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

Public Meeting Transcripts

Public Meeting Bank of America Corporation and Countrywide Financial Corporation

Held on Monday, April 28, 2008, at the Los Angeles Branch of Federal Reserve Bank of San Francisco

Unedited transcript

                                                                     1


          THE FEDERAL RESERVE BOARD

          + + + + +

          PUBLIC MEETING REGARDING THE NOTICE OF

           BANK OF AMERICA CORPORATION
          TO ACQUIRE COUNTRYWIDE FINANCIAL CORPORATION

          + + + + +

          Monday
          April 28, 2008


          + + + + +

                The public meeting came to order at 8:30
          a.m. in Branch Conference Center, 950 South
          Grand Avenue, Los Angeles, California, Sandra
          Braunstein, Director, Federal Reserve Board,

          presiding.
          FEDERAL RESERVE SYSTEM PANEL:

          SANDRA F. BRAUNSTEIN, Director,
                Federal Reserve Board
          PATRICIA ROBINSON, Assistant General Counsel,
                Federal Reserve Board
          MAC ALFRIEND, Senior Vice President,

                Federal Reserve Bank of Richmond
          SCOTT TURNER, Director,
                Federal Reserve Bank of San Francisco

          BANK OF AMERICA CORPORATION PANEL:

          LIAM  MCGEE, President,

                Global Consumer & Small Business Banking
          ANDREW PLEPLER, Senior Vice President,
                Global Community Impact
          JANET LAMKIN, California State President







                                                                          2


          T A B L E  O F  C O N T E N T S

          Welcome

                Director Braunstein . . . . . . . . . . .4


          Bank of America Corporation Panel
                Liam McGee. . . . . . . . . . . . . . . .9
                Andrew Plepler. . . . . . . . . . . . . 26
                Janet Lamkin. . . . . . . . . . . . . . 33

          Panel 1

                Congresswoman Maxine Waters . . . . . . 45
                Adolfo Bailon . . . . . . . . . . . . . 65

          Panel 2
                Robyn C. Smith. . . . . . . . . . . . . 69
                Butch Wing. . . . . . . . . . . . . . . 76


          Panel 3
                Roberto Barragan. . . . . . . . . . . . 87
                Clarence Williams . . . . . . . . . . . 90
                Sharon Kinlaw . . . . . . . . . . . . . 93
                Kevin Stein . . . . . . . . . . . . . . 97
                Alan Fisher . . . . . . . . . . . . . .107
                
          Panel 4

                Michael Rubinger. . . . . . . . . . . .111
                Judy Kennedy. . . . . . . . . . . . . .115
                Doris Koo . . . . . . . . . . . . . . .122
                Carol Galante . . . . . . . . . . . . .129

          Panel 5
                Orson Aguilar . . . . . . . . . . . . .135

                Pastor John Hunter. . . . . . . . . . .140
                Denise Hunter . . . . . . . . . . . . .143
                Faith Bautista. . . . . . . . . . . . .147
                Martha Montoya. . . . . . . . . . . . .150
                Steve Figueroa. . . . . . . . . . . . .155
                George Dean . . . . . . . . . . . . . .158
                Ortensia Lopez. . . . . . . . . . . . .160

                Pastor George Thompson. . . . . . . . .163







                                                                          3


          T A B L E  O F  C O N T E N T S (Con't.)

          Panel 5 (Continued)
                Claudia Viek. . . . . . . . . . . . . .166
                Jorge Correlajo . . . . . . . . . . . .168

                Larry Ortega. . . . . . . . . . . . . .170
                Lynn Dangtu . . . . . . . . . . . . . .173
                Joey Quinto . . . . . . . . . . . . . .175
                Bob Gnaizda . . . . . . . . . . . . . .177
                
          Panel 6
                Lez Trujillo. . . . . . . . . . . . . .181

                Angela Sanbrano . . . . . . . . . . . .185
                Marvin Andrade. . . . . . . . . . . . .188
                Mary Kaiser . . . . . . . . . . . . . .190

          Panel 7
                Sandra McNeill. . . . . . . . . . . . .197
                Allen Baldwin . . . . . . . . . . . . .202

                Gail Burks. . . . . . . . . . . . . . .207
                Rudy Cavazos. . . . . . . . . . . . . .213

          Panel 8
                Ty Knolwes. . . . . . . . . . . . . . .220
                Diane Knolwes . . . . . . . . . . . . .224
                Angelica Rubio. . . . . . . . . . . . .228
                David Lizarraga . . . . . . . . . . . .235


          Panel 9
                Mark Pinsky . . . . . . . . . . . . . .244
                Marc Spencer. . . . . . . . . . . . . .255
                Villy Wang. . . . . . . . . . . . . . .258

          Panel 10

                Gail Burks. . . . . . . . . . . . . . .207

          Panel 11
                Katrina Vizinau . . . . . . . . . . . .284
                Gertrude Guillory . . . . . . . . . . .289
                Donette Heard . . . . . . . . . . . . .302
                Yolanda Clark . . . . . . . . . . . . .297


          Adjourn







                                                                          4


     1                  P-R-O-C-E-E-D-I-N-G-S

     2    (8:34 a.m.)

     3                DIRECTOR BRAUNSTEIN:  Good morning


     4    everybody and I am pleased to welcome you

     5    today to this public meeting on the

     6    application of Bank of America Corporation to 


     7    acquire Countrywide Financial Corporation.

     8                And first, I will introduce

     9    myself.  I am Sandra Braunstein, Director of

    10    the Division of Consumer and Community Affairs


    11    of the Federal Reserve Board in Washington,

    12    D.C.  I am the presiding officer for this

    13    public meeting.

    14                Our other panelists are Patricia


    15    Robinson, who is an Assistant General Counsel

    16    in the Federal Reserve Board's Legal Division. 

    17    And to her right is Mac Alfriend, who is a


    18    Senior Vice President in the Department of

    19    Banking Supervision and Regulation from the

    20    Federal Reserve Bank of Richmond.  To my left

    21    is Scott Turner, who is Director of Community


    22    Development from the Federal Reserve Bank of







                                                                          5


     1    San Francisco.  And Scott is also the

     2    Community Affairs Officer.

     3                We are here today because Bank of


     4    America Corporation from Charlotte, North

     5    Carolina, has applied for approval to acquire

     6    Countrywide Financial Corporation, Calabasas,


     7    California.  When the Federal Reserve

     8    considers an application, we look at a number

     9    of factors under the Bank Holding Company Act. 

    10    These include financial issues, managerial


    11    issues, competitive issues and the views of

    12    the communities affected.  In doing so, we

    13    particularly look at the record of performance

    14    of the parties under the Community


    15    Reinvestment Act or the CRA.  The CRA requires

    16    the Board to take into account an

    17    institution's record of meeting the credit


    18    needs of its entire community.

