageous for the City of Indianapolis and    
15:33:36

          11   the citizens that we serve.

          12            As a nonprofit, we, like all nonprofits,

          13   seek local, state and national contributions; and

          14   since 1988, year in and year out, Bank One has made

          15   significant contributions to the Housing              
15:33:52

          16   Partnership and, in fact, is our largest

          17   contributor on an annual basis to support

          18   operations.  Additionally, they have encouraged and

          19   brought additional corporate partners to support

          20   our operations.                                       
15:34:04

          21            For the first time in 2003 and 2004, the

          22   Housing Partnership conducted a major community

          23   event that drew nearly 14,000 people.  This event

          24   would not have happened without a major corporate

                                                                303




           1   sponsor and, in that realm, Bank One stepped up and

           2   became the $100,000 primary sponsor of the event.

           3   That event enabled all of those households to

           4   understand and become more aware of their

           5   opportunities to secure safe, decent, affordable      
15:34:30

           6   housing and to attain, maintain and sustain that

           7   housing over the long-term.

           8            Therefore, based on our strong and

           9   continuous relationship with Bank One leadership

          10   over the years in the areas of board governance,      
15:34:44

          11   contributions and investments, as well as

          12   assurances of a strong, local leadership presence

          13   and continued support after the merger, the Housing

          14   Partnership is encouraged about its future, its

          15   future with Bank One/J. P. Morgan Chase, and we do    
15:35:00

          16   support this merger.  Thank you.

          17       MS. BRAUNSTEIN:  Thank you.  Ms. Robinson.

          18       MS. ROBINSON:  Good afternoon.  My name is

          19   Patricia Robinson, and I would like to thank you

          20   for this opportunity to comment on this proposed      
15:35:14

          21   merger with J. P. Morgan Chase and Bank One.

          22            I am the Program Director for the LISC

          23   Baton Rouge Program in Baton Rouge, Louisiana.  As

          24   the Program Director, for the last two years, we've

                                                                304




           1   had a presence in Louisiana's urban and mid delta

           2   rural neighborhoods since 1992.  We provide direct

           3   services to community-based development

           4   organizations, as we all know as CDCs.

           5            The industry in Louisiana is a fairly        
15:35:44

           6   young industry.  As I indicated, LISC came to the

           7   state in 1992.  However, we had organizations that

           8   had been engaged in this type of work starting in

           9   the mid to late 1990s.

          10            Bank One has demonstrated its commitment     
15:36:02

          11   to the Baton Rouge market's nonprofit community

          12   economic development practitioners through several

          13   resources.  Its commitment to the LISC Baton Rouge

          14   office has ranged from direct financial support in

          15   the office located in Baton Rouge, as well as         
15:36:20

          16   providing direct financial assistance to some of

          17   our CDC partners.

          18            I would like to briefly highlight a few

          19   examples of the commitment that we've received from

          20   the Bank One staff, that staff consisting of          
15:36:34

          21   Scarlett Dunkeshane at the local level as well as

          22   Mike Scott at a statewide level and through our

          23   northern partners Sharletta Coleman.  The project

          24   that I want to highlight centered around one of our

                                                                305




           1   most distressful neighborhoods.  Bank One, through

           2   Scarlett Dunkeshane's leadership, took that first

           3   initial investment and came to the neighborhood and

           4   provided the initial free development dollars and

           5   acquisition dollars for this project.                 
15:37:04

           6            This project consisted of three scattered

           7   sites, over 300 units, mostly consisting of

           8   one-bedroom apartments that were converted into

           9   172 units of two-, three- and four-bedroom units.

          10   This was an area that no one wanted to take an        
15:37:18

          11   opportunity to come in and change.  Bank One was

          12   that first lender at the table.

          13            The City of Baton Rouge, Fannie Mae and

          14   another local bank eventually came to the table

          15   also to finance this project.  And I wanted to        
15:37:34

          16   highlight this project because it showed that this

          17   is also a risk-taking financial institution in

          18   Baton Rouge in such a new industry.

          19            Another example of Bank One's commitment

          20   to revitalizing distressed communities in the mid     
15:37:48

          21   south region of the United States is that our local

          22   housing authority is just acquiring a troubled

          23   piece of property where, again, Bank One has

          24   stepped to the table to provide a letter of credit

                                                                306




           1   to secure HUD's requirement for this disposition of

           2   property, as well as LISC has also partnered with

           3   Bank One and other lenders to support this

           4   endeavor.  That is just the examples of the strong

           5   partnership that Bank One has in Louisiana with       
15:38:16

           6   getting projects done.

           7            As I indicated earlier, Bank One continues

           8   to be a strong partner in the City of Baton Rouge

           9   and in the parish.  They provide technical

          10   assistance to our CDCs, but they also provide         
15:38:30

          11   ongoing support.  They serve on our local advisory

          12   committee as well as different community-based

          13   development boards, and they provide leading-edge

          14   best practices to our CDC practitioners.

          15            Bank One is an invaluable partner in the     
15:38:46

          16   community, economic development industry in the

          17   East Baton Rouge parish and the State of Louisiana.

          18   We support them in their merger with J. P. Morgan

          19   Chase, and we welcome them and their full-service

          20   banking programs to the mid south delta region.       
15:39:00

          21       MS. BRAUNSTEIN:  Thank you very much.

          22   Mr. Bradley.

          23       MR. BRADLEY:  Yes.  Good evening.  My name is

          24   Wallace Gator, G-a-t-o-r, Bradley, B-r-a-d-l-e-y.

                                                                307




           1   My organization is called United in Peace.

           2            First and foremost, let me give honor to

           3   God and ask that he bless this merger, assist it in

           4   all its rights and endeavors, especially since they

           5   are going to invest $800 billion into our             
15:39:30

           6   community; and, as we all know, on the back of

           7   every one of those dollars is In God We Trust.

           8   And, no, this is not a joking matter.

           9            And, secondly, I believe that

          10   William Harrison, Chairman and CEO of J. P. Morgan    
15:39:46

          11   and Chase, and Jamie Dimon are men of honor and

          12   integrity and men of their words.