    19                The purpose of the public meeting

    20    today is to receive information regarding

    21    factors and to clarify factual issues related


    22    to the application.  We are pleased that so







                                                                          6


     1    many witnesses have come forward to testify at

     2    this public meeting.  We will have a total of

     3    over 120 groups and individuals represented.


     4                Let me make a few remarks about

     5    the procedures.  This is what is called an

     6    informal public meeting.  Members of the panel


     7    may ask questions of those who were

     8    testifying.  This is not a formal

     9    administrative hearing.  So, we are not bound

    10    by rules regarding evidence, cross-


    11    examinations and some of the formal trappings

    12    of that kind of a proceeding.

    13                Because we have so many witnesses,

    14    we need to stick to the schedule so that


    15    everyone who has asked to offer testimony will

    16    have a chance to do so.  We are going to ask

    17    the witnesses today and tomorrow to be mindful


    18    of the needs of others and to help us stay on

    19    schedule.  The panels of witnesses will be

    20    expected to keep within their allotted times. 

    21    We have a timekeeper.  Melody, can you just


    22    raise your hand just so?  We have a timekeeper







                                                                          7


     1    up here.  The timekeeper is going to give

     2    people a signal, a sign when they have two

     3    minutes left, and then signal them when their


     4    times is up.

     5                There may be some individuals who

     6    did not have a chance to sign up in advance. 


     7    And to the extent possible, we want to give

     8    them a chance to speak as well.  At the end of

     9    the meeting today, we will make available to

    10    anybody who would like to make a presentation,


    11    time permitting, we will have an open mike

    12    session, we would ask that those who want to

    13    speak at the open mike session sign up.  And

    14    there is, the registration table is outside.


    15                MR. TURNER:  Yes, right outside.

    16                DIRECTOR BRAUNSTEIN:  Right

    17    outside the doors.


    18                One more comment about the

    19    testimony.  Witnesses may submit a written

    20    supplement to their oral testimony but must do

    21    so by next Tuesday, May 6th and then the


    22    record will be closed.  Any written







                                                                          8


     1    supplements should be directed to Jennifer

     2    Johnson, Secretary of the Board of Governors

     3    of the Federal Reserve System in Washington,


     4    D.C. and they must be received by 5:00 p.m.

     5    Eastern Time on May 6th.

     6                If you haven't turned in your


     7    copies of your written testimony or you have

     8    other written statements to put into the

     9    record, you can also leave them with the

    10    Federal Reserve Stamp at the registration


    11    table.  And it is very important that we get

    12    this material for the record.  

    13                And there will be a hard copy of a

    14    written transcript of these proceedings.  We


    15    have a court reporter here today and the

    16    transcript will be available through the

    17    Federal Reserve Bank of San Francisco and the


    18    Board sometime next week.  In addition it will

    19    also be available next week on the Board's

    20    public website.

    21                And with that, we are going to


    22    begin the proceedings.  We will ask, as we







                                                                          9


     1    always do that for each speaker, please state

     2    your name and your organization for the record

     3    before you start giving your remarks.  


     4                And with that, I will recognize

     5    our first panel.  Liam McGee, Andrew Plepler

     6    and Janet Lamkin.  And we can start, Liam,


     7    with you first.

     8                MR. MCGEE:  Thank you.  Good

     9    morning.

    10                Good morning.  My name is Liam


    11    McGee.  I am President of Global Consumer and

    12    Small Business Banking for Bank of America. 

    13    Joining me, as was noted, are Andrew Plepler,

    14    who is our Global community Impact Executive


    15    and President of the Bank of America

    16    Charitable Foundation and Janet Lamkin, who is

    17    President of Bank of America, California.  We


    18    would like to thank the Federal Reserve for

    19    the opportunity to discuss the benefits of

    20    Bank of America's proposed acquisition of

    21    Countrywide Financial Corporation.  


    22                But first, I am proud to announce







                                                                         10


     1    that late last week the Office of the

     2    Comptroller of the Currency notified Bank of

     3    America that we received an outstanding rating


     4    in our recently completed Community

     5    Reinvestment Act Exam.  As you know, the

     6    Community Reinvestment Act measures the Bank's


     7    performance in meeting the needs of every

     8    community we serve.  This is our sixth

     9    consecutive outstanding rating.  We think it

    10    is an appropriate recognition of our deep


    11    commitment and service to the communities in

    12    which we do business.

    13                Our commitment to the communities

    14    is ingrained in the Bank of America Culture


    15    that holds all of our associates accountable

    16    for doing the right thing for customers,

    17    shareholders, communities, and one another. 


    18    That accountability also applies to the

    19    acquisition of Countrywide.  We believe the

    20    financial strength, security and stability of

    21    the combined company will allow us to enable


    22    people to buy homes, and stay in homes, and to 







                                                                         11


     1    assist many of those affected by the current

     2    mortgage troubles.

     3                Fundamental changes in the


     4    marketplace also mean that we will govern key

     5    aspects of the combined mortgage company

     6    differently than in the past.  What will not


     7    change, however, is that our expectation that

     8    all of our associates, as well as anyone who

     9    does business with us will be held to the

    10    highest standards of trust, integrity,


    11    accountability, and business excellence.  Bank

    12    of America's values and business practices

    13    will govern how we run the combined mortgage

    14    business.  So, we will operate under the Bank


    15    of America brand.  As with all acquisitions,

    16    the brand change will not happen overnight,

    17    but will be phased in as we integrate the


    18    company over time.

    19                Now California, in particular,

    20    will benefit from this transaction.  I am

    21    pleased to announce today that Calabasas,


    22    California will be the national headquarters







                                                                         12


     1    for the combined mortgage business.  This

     2    decision highlights the continued importance

     3    of the California market to Bank of America


     4    and our commitment to maintaining our

     5    leadership position here.  

     6                We are also proud to announce


     7    today that we are the first bank to support

     8    Governor Schwarzenegger's Bank on California

     9    Initiative.  This is an ambitious effort to

    10    bring under-banked individuals into the


    11    financial mainstream.  A critical step to

    12    enable low income wage earners to begin a

    13    banking relationship and build assets.  We led

    14    the Bank on San Francisco Initiative with the


    15    City Treasurer there and learned a great deal. 

    16    We look forward to helping make the Governor's

    17    program a tremendous success.


    18                Let me turn now to home lending

    19    and our plans for the combined mortgage

    20    business.  We are unwavering in our mission of

    21    helping consumers achieve their dreams of home


    22    ownership.  Today, millions of Americans who







                                                                         13


     1    otherwise might not have been able to do so in

     2    the past, have achieved home ownership because

     3    of the efforts of Bank of America and


     4    Countrywide.  Bank of America will continue to

     5    offer home loan products to those who can

     6    afford them, while our lending practices will


     7    evolve to reflect this dramatically different

     8    mortgage environment.  