          13            I would like to also thank Harry Preston,

          14   the Community Affair Program Director for the

          15   Federal Reserve Bank, and Ms. Lori Trout from         
15:40:06

          16   Bank One for giving me this information to take to

          17   our community and let me know the importance of

          18   this merger.

          19            I'm a native of Chicago and a participant

          20   in almost every election supporting candidates who    
15:40:22

          21   are familiar with the population on personal

          22   levels, what the polls refer to as grass-roots

          23   organizations.  Many meetings have been held since

          24   my involvement in the community of Chicago as a

                                                                308




           1   whole.  Many offerings of financial assistance have

           2   been placed in every newspaper and network in

           3   Chicago.

           4            As I sit here before you today, the

           5   grass-roots community have yet to see or realize      
15:40:50

           6   any of the benefits that have been broadcast

           7   throughout the neighborhoods of Chicago.  Those of

           8   us who are recipients of such opportunities have

           9   yet to reveal whether the funds have actually

          10   reached our organizations; and, for this reason,      
15:41:08

          11   I'm here to seek the truth about the true

          12   intentions of the Federal Reserve Banking System,

          13   the two merging banks and the means by which these

          14   opportunities will reach the grass-roots community.

          15            The minority interest in Chicago may work    
15:41:24

          16   in the suburbs and downtown, but a majority of the

          17   parents, sisters and brothers are still living in

          18   the neighborhoods that we represent.

          19            As founder of United in Peace, a

          20   not-for-profit organization who held a strong         
15:41:38

          21   presence in all neighborhoods in Chicago, has a

          22   specific mission to assist the homeless, uneducated

          23   and ex-offenders find jobs, educational

          24   opportunities as an option other than running the

                                                                309




           1   streets of Chicago and investing in the system

           2   through the correctional institution.

           3            Our interest has a twofold situation that

           4   is readily easy to understand and one that is

           5   direct for both the Federal Reserve System and the    
15:42:04

           6   banking system.

           7            It's a matter of record.

           8   African-Americans have been working in America, in

           9   Chicago since the 1800s.  Our work-related past is

          10   one that is greatly recorded.  African-Americans      
15:42:18

          11   have been working and would like to continue to

          12   work to make our communities healthy and our family

          13   life one of quality.

          14            To the banking sector of this meeting,

          15   please address the liaison between the banking        
15:42:32

          16   system and the grass-roots neighborhoods instead of

          17   English terms.  There has been a record of the past

          18   banking opportunities that once offered concessions

          19   to the City of Chicago and, to this day, have not

          20   reached a visible -- a visual.  As to date, no        
15:42:48

          21   results.

          22            We read of the millions going to a group

          23   of African-American organizations that claim to

          24   represent the neighborhoods in Chicago in the past.

                                                                310




           1   They are not available to community, to extend that

           2   blessing.  They are visible when it's time for the

           3   community to invest with these organizations to

           4   learn how to get the funds only, although a very

           5   few ever do.                                          
15:43:14

           6            I would like to know if these same few

           7   individuals, the same individuals who were to have

           8   organized distribution of funds in the past, have

           9   exclusive rights here.  If so, the policies must

          10   remain public to eliminate future scandals and        
15:43:30

          11   squandering of dedicated funds and favorable to all

          12   Chicago.  Our team is ready, willing and able to

          13   assist with the communications between the banks

          14   and the grass-roots people.

          15            In respect to the Federal Reserve Bank       
15:43:48

          16   System, since my access to the politicians from the

          17   late great Honorable Harold Washington, Reverend

          18   Jesse Jackson to the local communities stemming

          19   from the Olympics in Atlanta, I would like to

          20   express for the record that there has been funds      
15:44:04

          21   that were and are available to develop and create

          22   jobs.

          23            One of the things that I heard earlier is

          24   that how the pay loans have been taking advantage

                                                                311




           1   of the money.  I think the legislature body ought

           2   to make rules to regulate those pay loans and that

           3   they don't put it on the backs of the banks.  Thank

           4   you.  I am in full support of the merger.

           5       MS. BRAUNSTEIN:  Thank you very much.             
15:44:36

           6   Ms. Stewart.

           7       MS. STEWART:  Good afternoon.  I would like to

           8   thank the Federal Reserve Bank for providing me the

           9   opportunity to comment on the proposed merger of

          10   J. P. Morgan Chase and Bank One.                      
15:44:46

          11            My name is Diana Brown Stewart, and I'm

          12   the Executive Director of Jefferson East Business

          13   Association, a nonprofit community development

          14   corporation on the far east side of Detroit,

          15   Michigan.  Our organization serves citizens in the    
15:44:58

          16   metropolitan Detroit area.  Our target boundaries

          17   for the revitalization work Jefferson East Business

          18   Association does is within a 4 square mile of

          19   Detroit's east side.

          20            Jefferson East Business Association was      
15:45:12

          21   founded in 1995 by a group of entrepreneurs and

          22   residents who wanted to see a change and

          23   improvement along the business corridor.  The

          24   mission of Jefferson East Business Association is

                                                                312




           1   to improve the quality of life on the lower east

           2   side of Detroit by addressing the needs of the

           3   business and residential community.

           4            To address our mission and our focus,

           5   Jefferson East has established four primary           
15:45:36

           6   programs:  Business development; clean and safe

           7   initiatives; design and real estate development;

           8   and promotions.

           9            Through our business development program,

          10   we provide counseling, training, advocacy, research   
15:45:48

          11   and business retention and recruitment strategies.

          12   Our clean and safe program implements

          13   beautification, code enforcement and community

          14   policing initiatives.  The design and real estate

          15   development program includes facade improvement       
15:46:02

          16   grants, historic designation, financial incentives

          17   for development, and East Side Jefferson Avenue

          18   Streets improvement.

          19            We implement promotion activities as well

          20   to highlight and market the businesses along our      
15:46:16

          21   district and to have street festivals, holiday

          22   decorations and holiday sing-alongs and quarterly

          23   newsletters and membership meetings to get the

          24   concerns voiced by our community businesses.