     9                We also recognize that some

    10    consumers who are experiencing financial


    11    challenges but who ultimately have the ability

    12    to repay their loans need our help to keep

    13    their loans and we are ready to help them.  We

    14    do so because no one benefits from a


    15    foreclosed home.  A customer's dreams are

    16    shattered, communities are weakened, and it is

    17    bad business for banks.  So, we continue to


    18    reach out to homeowners, community groups,

    19    regulators, and legislators to better our

    20    understanding of their concerns.  And we are

    21    listening and we are acting.


    22                As America's largest  home loan







                                                                         14


     1    provider, we will lead a new era of home

     2    lending built on secure, transparent and fair

     3    practices, easily understood and available to


     4    all who can afford to own a home.

     5                To accomplish this, we will

     6    improve the mortgage origination process,


     7    including products offered, sales and

     8    underwriting standards, and channels of

     9    distribution.  We will reduce the number of

    10    foreclosures.  We will help the communities


    11    hardest hit by foreclosures and continue to

    12    make affordable mortgages available to those

    13    traditionally under-served, including low and

    14    moderate income, and minority households.


    15                Customers tell us that they want

    16    us to continue offering a broad array of

    17    responsible home lending products and employ


    18    sound underwriting criteria to ensure that

    19    they can get in and stay in their homes.  The

    20    newly combined mortgage business will offer

    21    mass market retail customers the following


    22    types of first lien mortgage loans.







                                                                         15


     1                Conforming loans underwritten to

     2    standard guidelines of the government and

     3    government sponsored enterprises, including


     4    expanded approval guidelines and FHA/VA

     5    guidelines designed for low and moderate

     6    income borrowers.


     7                Nonconforming loans with terms

     8    expected to produce no greater risk of default

     9    than our conforming loans.

    10                Interest-only, fixed rate, and


    11    adjustable rate mortgage products subject to

    12    a ten year minimum interest-only period that

    13    removes to the possibility of short-term

    14    payment shock.  And fixed period ARMs that


    15    provide borrowers low initial rates with the

    16    security of fixed payments, subject to

    17    protections against severe step-ups and


    18    payment amounts.

    19                Upon completion of the merger,

    20    Bank of America will continue our long

    21    established policy not to offer subprime


    22    mortgage loans.  We will not offer certain







                                                                         16


     1    nontraditional mortgages, including so-called

     2    Option ARM Loans in which payments may not

     3    cover accrued interest and cause negative


     4    amortization.  And we will significantly

     5    curtail come other nontraditional mortgages,

     6    such as certain low documentation loans.


     7                Most importantly, we remain

     8    committed to offering affordable mortgage

     9    loans, particularly to low and moderate income

    10    and minority households, subject to these


    11    prudent lending standards.

    12                Bank of America is equally

    13    committed to enhanced consumer protection.  We

    14    wills strive to ensure that borrowers are


    15    presented with appropriate product options for

    16    which they qualify, understand the product

    17    features and are able to make informed


    18    choices, and are not deliberately steered to

    19    products that are more costly or for

    20    refinances that provide no tangible benefits. 

    21    We will adopt practices with regard to


    22    prepayment penalties and escrows that are







                                                                         17


     1    responsive to consumer demands while

     2    reflecting prudent risk management.

     3                We will offer our customers


     4    choices to have loans with or without

     5    prepayment fees and we will offer prepayment

     6    fees only if the customer receives the


     7    benefits of a lower loan rate.  Our fees will

     8    be transparent and clearly disclosed, so that

     9    our customers understand available product

    10    options, features, rates, and terms that are


    11    consistent with borrowers' qualifications.

    12                We have listened to customers

    13    share their fear and distress when faced with

    14    delinquency and foreclosure.  And like any


    15    prudent lender, Bank of America avoids

    16    customer foreclosures, if reasonably possible.

    17                As you know, the industry is


    18    experiencing increased foreclosure and

    19    foreclosure sales as a consequence of

    20    declining home prices but let's put

    21    foreclosures in perspective.  First, 12.8


    22    million or 93 percent of the homeowners whose







                                                                         18


     1    mortgages we will service following the

     2    acquisition of Countrywide pay their mortgages

     3    on time every month.  Of the remaining seven


     4    percent, a fraction of those who miss their

     5    payments are faced in foreclosure and fewer

     6    still actually result in foreclosure sale. 


     7                These foreclosures are

     8    concentrated in subprime borrowers while many

     9    others are investors or speculators.  In other

    10    cases, borrowers simply cannot afford the


    11    homes they bought and the current housing

    12    slump makes it difficult for them to sell

    13    their homes.  As we subtract the speculators,

    14    that leaves us with the borrowers for whom we


    15    are seeking a solution.  Those who want to

    16    keep their homes and have the financial

    17    wherewithal but are facing challenges making


    18    their monthly payments.  We are focused on

    19    doing all we can to help those borrowers.  

    20                We will continue certain practices

    21    already in place, improve these practices, and


    22    introduce new efforts to help borrowers avoid







                                                                         19


     1    foreclosures, including robust processes for

     2    identifying and contacting borrowers, special

     3    strategies for subprime borrowers holding


     4    hybrid adjustable rate mortgages, and

     5    refinancing, loan modifications, and other

     6    restructuring tools that make the borrower's


     7    debt affordable.  We will devote substantial

     8    resources, financial and otherwise to these

     9    important tasks.  And through focused effort

    10    and determination, we expect our combined


    11    company over the next two years will

    12    successfully modify or work out at least 40

    13    billion dollars in troubled mortgage loans,

    14    helping at least 265,000 customers remain in


    15    their homes.

    16                We will tailor our workout

    17    strategies to a borrower's particular


    18    circumstance.  Once we have been able to make

    19    customer contact, we work with the distressed

    20    borrowers to match the customers' repayment

    21    ability with the appropriate loss mitigation


    22    option, using tools such as loan







                                                                         20


     1    modifications, forbearances, and repayment

     2    plans, lower rates, and possibly principle

     3    reductions.  We will not assess new late


     4    charges for customers in foreclosure and we

     5    will waive prepayment or trustee fees, when

     6    permitted.


     7                In response to the needs of our

     8    customers, both companies have already added

     9    more staff and improved the experience,

    10    quality and training of the professionals


    11    dedicated to loss mitigation.  Over the past

    12    year, the combined loss mitigation staffs have

    13    doubled to the current level of over 3,900

    14    associates assisting customers.  I would like


    15    to announce that we will maintain no less than

    16    this level for at least one year after the

    17    acquisition.