                                                                313




           1            Jefferson East Business Association's

           2   relationship with Bank One began in 1996 and, at

           3   that time, it was called the National Bank of

           4   Detroit.  When Jefferson East Business Association

           5   wanted to include representatives from the            
15:46:44

           6   financial industry, the local bank, Bank One,

           7   branch in our community was approached and accepted

           8   the invitation to serve.  The rest is history.

           9            Bank One has maintained a seat on our

          10   board since 1996 and are actively involved in our     
15:46:58

          11   organization's program services.  Presently,

          12   Bank One sponsors our business development center

          13   programs with financial grants, serves on our

          14   business development committee, provides technical

          15   assistance for our clients, partners with us on our   
15:47:14

          16   community service projects, participates in our

          17   entrepreneur training, recently awarded our

          18   organization a hundred thousand dollar line of

          19   credit.

          20            Bank One is a solid partner of Jefferson     
15:47:26

          21   East Business Association and has proven that

          22   through their involvement, support and commitment

          23   throughout the years.  They understand that

          24   bringing a vision to reality takes involvement and

                                                                314




           1   partnership.  Partnership with a nonprofit

           2   organization to assist them in sustaining their

           3   programs to develop and build strong communities is

           4   a concept that Bank One gets.

           5            I was concerned when I initially learned     
15:47:50

           6   about the proposed J. P. Morgan Chase and Bank One

           7   mergers.  These are the questions I asked myself:

           8   What type of involvement will the bank have with

           9   nonprofit groups?  Will the bank's commitment to

          10   development increase or decrease?  Can we expect      
15:48:06

          11   the bank to maintain its branches in the

          12   neighborhood to serve the area residents?  Will the

          13   great bank representatives that we presently work

          14   with remain with the bank?

          15            These questions were somewhat answered,      
15:48:20

          16   and I asked myself and I asked the bank

          17   representatives who I have a relationship with; and

          18   by doing some research and through conversations

          19   with individuals that are familiar with

          20   J. P. Morgan Chase, I learned that J. P. Morgan       
15:48:36

          21   Chase has a positive reputation of community

          22   partnership, involvement and demonstrates

          23   commitment to economic and community development.

          24            From my years of experience with Bank One

                                                                315




           1   and from what I have learned about J. P. Morgan

           2   Chase's history of nonprofit and community support,

           3   I think and expect the merger to benefit my Detroit

           4   community and constituents.  The merging of the two

           5   banks' similar community involvement philosophies     
15:49:04

           6   assures me that the merger will strengthen the bank

           7   which will provide them with more resources to

           8   strengthen the community.

           9            I support the merger of Bank One and

          10   J. P. Morgan Chase and look forward to the            
15:49:20

          11   continued organizational and community involvement

          12   as we expand our partnership to build strong,

          13   viable neighborhoods.

          14       MS. BRAUNSTEIN:  Thank you very much.

          15       MS. DeBONNETT:  Good afternoon.  My name is       
15:49:32

          16   Pat DeBonnett.  I am the Executive Director of

          17   Great Roseland Community Development Corporation.

          18   I would like to thank you for the opportunity for

          19   this open mic experience.  I do not have a prepared

          20   statement.  However, I would like to just speak       
15:49:48

          21   from my heart and thank you again for the

          22   opportunity.

          23            I would like to encourage the J. P. Morgan

          24   Chase/Bank One merger to continue to support the

                                                                316




           1   local community-based organizations' involvement

           2   and participation in the revitalization of our

           3   communities.

           4            I'm a lifetime resident of the City of

           5   Chicago, and I have been an armchair planner.  I      
15:50:16

           6   call myself a self-styled armchair planner with

           7   roles in the communities of Chicago.  Those

           8   communities consist of Historic Pullman, Roseland

           9   and West Pullman.  It's a community that has -- the

          10   Roseland community has the highest home ownership     
15:50:32

          11   rate in the City of Chicago.  However, for about

          12   20 years back in the '70s, it experienced the

          13   highest foreclosure rate in the country; and, at

          14   this time, we have over 500 vacant but yet

          15   affordable beautiful homes in the area, which a       
15:50:48

          16   number of those homes are nonperforming assets of a

          17   number of banks.

          18            The mission of Great Roseland Development

          19   Community Corporation is driven by the need to

          20   provide or ensure the implementation of the many      
15:51:02

          21   development plans that have been organized from the

          22   grassroots or actually a broad base of the

          23   community, the lenders, the insurers, the

          24   residents, the community-based organizations

                                                                317




           1   working together.

           2            And oftentimes in larger mergers, I just

           3   want to make certain that we had an opportunity to

           4   have dialogue with the lenders, with Bank One, with

           5   Chase and the bank merger to ensure that you're       
15:51:32

           6   getting what's called the mission from the

           7   grass-roots stakeholders in the community because

           8   banking is, of course, an issue or it's very

           9   personal and trust has to be mutual.  And we're

          10   committed to ensuring the success of all of our       
15:51:52

          11   communities and improving the quality of life of

          12   those persons and people within the inner city

          13   communities.

          14            I welcome the merger, but I again

          15   encourage you to ensure that there is grass-roots     
15:52:08

          16   participation and that the funding is supporting

          17   also the grass-roots initiatives as well.

          18   Thank you.

          19       MS. BRAUNSTEIN:  Thank you very much.

          20   Mr. Espinoza.                                         
15:52:22

          21       MR. ESPINOZA:  First of all, let me thank the

          22   Federal Reserve Bank for allowing us to testify

          23   today.

          24            I'm president and CEO of the Raza

                                                                318




           1   Development Fund.  We are the largest Latino CDFI

           2   in the country.  We are a subsidiary of National

           3   Council Raza which is the largest civil rights

           4   organization for Latinos based out of Washington,

           5   D.C.                                                  
15:52:50

           6            There has been a letter that was drafted

           7   by our parent that has been submitted to the record

           8   in New York, so I won't reiterate that letter.  I

           9   should point out there are some concerns that I

          10   feel J. P. Morgan Chase and Bank One are              
15:53:04

          11   addressing.  One of the issues obviously is the

          12   access to capital and the floor plate that the bank

          13   is going to include in the merger that Latino and

          14   Hispanic families across the country have access to

          15   capital.                                              
15:53:22

          16            That's basically where the Raza

          17   Development Fund comes in.  There has been --

          18   actually, we did some homework, and there's been a

          19   relationship with J. P. Morgan Chase that had gone

          20   back to funding an office of ours in Puerto Rico      
15:53:34

          21   that serves the Latino community there.  And our

          22   President and CEO had also served and participated

          23   with a committee dealing with mortgage lending out

          24   of J. P. Morgan.