    18                We will continue to be proactive

    19    in contacting customers with adjustable rate

    20    mortgages who are facing significant rate

    21    reset to provide assistance before a problem


    22    hits and we will continue to educate borrowers







                                                                         21


     1    about risks and options available to them.

     2                We will also improve our overall

     3    loss mitigation efforts through self-


     4    inspection and examination.  For example, we

     5    will establish at the Bank of America a loss

     6    mitigation governance committee within the


     7    bank, independent of the loss mitigation area,

     8    to review and audit loss mitigation decisions

     9    and performance.

    10                We believe the key to helping


    11    customers is outreach.  At Bank of America,

    12    collection and loss mitigation associates try,

    13    on average, 17 times to reach a customer

    14    between the time of delinquency and a


    15    foreclosure sale on a first mortgage. 

    16    Countrywide, after three missed payments in

    17    its subprime portfolio, sends an associate to


    18    the customer's house to have a face-to-face

    19    conversation about home retention options.  At

    20    both companies, loss mitigation outreach

    21    efforts continue until the time of a


    22    foreclosure sale.  In addition, both companies







                                                                         22


     1    are leveraging industry and government

     2    resources to help borrowers.  Both are

     3    founding members of the Hope Now Coalition and


     4    are participants in the Project Lifeline

     5    Initiative.

     6                Now, while these efforts are


     7    important, we recognize there is much more to

     8    do.  Both Bank of America and Countrywide will

     9    continue to partner with community

    10    organizations and programs such as NOCA,


    11    ACORN, the California Home Ownership

    12    Preservation Initiatives, Neighbor Works, and

    13    New Vista to promote credit counseling and

    14    financial literacy and to assist in home


    15    retention and management of vacant properties.

    16                We will continue to work with

    17    community groups and government agencies to


    18    identify new solutions for customers facing

    19    foreclosure.  Last week, we announced a new 35

    20    million dollar Neighborhood Preservation

    21    Program.  Under this program, the Bank of


    22    America Charitable Foundation together with







                                                                         23


     1    Countrywide will make 20 million dollars in

     2    grants to national and local community

     3    organizations specifically targeting loan


     4    counseling, foreclosure prevention, and

     5    support for purchase and management of vacant

     6    properties. 


     7                Also, Bank of America will make 15

     8    million dollars in program-related investments

     9    to support these activities.  We recognize

    10    that foreclosures can have a ripple effect,


    11    including communities with high levels of

    12    vacant homes and tenants who lose housing when

    13    their landlords default.  This can also

    14    increase the need for affordable rentable


    15    properties.  Many of these problems do not

    16    have easy solutions.  However, in addition to

    17    our foreclosure prevention efforts, our


    18    combined company will continue Bank of

    19    America's policy of permitting tenants to

    20    continue living in properties subject to

    21    foreclosure for 60 days after the completion


    22    of foreclosure proceedings.  If the tenant







                                                                         24


     1    voluntarily leaves the property within 30 days

     2    of the completion of foreclosure proceedings,

     3    they will receive a $2,000 cash for keys


     4    payment to help defray moving expenses.  This

     5    is an important issue and we are also

     6    exploring other efforts.


     7                Our continuing commitment to

     8    community development will not waiver.  As you

     9    know, in 2004, we raised the bar when we

    10    announced our ten year 750 billion dollar


    11    community development goal.  Today, we are

    12    raising that bar.  I am proud to announce Bank

    13    of America's new and unprecedented ten year

    14    goal of one and a half trillion dollars for


    15    community development lending and investments. 

    16    This is the largest community development goal

    17    ever by any company in America.  In the coming


    18    years, this goal is certain to enhance to

    19    quality of life for millions of Americans in

    20    need by helping finance the construction of

    21    affordable housing throughout the country,


    22    providing loans and other needed capital to







                                                                         25


     1    small businesses, supplying consumer loans,

     2    including housing finance for low and moderate

     3    income and minority borrowers, and financing


     4    economic development for communities in need.

     5                In addition, our charitable

     6    foundation is raving its philanthropic giving 


     7    goal from one and a half billion dollars to

     8    two billion dollars over the next ten years. 

     9    This is the most ambitious long-term corporate

    10    philanthropic goal ever announced by any


    11    company and we are setting this goal, despite

    12    uncertain economic times.

    13                We are optimistic about the future

    14    prospects of the housing market and the


    15    enhanced mortgage services Bank of America

    16    will offer after its acquisition of

    17    Countrywide.  In announcing our new one and a


    18    half trillion dollars community development

    19    goal, industry leading mortgage loan

    20    practices, and new foreclosure mitigation

    21    strategies, we ensure that our customers will


    22    continue to benefit from Bank of America's







                                                                         26


     1    responsible and principled approach to doing

     2    business.  We encourage others in the industry

     3    to follow our lead.


     4                Andrew Plepler will now give more

     5    details in our community development and

     6    philanthropic efforts.


     7                MR. PLEPLER:  Thank you, Liam.  My

     8    name is Andrew Plepler.

     9                Bank of America's commitment to

    10    strengthening the health and vitality of


    11    communities stems from a deeply ingrained

    12    philosophy and long tradition of demonstrating

    13    corporate citizenship through community

    14    development and philanthropy.  In particular,


    15    by partnering with nonprofits and community

    16    leaders, we concentrate on improving the lives

    17    of low and moderate income and minority


    18    families and neighborhoods.  Our record of six

    19    consecutive CRA ratings, which Liam just

    20    announced, is reflective of our community

    21    development focus.  In addition, the Bank of


    22    America Charitable Foundation is the second







                                                                         27


     1    largest corporate donor in the world.  And in

     2    keeping with our community development work,

     3    in excess of 50 percent of our charitable


     4    grants are CRA qualified.  

     5                For many years, Bank of America

     6    has been recognized for its community


     7    development work.  The vast majority of these

     8    activities are the results of our line of

     9    business products and services that we provide

    10    to customers and communities.  In more


    11    specific areas of community development, we

    12    have leveraged our knowledge and expertise to

    13    become a national leader in affordable

    14    housing, small business lending, and


    15    neighborhood revitalization.  And, we are

    16    recognized for our results in creating

    17    sustainable community and economic development


    18    through public-private partnerships and public

    19    policy advocacy on related issues.

    20                Since 2004, our company has been

    21    delivering on an ambitious ten year goal of


    22    750 billion dollars for community development







                                                                         28


     1    loans and investments.  And as you just heard

     2    from Liam, with the completion of our merger

     3    with Countrywide, we will double our community


     4    development loans and investments.

     5                To provide just a few prove

     6    points, consider some of our 2007 results. 