                                                                319




           1            Our fund, the Raza Development Fund, just

           2   recently closed a loan with Bank One which was for

           3   a charter school.

           4            So our focus today is to endorse the

           5   merger, and let me explain for a moment.  I know      
15:54:10

           6   there is always controversy when banks merge.  A

           7   question to all of us in the community is will we

           8   get service in our communities, especially will

           9   poor communities have access to this capital?  We

          10   have noticed recently that Bank One, at least in      
15:54:28

          11   Arizona and some of the areas in Texas, has been

          12   effectively working with some of our affiliates.

          13            As far as we're concerned, we feel that we

          14   are in the process presently of putting together a

          15   partnership that we feel will service the Hispanic    
15:54:44

          16   community in years of providing home ownership, in

          17   the area of community development, in the areas of

          18   charter schools, facility lending, and a third area

          19   which is an exciting area of putting together a

          20   community development, in effect, a think-tank of     
15:55:02

          21   executing models for community development in

          22   partnership with ASU and a number of other

          23   universities.

          24            So we're excited about the merger.  We

                                                                320




           1   feel that so far the relationship has been

           2   excellent.  We've had a number of meetings, and we

           3   look forward to working with the whatever name

           4   comes out of this merger, whether it's J. P. Morgan

           5   or Chase.  I hope it's not J. P. Morgan Chase Bank    
15:55:30

           6   One.  That would be really difficult.

           7       MS. BRAUNSTEIN:  That's a mouthful.

           8       MR. ESPINOZA:  Thank you very much once again.

           9       MS. BRAUNSTEIN:  Thank you very much and thank

          10   you to the entire panel.  And will the next group     
15:55:40

          11   of speakers please come forward?

          12            As you have probably heard, five minutes

          13   per speaker.  The timekeepers are right there.  The

          14   yellow light means two minutes left; red light and

          15   the noise means time is up.  And please state your    
15:56:44

          16   name and organization at the beginning of your

          17   remarks for our record.

          18       MR. PITRE:  My name is Robert Pitre.  I'm

          19   President of the Entrepreneurs Association of

          20   Texas.  I would like to thank Byron Reed of           
15:57:00

          21   Bank One, Mark Willis of J. P. Morgan Chase for

          22   listening to some of the personnel issues I have

          23   with Bank One.

          24            I spent 15 years in a Beaumont Housing

                                                                321




           1   Project as a young boy.  I started my business

           2   28 years ago with $300.  I have seen all the Texas

           3   banks fail.  I have seen the developers, the

           4   insurance companies, the savings and loans.  None

           5   of the money was spent in the black community of      
15:57:38

           6   the failed institutions, and I thank God that I'm

           7   still in business.

           8            I might be the largest landholder of prime

           9   real estate in Dallas.  My company owns 120 acres

          10   of prime commercial real estate, more than            
15:57:58

          11   5 million square feet of real estate in Dallas.

          12   But I had to go one block out of Dallas to borrow

          13   money for my business to the Bank of DeSoto, one

          14   block out of Dallas in another city.

          15            What I see in banks in Dallas, that          
15:58:16

          16   they're buying banquet tickets, donating money to

          17   nonprofit organizations and very little commercial

          18   lending in the black community.

          19            The Federal Reserve needs to measure the

          20   effectiveness of the Community Reinvestment Act by    
15:58:44

          21   measuring the commercial lending practices of

          22   banks.  One of the reasons the black community of

          23   America is so blighted is because very little

          24   commercial lending is made to small black

                                                                322




           1   businesses.  American banks are investing hundreds

           2   of billions of dollars in other countries and very

           3   little in the black community of America.

           4            I would like to see the Bank Ones and the

           5   J. P. Morgan Chases and the people that have been     
15:59:24

           6   here purportedly with organizations that have

           7   expressed how good and fair that the banks have

           8   been in their community, I would like to see that

           9   part of Chase and Bank One come to Dallas to the

          10   black community and make some loans because our       
15:59:42

          11   community is blighted.

          12            The banking officers, when Bank One came

          13   to Dallas, they hired more black officers than any

          14   other bank.  None of the black officers with

          15   Bank One, they're not making loans in the black       
16:00:02

          16   community anymore, and they have lost their lending

          17   authorities.

          18            I think that the Federal Reserve can help

          19   force these institutions to invest in the

          20   community, and I think it's very necessary to gauge   
16:00:22

          21   what they do by their commercial lending.  And if

          22   you look at their commercial lending in the inner

          23   cities of America, you would see very little.

          24   Thank you.

                                                                323




           1       MS. BRAUNSTEIN:  Thank you.  Ms. Bares.

           2       MS. BARES:  Good afternoon.  My name is

           3   Kimberly Bares.  I am the Executive Director of

           4   DevCorp, and I want to thank you for the

           5   opportunity to provide testimony today.               
16:00:46

           6            DevCorp North is the business, community

           7   and economic development nonprofit 501(c)(3)

           8   organization for Rogers Park, a community on the

           9   north side of Chicago.

          10            We support and applaud the banks'            
16:00:58

          11   discussions with the Chicago CRA Coalition and the

          12   Woodstock Institute and understand the outcomes to

          13   include targets for home and small business

          14   lending, provisions for guarding against the

          15   origination and purchase of predatory loans, for      
16:01:10

          16   reducing foreclosures, for various special products

          17   designed for special groups of customers, the

          18   addition of bank branches in low- to

          19   moderate-income areas, and increased levels of

          20   community development grants and investments.  The    
16:01:24

          21   agreement also contains provisions for the regular

          22   review of data that permit effective monitoring of

          23   the agreement.

          24            In addition to this agreement, though, is

                                                                324




           1   the need to do considerable outreach to the many

           2   community organizations that are supported by

           3   Bank One and presumably will continue to be

           4   supported by the new bank.

           5            DevCorp North has received support for our   
16:01:42

           6   local economic development work from Bank One for

           7   several years and we highly value and appreciate

           8   that relationship.  We've been interested in

           9   expanding that relationship to include more active

          10   involvement from local Bank One branches and          
16:01:56

          11   personnel in our programs and services, involvement

          12   that we currently receive from several other banks

          13   in our lending areas.

          14            However, to date, this has not occurred

          15   and we hope that the importance of personal           
16:02:08

          16   relationships and involvement will not be lost in

          17   this acquisition/merger.

          18            There was incredible outreach done by both

          19   banks in anticipation of these hearings.  It is my

          20   sincere hope that the outreach efforts and new        
16:02:22

          21   relationships that are being created now are not

          22   lost or set aside once the acquisition/merger is

          23   complete, but instead provide the foundation for a

          24   bank that is known for its national position and

                                                                325




           1   its local commitment to relationships.  Thank you.

           2       MS. BRAUNSTEIN:  Thank you very much.

           3       MR. PITRE:  I have one more thing.

           4       MS. BRAUNSTEIN:  Sure, you didn't use up all

           5   your time.                                            
16:02:46

           6       MR. PITRE:  I was at a Chase Bank in Dallas

           7   across from the Veterans Hospital, and there was a

           8   veteran there that was trying to change a $100 bill

           9   to lend to one of his friends tat he was in Vietnam

          10   with.  And he went into the Chase Bank and I was      
16:03:04

          11   behind him in line, and he asked the teller to

          12   change his hundred dollar bill.  And they said

          13   that--  asked him if he had an account.  And the

          14   gentlemen said, no, I don't have an account.  They

          15   said, well, we cannot change your hundred dollar      
16:03:20

          16   bill.  And the gentlemen kept saying, this is

          17   American currency, why can't you change my hundred

          18   dollar bill?

          19            And I think that when you look at -- there

          20   are banks -- I'm not speaking of Chase, but there     
16:03:34

          21   are banks in Dallas that charge a customer $5 if

          22   you don't have an account at the bank.  If someone

          23   writes you a check and you go to the bank, they

          24   charge you $5 of your money no matter how much the

                                                                326




           1   check amount is.

           2            The way these banks are growing in our

           3   community, it's getting harder to deal with them.

           4   They don't -- if you don't have an account with the

           5   banks, you can't buy a cashier's check, a money       
16:04:02

           6   order.  I mean, they're getting away from the

           7   people and communities that really need a bank.

           8   Thank you.

           9       MS. BRAUNSTEIN:  Thank you.  And thank you to

          10   both of our speakers.  Will the next group of         
16:04:22

          11   speakers come forward, please.

          12            Welcome.  We have five minutes allotted to

          13   each speaker.  There are timekeepers there that

          14   have a box with lights, and a yellow light will

          15   tell you when there's two minutes left in your        
16:05:14

          16   presentation, and the red light and the noise will

          17   alert you that your time is up.

          18            Please state your name and organization

          19   for the record when you begin.  And with that,

          20   please begin.                                         
16:05:28

          21       MS. PRUNEDA:  My name is Rose Pruneda, and I am

          22   with the Hispanic Internal Revenue Employees

          23   National, Incorporated.  I am a Regional Vice

          24   President for Mid States North.  We are nonprofit

                                                                327




           1   organization that focuses on community outreach to

           2   our low-income areas.  I'm also the Vice President

           3   of Communications of the North Texas Chapter of

           4   HIRE.

           5            In November 2002, I had the privilege of     
16:05:56

           6   meeting Sophie Guerra from Bank One Community

           7   Investment Management Group Market Manager when I

           8   was serving my final term as the Texas Chapter

           9   President.  During this meeting, we determined it

          10   would be in the best interest of both organizations   
16:06:10

          11   to join forces in an effort to provide much needed

          12   free services to our low-income communities.  These

          13   free services would include W7, IT preparation and

          14   document notarization; 1040 electronic filing and

          15   tax preparation; outreach educational classes         
16:06:26

          16   surrounding federal tax regulations for small

          17   business taxpayers, as well as low-income tax

          18   issues; and classes surrounding federal investments

          19   called Access to Capital.

          20            Our joint efforts reached across the         
16:06:38

          21   Dallas/Fort Worth Metroplex and touched a diverse

          22   community, which included the Hispanic community,

          23   the hearing-impaired community, and the Vietnamese

          24   community.

                                                                328




           1            Prior to each filing season, the HIRE

           2   employees held several tax filing classes in an

           3   effort to train our new Bank One partners.

           4            During the 2002 filing season, both of the

           5   organizations joined forces and provided a total of   
16:07:02

           6   1,385 combined volunteer hours.  Bank One processed

           7   215 W7 I-10 applications during the month of

           8   November 2002.

           9            In 2003, we increased our efforts and we

          10   have established 12 one-day VITA sites and two        
16:07:20

          11   permanent VITA sites which were opened anywhere

          12   from one to four days a week through April 15th tax

          13   deadline.  Bank One employees were present at each

          14   of these sites to help provide the free services

          15   mentioned above.                                      
16:07:36

          16            In addition, this year Bank One added an

          17   additional free service which consisted of

          18   activating a store value part for those taxpayers

          19   who normally would not qualify for a bank account.

          20   This service would allow the taxpayer the ability     
16:07:48

          21   to receive their tax refund quicker through direct

          22   deposit.

          23            While all of our community outreach hours

          24   have not yet been accounted for as of today, we

                                                                329




           1   have given a total of 2,255 volunteered hours

           2   during the filing season 2003 to the

           3   Dallas/Fort Worth community.  As a result of our

           4   Bank One and HIRE partnership in the

           5   Dallas/Fort Worth area, we have far exceeded last     
16:08:12

           6   season's total.