     7    More than 100 billion dollars in community

     8    development, loans, and investments to low and

     9    moderate income and minority families, small

    10    businesses, and communities, financing,


    11    developing, and rehabbing nearly 22,000 units

    12    of affordable housing; 25.6 billion dollars in

    13    small business lending and number one SBA

    14    lender for the tenth consecutive year; 


    15    investing more than 84 million dollars in

    16    Community Development Financial Institutions

    17    or CDFIs; and a three year cumulative total of


    18    more than 273 billion dollars in community

    19    development activity.

    20                Because we also believe that

    21    affordable quality rental housing is critical


    22    to our national housing stock, we have been a







                                                                         29


     1    leader in providing financing to both non- and

     2    for-profit developers.  While others are

     3    retrenching or exiting this business, Bank of


     4    America remains and strong player in this

     5    space and it has expanded its capability to

     6    direct low income housing tax credit


     7    investments to ensure continuity and capacity

     8    in the market.

     9                In addition to setting a new

    10    community development goal, you also heard


    11    Liam refer to our new two billion dollars in

    12    philanthropic giving goal to begin in 2009. 

    13    Since 2004 we have invested more than 550

    14    million dollars toward increasing the health


    15    and vitality of the neighborhoods throughout

    16    our franchise.  Through signature programs

    17    such as our Neighborhood Excellence


    18    Initiative, we are increasing the capacity of

    19    community organizations, developing the

    20    current and the next generation of community

    21    leaders and creating significant impact in the


    22    communities we serve.  By also supporting







                                                                         30


     1    organizations such as hospitals, universities,

     2    and arts institutions, we are helping to

     3    create jobs and stimulate economic development


     4    to enhance the quality of life in diverse

     5    neighborhoods.  In addition, our employees

     6    provide tremendous support as volunteers in


     7    the communities where we live and work.  We

     8    exceeded more than 200 million dollars in

     9    charitable giving in 2007 and our employees

    10    contributed more than 650,000 volunteer hours


    11    and more than 20 million dollars in charitable

    12    foundations to help meet pressing community

    13    leads.

    14                Our community development and


    15    philanthropic commitments begin with

    16    engagement in active on-going conversations

    17    with community and non-profit leaders at the


    18    local, state, and national levels.  We do this

    19    in order to have an understanding of the needs

    20    and priorities unique to each community, so

    21    that our investments can be as relevant and


    22    impactful as possible.







                                                                         31


     1                For me, personally, one of the

     2    most rewarding parts of my role at the bank is

     3    engaging in dialogue with these community


     4    leaders through community forums and

     5    individual meetings.  Most recently, I was

     6    pleased to participate in meeting with Bob


     7    Gnaizda and Orson Aguilar from the Greenlining

     8    Institute and Alan Fisher from the California 

     9    Reinvestment Committee and members of his

    10    Board of Directors.  These dialogues make us


    11    a better company and we look forward to

    12    continuing these conversations.

    13                I would like to give two other

    14    specific instances where Bank of America


    15    serves as a good corporate citizen.  First, to

    16    supplier diversity.  Bank of America is

    17    committed to fostering diversity in our


    18    communities and has incorporated that

    19    commitment as a core value in our business

    20    practices.  We developed an aggressive program

    21    of outreach and business development to


    22    increase opportunities to support diverse







                                                                         32


     1    suppliers.  We are proud that more 16 percent

     2    of our companies sourceable spend in 2007 with

     3    firms that majority owned by women,


     4    minorities, or people with disabilities. 

     5                Second is the environment.  Bank

     6    of America is recognized as a leader for our


     7    advocacy of efforts to reduce greenhouse gases

     8    and support responsible sustainable

     9    development.  We have dedicated 20 billion

    10    dollars over ten years for an environmental


    11    initiative to support these efforts.  We

    12    recently announced that Bank of America has

    13    adopted the carbon principles, guidelines for

    14    lenders to promote cleaner energy


    15    technologies.  We are also very proud that our

    16    Bank of America tower in New York City has

    17    been recognized widely as one of the most


    18    environmentally friendly buildings in the

    19    world.  

    20                In short, Bank of America is and

    21    will continue to be committed to communities


    22    that we serve.  By providing local, relevant







                                                                         33


     1    support to neighborhoods, we will continue to

     2    create opportunities for our customers,

     3    associates, and communities to grow and


     4    prosper.  We know that we are most effective

     5    by partnering with nonprofit organizations and

     6    community leaders to identify and address the


     7    challenges that together we can overcome.

     8                Now, I will turn to Janet Lamkin

     9    to give you a local perspective of our

    10    community leadership and activities.


    11                MS. LAMKIN:  Thank you, Andrew.  I

    12    am Janet Lamkin and I would like to focus on

    13    how some of the programs that Liam and Andrew

    14    that just mentioned will affect California,


    15    specifically.

    16                As Liam has announced, California

    17    will be the headquarters of our combined


    18    mortgage business.  That amounts to an

    19    extremely significant investment in California

    20    and an ongoing commitment by our company to

    21    this state.  


    22                One example of that commitment is







                                                                         34


     1    the increase in our philanthropic goal that

     2    Andrew touched on.  Here in California, we

     3    plan to make 30 million dollars in charitable


     4    contributions to nonprofits this year.  That

     5    is a four million dollar increase over 2007

     6    and a doubling of our annual California grant-


     7    making budget over the past five years.  And

     8    I would stress that this is occurring at a

     9    time when some other companies are scaling

    10    back through charitable contributions in


    11    response to the current economic downturn.

    12                As the largest provider of

    13    financial services to consumers, businesses,

    14    and government agencies and the largest


    15    provider of SBA loans in California, Bank of

    16    America is a key driver of the state's

    17    economy.  We are a major contributor to the


    18    health and well-being of communities

    19    throughout the state.  And California

    20    communities are home to 35,000 Bank of America

    21    associates.  This is where we live, where we


    22    work, and where we rear our families.  So like







                                                                         35


     1    all of us here today, we have a significant

     2    stake in the economic vitality and the overall

     3    quality of life in this state.  For example,


     4    our associates donated more then three million

     5    dollars of their own money to nonprofits in

     6    California last year, which was matched dollar


     7    for dollar by our foundation.  And they spent

     8    more than 42,000 volunteer hours to help

     9    improve their local communities.

    10                In my role as Bank of America's


    11    California President, I lead a statewide team

    12    of 15 local market presidents.  These

    13    executives and their local leadership teams

    14    routinely engage a cross-section of local


    15    business, nonprofit, and government leaders to

    16    discuss community needs, to establish

    17    priorities, provide thought leadership,


    18    identify solutions, and then allocate the

    19    resources necessary to implement them.