           7            Over the last couple of years, HIRE found

           8   it more and more difficult to obtain computer

           9   equipment in order to provide free services.  So in

          10   January 2004, our North Texas Chapter of HIRE         
16:08:24

          11   received a grant from Bank One.  This allowed the

          12   organization to purchase three lap tops and three

          13   scanner/copier/printers.  This will also allow our

          14   volunteers to continue to provide free services

          15   throughout the year to our community.                 
16:08:38

          16            During the 2003 HIRE National Conference

          17   in Albuquerque, New Mexico, both Bank One employees

          18   and HIRE North Texas Chapter employees were

          19   recognized for the joint efforts in providing a

          20   much needed service to our community.  As a result    
16:08:52

          21   of this recognition, HIRE chapters began making

          22   contacts with other Bank One representatives in

          23   their local area in an effort to mirror our

          24   activities.

                                                                330




           1            Currently, HIRE National is exploring to

           2   expand our existing partnership with Bank One by

           3   establishing a national outreach agreement between

           4   Bank One and HIRE National, Incorporated.  This

           5   will cover 37 chapters.  We hope this agreement       
16:09:14

           6   will encourage chapters of HIRE National across the

           7   country to partner with their local Bank One

           8   representatives and establish a local outreach plan

           9   which will offer free services to low-income

          10   individuals within their communities.                 
16:09:28

          11            We also do hope to present a final draft

          12   of this agreement at the 2004 National Conference

          13   held in July in Los Angeles.

          14            In closing, on behalf of HIRE National,

          15   North Texas Chapter of HIRE, I want to personally     
16:09:40

          16   thank Sophie Guerra and Bank One for the continued

          17   support to our organization and their commitment to

          18   serving low-income and minority communities.  Since

          19   both financial institutions are committed to

          20   serving the low-income and minority communities,      
16:09:56

          21   the combination of their commitments should

          22   strengthen the efforts of organizations similar to

          23   ours to reach more of the underserved population.

          24   Thank you.

                                                                331




           1       MS. BRAUNSTEIN:  Thank you.  Mr. Sise.

           2       MR. SISE:  Thank you for providing this

           3   opportunity to comment on the J. P. Morgan

           4   Chase/Bank One merger.  My name is Michael J. Sise,

           5   and I am the president of the Beverly/Morgan Park     
16:10:20

           6   CDC.

           7            The Beverly/Morgan Park CDC is a

           8   nonprofit, community-based, economic development

           9   agency that has been active in the Beverly Hills

          10   and Morgan Park communities on the far south side     
16:10:32

          11   of Chicago since 1977.  We serve a diverse area of

          12   over 70,000 residents.  We are a delegate agency of

          13   the Department of Planning and Development for the

          14   City of Chicago; and we specialize in providing

          15   technical assistance to developers and businesses     
16:10:52

          16   in our service area.

          17            We also perform development work ourselves

          18   in blighted sections of our service area that are

          19   not being served by for-profit developers.

          20            We have had a relationship with Bank One     
16:11:06

          21   for approximately 15 years and have benefited from

          22   many annual operating grants from Bank One.  We

          23   could not have continued our work without its

          24   assistance.  Bank One's operating grants have been

                                                                332




           1   a significant part of our approximately $100,000

           2   annual budget.

           3            We support the J. P. Morgan Chase/Bank One

           4   merger because we feel that this merger will

           5   benefit the communities and organizations that it     
16:11:32

           6   is currently serving and community development

           7   programs in the Chicago area.  The new bank will

           8   have a trillion dollar asset base and will be more

           9   efficient and better able to serve our community.

          10            With Chicago being the base for its retail   
16:11:48

          11   operation, we should receive the best services and

          12   products any bank could offer.  Bank One has a

          13   historical commitment to community investment in

          14   the Chicago area, and it has a great, reputation

          15   among community development organizations.            
16:12:04

          16            Bank One is currently building a beautiful

          17   new branch facility in our community on

          18   95th Street, and this facility is helping

          19   rejuvenate an area that was becoming blighted and

          20   depressed.  Also Bank One has sponsored many          
16:12:18

          21   training programs that have helped our staff

          22   improve their skills about lending and management.

          23            Bank One was a very strong supporter of

          24   CANDO for many years before its recent demise and

                                                                333




           1   CANDO was an important organization for Chicago

           2   area development organizations.

           3            Once again, we support the merger and feel

           4   confident that the new bank will continue to

           5   provide excellent banking services to individuals,    
16:12:46

           6   nonprofit agencies and businesses in Chicago and

           7   especially in our service area.

           8            Thank you for your attention to this

           9   statement.

          10       MS. BRAUNSTEIN:  Thank you very much.             
16:12:58

          11   Ms. Vates.

          12       MS. VATES:  Good afternoon.  I am Cathy Vates,

          13   the Director of the Rogers Park Community

          14   Development Corporation.  We're located on

          15   Chicago's far northeast side, but our work takes us   
16:13:08

          16   across the city and into the surrounding suburban

          17   areas.  We are a nonprofit community development

          18   organization with a seven-year history, not at all

          19   like my neighbor here who's been around a lot

          20   longer.                                               
16:13:22

          21            We have had a relationship with Bank One

          22   since our founding.  We are a HUD-certified city

          23   delegate agency, and our chief service to our

          24   community area is that of housing counseling.  One

                                                                334




           1   of the services that we offer to residents of the

           2   area is first-time homebuyer training.  We see

           3   clients who are just beginning the process of

           4   homebuying, and we also see persons who have found

           5   a home, applied for a mortgage and are preparing      
16:13:48

           6   for closing.

           7            Most of our clients are families with low-

           8   to moderate-income, based on area median income of

           9   the area median income scale employed by HUD.  We

          10   find many of our clients choose mortgage products     
16:14:02

          11   from Bank One because of the exceptional first-time

          12   homebuyer product array they offer.

          13            In addition to the products available,

          14   Bank One representatives have been knowledgeable,

          15   welcoming and pleasant to work with, both from the    
16:14:16

          16   client's perspective and the agency's perspective.