    20                Here are some of the results of

    21    our activity in California for 2007.  We made


    22    more than 16.2 billion dollars in mortgage







                                                                         36


     1    loans to low and moderate income and minority

     2    borrowers and borrowers in low tracks.  We

     3    provided more than 624 million dollars in debt


     4    and equity financing for affordable multi-

     5    family rental housing.  We made 4.6 billion

     6    dollars of home-related and other consumer


     7    loans to low and moderate income borrowers. 

     8    We made 5.3 billion dollars in small business

     9    loans.  We  completed the third year of our

    10    neighborhood excellence initiative with 18


    11    outstanding California nonprofits receiving

    12    two hundred thousand dollars of operating

    13    grants each, for a three year total of 10.8

    14    million dollars.  And, we spent 191 million


    15    dollars purchasing goods and services for

    16    minority and women-owned firms, fully 23

    17    percent of the bank's total spending


    18    statewide.

    19                Now that we have doubled our

    20    national community development lending and

    21    investing goal and also substantially


    22    increased our national philanthropic goal, we 







                                                                         37


     1    will be taking a fresh look at our plans and

     2    programs here in California so that we can do

     3    even more.  We will continue to meet with


     4    community leaders, as we have in the past to

     5    determine where we can be most effective.  

     6                In this vein, we are going to be


     7    stepping up our efforts to support

     8    Californians who have been hit by the fallout

     9    by the implosion of the mortgage market.  Liam

    10    has provided a global view of how we will


    11    manage that business, with the highest of

    12    standards.  Our neighborhood preservation

    13    program, which Liam announced earlier, will

    14    provide 1.5 million dollars in foreclosure


    15    mitigation grants and program related

    16    vestments to California nonprofits.  This will

    17    enable us to increase the service capacity of


    18    more counseling programs and reduce

    19    neighborhood deterioration due to

    20    foreclosures.  Particularly, those areas that

    21    have been hard hit will get the concentration


    22    of some of this effort.  That will include







                                                                         38


     1    Fresno, Stockton, Oakland, Los Angeles, and

     2    the Inland Empire.

     3                As we all know, the Inland Empire


     4    has proven to be particularly vulnerable to

     5    the downturn in the housing market.  Situated

     6    just east of Los Angeles, where we sit today,


     7    the once sparsely populated counties of 

     8    Riverside and San Bernardino now contain the

     9    fastest growing bedroom communities in the

    10    state with some of the highest foreclosure


    11    rates.  Sadly for too many who recently became

    12    homeowners, the American dream is diminishing. 

    13    We want to help those homeowners hold on to

    14    their dreams.  So, at the suggestion of the


    15    Greenlining Coalition, we are exploring

    16    concentrated efforts in the Inland Empire to

    17    provide a comprehensive solution to this very


    18    complex issue.  

    19                We don't pretend to have all of

    20    the answers to all of the problems caused by

    21    the current mortgage environment but, as Bank


    22    of America has so many times in the past been







                                                                         39


     1    in this state, we are committed to being a

     2    leader in finding solutions and forging

     3    productive partnerships to address this crisis


     4    head-on.

     5                Liam.

     6                MR. MCGEE:  Thank you, Janet and


     7    Andrew.  In conclusion, we encourage the

     8    Federal Reserve Board to act swiftly to

     9    approve Bank of America's application.  Today,

    10    we have outlined how the acquisition will


    11    enable Bank of America to make it possible for

    12    consumers to buy homes and stay in their home.

    13                With approval of the merger, Bank

    14    of America's values and business practices


    15    will govern the combined mortgage company. 

    16    Our records demonstrates a strong history of

    17    meeting and exceeding both internal and


    18    external goals and at improving the

    19    communities we serve with the highest

    20    standards of trust, integrity, accountability,

    21    and business excellence.


    22                Thank you again for giving this







                                                                         40


     1    opportunity to speak with you.

     2                DIRECTOR BRAUNSTEIN:  Thank you

     3    for your testimony.  Does the panel have any


     4    questions?

     5                MS. ROBINSON:  Yes, I do.  We have

     6    received comments indicating that the efforts


     7    at Countrywide in working with borrowers

     8    experiencing problems has experienced its own

     9    problems and that there have been overly

    10    aggressive collection practices, lack of


    11    communication, sending emails to borrowers

    12    without having the ability for the borrowers

    13    to respond via email.  Failure to work with

    14    counseling groups who are working with


    15    borrowers, taking months and months to even

    16    reach a human being at Countrywide.

    17                With that said, can you give us


    18    more information as to what kind of training

    19    efforts you are going to deploy?  Because it

    20    doesn't sound as though you will be able to

    21    rely on the resources at Countrywide for your


    22    new loss mitigation.  And as well, more







                                                                         41


     1    specifics about the oversight that you are

     2    going to put in place to make sure that that

     3    process gets off the ground running


     4    immediately and there is, you know,

     5    verification that it is in fact working well?

     6                MR. MCGEE:  First all -- thank you


     7    for the question.  First of all, let me remind

     8    everyone that Countrywide is still today an

     9    independent company.  Our plans are to

    10    complete, upon approval of the Federal Reserve


    11    and Countrywide shareholders, the transaction

    12    in the third quarter.

    13                Going forward, I hope I have made

    14    it clear that first of all that the new


    15    combined mortgage business will be managed

    16    with a Bank of America set of values, ethics,

    17    both collective and personal accountability in


    18    business practices.  We will continue to

    19    invest the appropriate amount of training and

    20    resources to address the perception that you

    21    have created.


    22                I will just make it very clear







                                                                         42


     1    that our purpose at the Bank of America today

     2    and in the new combined mortgage business will

     3    be to enable people who can afford it to buy


     4    homes and stay in their homes that foreclosure

     5    is an awful experience for consumers, for

     6    neighborhoods, and for banks as well.  And we


     7    will do everything in our power as I have

     8    described to minimize that as appropriate.

     9                DIRECTOR BRAUNSTEIN:  Any other

    10    questions for this panel?  Mr. Alfriend?


    11                MR. ALFRIEND:  No.

    12                DIRECTOR BRAUNSTEIN:  No, okay.  

    13                MR. TURNER:  Sure, I have just got

    14    one question.  Mr. McGee, you spoke early on


    15    about your commitment to assisting local

    16    communities hit by the foreclosure crisis and

    17    then mentioned a 20 million grant program for


    18    both foreclosure prevention and something

    19    about helping communities acquire vacant

    20    properties.  I was just curious if you could

    21    elaborate a little more on the kinds of


    22    programs and initiatives you will be







                                                                         43


     1    supporting them in that area.