          17   Bank One employees have regularly gone beyond the

          18   expected in servicing our clients.  While we

          19   recognize this has often reflected a personal

          20   relationship built by this agency and its employees   
16:14:34

          21   with Bank One employees, we also recognize that the

          22   corporate culture of Bank One has nurtured and

          23   supported these relationships.

          24            We appreciate the opportunity Bank One has

                                                                335




           1   created in the Chicago metro area for many low- and

           2   moderate-income families to purchase their first

           3   home with a Bank One product.

           4            Bank One has also been a leader in

           5   innovative product development for specific classes   
16:14:58

           6   of homebuyers.  For example, we are currently

           7   working with Bank One, Fannie Mae, the Mayor's

           8   Office for People With Disabilities and Access

           9   Living on the development of a product for families

          10   that include a disabled member.                       
16:15:12

          11            This product takes into consideration the

          12   special circumstances many of these families

          13   experience, for example, increased and long-term

          14   medical obligations often offset by support from a

          15   third party or agency.  This product offers special   
16:15:28

          16   consideration for those financial circumstances,

          17   increased mortgage ratios, and an additional

          18   counselor assistance with family budgets.

          19            The advantage of stable housing often

          20   affords the same family benefits through the city's   
16:15:44

          21   H-rail program or modification programs offered by

          22   Access Living.  Bank One is the only Chicago

          23   lending participant in this program.

          24            We are one of the four citywide counseling

                                                                336




           1   agencies working with the CHAC Choose to Own

           2   Program.  Bank One is a lender in this program.

           3   The program supports working individuals to convert

           4   their rental subsidy into a mortgage payment for

           5   15 years.  In the case of a disabled individual       
16:16:12

           6   with adequate income to support some mortgage, the

           7   subsidy is for the 30-year length of the loan.

           8            This program creates opportunity for

           9   individuals who would be life-long renters to begin

          10   to build housing stability and personal wealth.       
16:16:28

          11   This is a life-altering experience for these

          12   families and for generations to come.  We have had

          13   62 successful closings in this program in the last

          14   two years.  This well-designed program offers

          15   post-purchase support to those families to ensure     
16:16:44

          16   that they are successful homeowners, not merely

          17   homebuyers.  Bank One is a leader in mortgage

          18   lending in this outstanding program.

          19            Bank One has also assumed a leadership

          20   role in the Greater Chicagoland Housing Counseling    
16:16:58

          21   Collaborative, an organization dedicated to the

          22   best practices and housing counseling in the

          23   Chicago metro area.  Representatives of Bank One

          24   have been on this board since -- have been on the

                                                                337




           1   board of this organization since its founding.

           2   They have given leadership and direction to the

           3   organization and have been active in presenting

           4   Bank One affordable products and new programs to

           5   the group.  Bank One representatives have assisted    
16:17:26

           6   with space needs for organization meetings,

           7   refreshments, and have supported the administrative

           8   functions and expenses.

           9            We are grateful to the leadership and the

          10   ownership they have demonstrated in their continued   
16:17:38

          11   support of this organization.

          12            These are but a few of Bank One's

          13   activities with individual agencies across the

          14   region.

          15            We also participate in the CRA Coalition     
16:17:50

          16   that met with Bank One and J. P. Morgan Chase

          17   several weeks ago to begin a dialogue.  While we

          18   feel we have no substantive relationship with the

          19   new entity that is proposed by this merger, based

          20   on past performance and relationships with the        
16:18:04

          21   corporate entity of Bank One, we are looking

          22   forward to forging a new and expanded working

          23   relationship.

          24            RPCDC is proud to count itself among the

                                                                338




           1   Bank One supporters in Chicago.

           2       MS. BRAUNSTEIN:  Thank you very much and thank

           3   you to our panel.  And I know we have a speaker

           4   left who had signed up, but I would ask at this

           5   point if there is anybody here in the room who has    
16:18:34

           6   not spoken today who would like to make a statement

           7   to please come forward at this time?  Okay.

           8            You have five minutes.  I think they

           9   probably explained the rules to you.  Five minutes.

          10   We have timekeepers who will -- a yellow light will   
16:19:04

          11   notify you that you have two minutes left, and the

          12   red light and the noise will tell you the time is

          13   up.  And if you could please clearly state your

          14   name and if you've got an organization affiliation

          15   for the record.                                       
16:19:18

          16       MR. NELLES:  My name is Allen Nelles,

          17   N-e-l-l-e-s.  I'm independent, and I don't work for

          18   the bank.

          19            We'll start with some of my own personal

          20   experiences directly with Bank One.  At one time      
16:19:38

          21   they were having a sweepstakes contest of some

          22   sort.  I was just walking around downtown and I

          23   happened to be passing their building.  It's the

          24   old First National Bank Building, I think, with the

                                                                339




           1   groping sides like this, and there was some of

           2   their people out there dressed like Evergreen

           3   trees, green outfits, walking around, handing out

           4   these contest game piece cards.

           5            A young woman urged me to take one and       
16:20:04

           6   said something like the million dollar winner is

           7   here, the bunch she had in her hand.  Well, she's

           8   not supposed to know that, so I had to get some

           9   clarification, is she guaranteeing that it's in

          10   there.  No, well, she really didn't mean that.  So    
16:20:20

          11   then she said, rub the spot.  So I did that, and I

          12   won I think $50 in a new account or some such thing

          13   like that.

          14            And so I went into the bank.  I always

          15   read the fine print, and it says, see official        
16:20:34

          16   rules.  So I went in the bank and I had to read

          17   everything to them on the card.  Apparently they

          18   weren't prepared.  They don't read all the stuff.

          19   It's grade school reading.

          20            So one person went to look for the rules.    
16:20:46

          21   They weren't posted anywhere which would have saved

          22   the time I wasted, their time and my time talking

          23   to somebody.  They could have had the rules hanging

          24   there somewhere.  But they didn't so they went off

                                                                340




           1   looking.  And pretty soon a second and third person

           2   came up, asking me what I wanted.  So now three

           3   people are looking for something that's supposed to

           4   be there already.