     2                MR. MCGEE:  I would say that

     3    Andrew and myself and Janet, as Andrew


     4    mentioned in his testimony, spent time with

     5    Greenlining and the CRC just a week and a half

     6    to two weeks ago.  And we were aware of the


     7    tenant issue with speculators buying

     8    properties and having tenants and some of the

     9    unfortunate effects on those tenants if the

    10    homes are foreclosed and secondly, and some


    11    neighborhoods have a concentration of homes

    12    that have been or might be foreclosed upon. 

    13    And we got a heightened sense of awareness

    14    from both of those organizations about that.


    15                I alluded to the fact that we know


    16    those are issues.  I was specific on some of

    17    the efforts we are putting into place around


    18    tenants.  But we will be quite creative around

    19    neighborhoods that have unusually high numbers

    20    of foreclosed properties to see if there are

    21    different things perhaps, that have ever been


    22    done to create rental properties and be sure







                                                                         44


     1    those neighborhoods don't fall into a state of

     2    disrepair or blight as a result of high levels

     3    of foreclosure.


     4                MR. PLEPLER:  I would just add

     5    there was a large meeting about two weeks ago

     6    convened by NeighborWorks on this issue in


     7    D.C. and they are grappling with what is a

     8    very complex issue around the vacant and

     9    abandon properties.  And they convened LISC

    10    and Enterprise, Housing Partnership Network in


    11    NeighborWorks.  We attended that meeting.  We

    12    are very anxious to participate in that

    13    initiative.  It is going to take them a little

    14    while to get the planning process in the


    15    works.  There are a lot of local issues around

    16    getting site acquisition and property

    17    acquisition that need to be worked through but


    18    we are very anxious to support those

    19    initiatives.

    20                Thanks.

    21                DIRECTOR BRAUNSTEIN:  Thank you


    22    very much.







                                                                         45


     1                MR. MCGEE:  Thank you.

     2                DIRECTOR BRAUNSTEIN:  Will the

     3    next panel come forward, please?


     4                DIRECTOR BRAUNSTEIN:  -- repeat

     5    our kind of ground rules here.  Could you

     6    please at the beginning of your statement,


     7    state your name and organization for the

     8    record?  We have a court reporter and

     9    transcript.

    10                And we will start with


    11    Congresswoman Waters.

    12                CONGRESSWOMAN WATERS:  Thank you. 

    13    I am Congresswoman Maxine Waters.  I represent

    14    the 35th Congressional District in the City of


    15    Los Angeles and other surrounding areas.

    16                I would first like to thank you

    17    for the opportunity to provide testimony on


    18    Bank of America's proposed purchase of

    19    Countrywide Financial.  This transaction

    20    stands as one of the most important that the

    21    Federal Reserve has reviewed in recent memory. 


    22    If completed, it will create the nation's







                                                                         46


     1    largest mortgage lender and mortgage servicer

     2    and it will do so in the midst of a crisis. 

     3    Specifically, meltdown in the mortgage markets


     4    that have led to a foreclosure waive unlike

     5    any since the great depression, nearly toppled

     6    a major investment bank, and resulted in a


     7    credit crunch that threatens our entire

     8    economy.

     9                Therefore, it is absolutely

    10    essential that the Federal Reserve get this


    11    right.  I would be less than candid, however,

    12    if I said that I was filled with confidence

    13    that it will do so, in light of the

    14    institution's lackluster record during the


    15    run-up to this crisis.  There is plenty of

    16    blame to go around the many, perhaps too many

    17    federal regulatory agencies with oversight of


    18    financial institutions in the subprime lending

    19    and mortgage backed securities markets.  

    20                The Federal Reserve's role in the

    21    years prior to the mortgage market meltdown


    22    was especially distressing.  First, then







                                                                         47


     1    Chairman Greenspan repeatedly underplayed or

     2    outright denied the possibility that

     3    skyrocketing housing prices.  The only reason


     4    the lax underwriting standards that pervaded

     5    the subprime mortgage did not lead to disaster

     6    sooner, might be symptomatic of an asset


     7    bubble at risk of bursting.  As a member of

     8    the House Financial Services Committee for

     9    over a decade, I certainly don't recall him

    10    issuing forceful warnings of this possibility


    11    in his biannual appearances before us as

    12    mandated by the Humphrey-Hawkins Act.

    13                Secondly, second and more

    14    troubling, the Federal Reserve declined to


    15    take even minimal steps to curb the deceptive

    16    practices and outright fraud taking place in

    17    the subprime lending market as it grew from


    18    virtual nonexistence a decade ago to a 625

    19    billion dollar industry, accounting for a

    20    quarter of all mortgages in 2006.  Former

    21    Chairman Greenspan never pushed subprime


    22    lenders for so much as a voluntary industry







                                                                         48


     1    code of conduct, despite a direct plea from

     2    the Greenlining Institute and the ongoing

     3    effort to elicit one, as it turned out, while


     4    another major federal regulator stakeholder,

     5    now FDIC Chairwoman Bair, who was in the early

     6    years of this administration a senior


     7    treasurer official.

     8                Most glaringly, the Federal

     9    Reserve  declined to put into place

    10    comprehensive protections for subprime


    11    borrowers under the authority conferred upon

    12    it under Regulation Z of the Federal Truth In

    13    Lending Act and the  Home Ownership Equity

    14    Protection Act of 1994.  While it issued a


    15    rule in 2001 that required income

    16    documentation for some HOEPA covered loans,

    17    additional rule making under its broad


    18    authority to regulate unfair, deceptive, and

    19    abusive lending practices was not forthcoming

    20    over the next seven years, even if so-called

    21    no doc loans, exotic mortgage products like


    22    2/28 ARMs and fraudulent sell practices







                                                                         49


     1    permeated the subprime lending industry.  Not

     2    until January of this year did the Federal

     3    Reserve propose anything near the sort of


     4    comprehensive protections of borrowers in both

     5    the home purchase and refinancing context that

     6    were clearly needed years ago.


     7                So troubling a history compels me

     8    to be very direct in stating that the Federal

     9    Reserve bears a heavy responsibility to prove 

    10    its commitment and competence in the review of


    11    the Bank of America/Countrywide transaction. 

    12    This is especially so, given the activist

    13    crisis management role the Fed has assumed in

    14    recent months under Chairman Bernanke, as well


    15    as the prominent Treasury Secretary Paulson

    16    gives the institution in the administration's

    17    proposed plan for regulating the financial


    18    market.

    19                Simply put, if the Federal Reserve

    20    continues to act as the primary watchdog over

    21    financial crises in the contemporary economy,


    22    then we must be sure that it will not assume







                                                                         50


     1    a stance of detachment and negligence when

     2    mistakes for American consumers are high.  We

     3    have now learned the high way that failing to


     4    vigilantly protect customers inevitably leads

     5    to harm to the safety and soundness of

     6    financial institutions and the economy as a


     7    whole.  The traditional realm of the Fed

     8    hiding its head in the sand is no longer an

     9    option.