           5            When I read the rules, I find I wasn't       
16:21:06

           6   supposed to rub the spot except in front of one of

           7   their bankers.  So the girl outside gave me the

           8   wrong information.  Now is the question did I

           9   really win my $50 in my account?

          10            Can you see where this is leading?  These    
16:21:22

          11   are the kind of people that are running our banks.

          12   They can't get grade school reading correct.

          13            I was in there another time with my

          14   elderly mother, and she had one of these

          15   certificate of deposits she wanted to roll over.      
16:21:40

          16   We sat down at a cubicle with the woman from the

          17   bank, and the woman said to my mother something

          18   like, oh, we're going to adjust your interest rate.

          19   And I looked over at the papers and I said, mom,

          20   they're lowering your interest rate.  The woman at    
16:21:54

          21   the bank desk objected.  I said, no, you're not

          22   just adjusting it, you're lowering it.  Tell her

          23   the truth.  Don't mislead her.  She's an old lady.

          24   She doesn't see well.  I said, I bet if you were

                                                                341




           1   raising the interest rate, you would use the word

           2   raise, wouldn't you?  Not adjust.  So she objected

           3   again.

           4            I believe these kinds of businesses should

           5   shrink or fail.  Not get bigger and prosper.  I       
16:22:18

           6   think somebody has to speak up.

           7            We're in kind of society where somebody

           8   who doesn't have an account number or charge card

           9   or fingerprint scan, an eye scan, et cetera, can't

          10   do anything.  They can't do business.  If you look    
16:22:34

          11   on your cash, it says, "This note is legal tender

          12   for all debts, public and private."  Cash is the

          13   universal means of doing business.

          14            Bankers came along and stuck that third

          15   hand in the transaction there.  They want to shave    
16:22:46

          16   a few percent out of everybody's side.  They don't

          17   care whose side.  Both sides if they can.

          18            And the way I do business, they don't

          19   contribute.  They don't do the work.  They didn't

          20   hire me.  Why should they get any money?  I have      
16:22:58

          21   yet to figure this out.

          22            If you read your Bible, you will find that

          23   the antichrist is going to take over everything

          24   using numbers.  Cash is a way to frustrate that.

                                                                342




           1   He needs some big centralized computerized numbered

           2   system so he can walk in and take it over.  If all

           3   of us do business by cash, he will probably never

           4   find us.  Won't know we're there.  And we suffer

           5   the wrath of God with the fire and brimstone if we    
16:23:28

           6   cooperate with him, by the way.  I think it's

           7   Revelation, Chapter 14.

           8            So if you all think about this, the reason

           9   cash was invested was to make business simple and

          10   easy.  Banks came along with their greed.  They       
16:23:38

          11   know they want to make a lot of money and they

          12   don't want to do a lot of work.  Bible says, be

          13   diligent in business.  It doesn't sound very

          14   diligent to me.  We need hard-working people to

          15   make this country grow, not people sitting around     
16:23:50

          16   shuffling papers and charging people for that,

          17   wanting to hold my money, tell me the rules under

          18   which I can get it back at their location under

          19   their rules during their hours.  And charge me for

          20   that.                                                 
16:24:06

          21            Here's a Levi's Sweepstakes.  I can't even

          22   enter this if I buy something with cash.  It's

          23   specifically in the rules.  I have to use a credit

          24   card.

                                                                343




           1            I've become a second-class citizen in my

           2   own country, an honest, hard-working guy -- my time

           3   is up.  Thanks.

           4       MS. BRAUNSTEIN:  Thank you very much.

           5            Once again, I will just ask, is there        
16:24:28

           6   anyone that would like to come forward who has not

           7   spoken today?

           8            Okay.  With that, I just have a few

           9   closing remarks.  I would like to, first of all,

          10   thank the members of my panel who have worked here    
16:24:44

          11   all day today, Jay, Walter, Alicia.  A special

          12   thanks to Alicia because not only has she sat on

          13   the panel all day, but she was very involved in the

          14   preparation and basically was our hostess for the

          15   day and was in charge of all the arrangements that    
16:25:02

          16   made this happen.

          17            And with that, I would like to just say

          18   for the record that these meetings don't just

          19   happen by themselves.  It takes the hard work of a

          20   lot of people and a lot of effort, a lot of time,     
16:25:16

          21   and that was definitely put in here.  I would like

          22   to acknowledge a few people.  I know I will not get

          23   everybody, and I apologize ahead of time if for

          24   some reason your name was left off, but I really

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           1   want to extend our thanks to everyone who worked so

           2   hard to make this happen.

           3            In particular, a few people that are very

           4   noticeable today, our timekeepers.  I would like to

           5   thank them, Helen and Sherry who sat here all day     
16:25:40

           6   and made sure people kept on schedule.  Our ushers

           7   who got people effectively in and out, and that's

           8   no small measure, especially through security.  So

           9   I would like to thank Sally.  I saw you running

          10   back and forth all day, Sally Skoff.  And             
16:25:58

          11   Mike Barry.  And I know there were others.

          12   Frank Squares was involved with that.  Jerry Boyle

          13   was very involved with that.  Steve Keel,

          14   certainly.

          15            I'd would also like to thank                 
16:26:14

          16   MaryJo Konestra, Harry Pestine, and Patrick Wilder

          17   for all their work and their staff.  And then those

          18   who were constantly adjusting the agenda for us

          19   like Jennifer Korman, who was running copies back

          20   and forth, I would like to thank her, too.            
16:26:28

          21   Barb Sholderz and Loretta Novak who were working

          22   all day today.  And James Piper and Carrie Wrait,

          23   and all the security people who did a great job

          24   today.

                                                                345




           1            Also I'd just like to mention, because I

           2   have to go home to Washington, the board staff that

           3   worked so hard also to make this happen.  In

           4   particular, I would like to note Beverly Smith and

           5   Eric Morris, who were here from Washington and        
16:26:50

           6   worked hard on getting this together.

           7            So with that, thank you, everyone, for

           8   coming, and we are adjourned.

           9                      (Whereupon, the Public Hearing

          10                      adjourned at 4:29 o'clock p.m.)    
16:27:00

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Last update: December 3, 2010