    10          What does this mean for the Federal


    11    Reserve's review of this particular

    12    transaction?  Taking a page from Secretary

    13    Paulson's approach of needing American

    14    financial regulation in the direction of so-


    15    called principle-based oversight of the

    16    financial markets, I suggest that two

    17    principles anchor the Federal Reserve's


    18    assessment of this acquisition.  These

    19    principles can be articulated in the form of

    20    questions.

    21                First, is this transaction safe


    22    for the financial markets and the American







                                                                         51


     1    economy?  And second, does the acquisition put

     2    in place a clear plan to ensure the best

     3    possible outcome for the millions of


     4    distressed Countrywide borrowers who face

     5    possible foreclosure?

     6                If the answer to either of these


     7    questions is no, then the acquisition must be

     8    stopped in its tracks.  With respect to the

     9    stability of the financial markets, I would

    10    quickly observe that the entire course of this


    11    crisis has followed a single troubling

    12    pattern.  Things look bad and then they turn

    13    out to be worse than we thought.  This has

    14    particularly been the case with regard to the


    15    exposure of large banks, hedge funds, and

    16    other investors to mortgage backed securities

    17    and other instruments that have suffered


    18    plummeting values as the credit crunch

    19    spreads, including leverage loans and

    20    collateralized debt obligations or CDOs.

    21                While it exited the direct


    22    subprime lending market a number of years ago,







                                                                         52


     1    I am told, Bank of America recently reported

     2    mortgage backed securities and related trading

     3    losses in the first quarter of over 1.3


     4    billion dollars and an 80 percent drop in

     5    profit, compared to the same period last year. 

     6    It has now had to reserve six billion dollars


     7    to cover potential credit losses and sits on

     8    nearly 35 billion dollars in mortgage backed

     9    securities, leverage loans to private equity

    10    firms and CDOs.  Clearly, the Federal Reserve


    11    must do a careful analysis to ensure that

    12    swallowing Countrywide will not make Bank of

    13    America so sick that it soon needs the

    14    emergency life support Bear Stearns received


    15    a short while ago.  The economy simply cannot

    16    withstand many such events so close together,

    17    especially given the enormous size of the


    18    post-acquisition Bank of America, an entity

    19    that will have a piece of well over one-third

    20    of the mortgages in the United States.

    21                I caution the Federal Reserve also


    22    to examine very carefully the exposure that







                                                                         53


     1    Bank of America has to civil and even criminal

     2    liability resulting from the recent behavior

     3    of Countrywide executives.  Countrywide CEO,


     4    Angelo Mozilo sold in excess of 450 million in

     5    stock in the months prior to the subprime

     6    implosion, even as he continued to tout


     7    Countrywide's subprime loan products to

     8    consumers and the markets.  He is now leading

     9    the company with a golden parachute of 120

    10    million, even after a voluntary reduction of


    11    37.5 million.  In my view, any reasonable

    12    analysis of this transaction must focus on the

    13    potential liability that Bank of America

    14    faces, as potential Countrywide shareholder


    15    lawsuits and civil and criminal inquiries are

    16    already or may be launched by the SEC,

    17    Department of Justice, and other federal or


    18    state regulators come to fruition.

    19                However, if a consummated

    20    acquisition results in a Bank of America that

    21    appears financially healthy, the transaction


    22    should not be permitted to go forward in the







                                                                         54


     1    absence of a concrete transparent strategy for

     2    ensuring that its many distressed Countrywide

     3    borrowers will be able to stay in their homes


     4    with mortgage payments they can afford for the

     5    long-term.  Without this, the Countrywide name

     6    will be buried forever but the damage


     7    inflicted by its employees and the mortgage

     8    brokers it allowed to operate with little or

     9    no oversight in communities across the state,

    10    will continue to be felt far into the future.


    11                In terms of evaluating the plan

    12    that Bank of America will, I understand expand

    13    upon  in its testimony today, I would again

    14    suggest that the Federal Reserve follow two


    15    principles.  With respect to the process for

    16    executing loan workouts and other loss

    17    mitigation activities, the operative question


    18    should be, does this plan make it as easy for

    19    a distressed borrower to get help from Bank of

    20    America resolving problems with their loans,

    21    as it was to get the loan from Countrywide in


    22    the first place?  To date, the answer to this







                                                                         55


     1    question has clearly been no.  

     2                As a threshold matter, I want to

     3    point out that Countrywide is currently the


     4    largest servicer of mortgages in the country

     5    and its purchase by Bank of America will

     6    create by far the largest institution of its


     7    kind.  I have been focused on mortgage

     8    servicers since this beginning of this debacle

     9    and it is now clear that within a generally

    10    opaque and under-regulated mortgage market,


    11    mortgage servicers represent by far the least

    12    understood and overseen segment of the

    13    industry, with no duty to report on their

    14    activities to federal regulators or Congress


    15    and no fiduciary obligation whatsoever to the

    16    borrowers for whom they are the first and only

    17    point of contact.  Mortgage servicers have


    18    acted in response to this crisis only as much

    19    as they voluntarily wish to and total policy

    20    holders and the public only as much as their

    21    activities as they felt like.  This must


    22    change.







                                                                         56


     1                The first step is improved

     2    outreach.  While the industry touts as

     3    comprehensive and effective strategies for


     4    reaching delinquent and at-risk borrowers, its


     5    direct mailings, toll-free Hope Now Alliance

     6    phone number, and participation in local home


     7    ownership preservation workshops, a different

     8    story has been told by witnesses at this and

     9    prior public hearings, as well as by

    10    investigative journalists and broader gauged


    11    analysis like the one recently conducted by

    12    the California reinvestment coalition.

    13                It is striking to me that while

    14    Countrywide, Bank of America, and other


    15    lenders who are also major mortgage servicers,

    16    have one major television campaign during

    17    recent sporting events such as the Super Bowl


    18    and NCAA College Basketball tournament

    19    encouraging prospective home buyers and

    20    existing home buyers to take out new loans or

    21    to refinance, no campaign of equal magnitude


    22    has been targeted to borrowers seeking help







                                                                         57


     1    with workouts for the existing subprime and

     2    other troubled loans.  The Federal Reserve

     3    must ensure that Bank of America's proposed


     4    post-acquisition outreach strategies

     5    significantly exceed the standard of more of

     6    the same.  This holds true as well for the


     7    accessibility and authority of loss mitigation 

     8    personnel at Bank of America after the

     9    transaction takes place.  

    10                In two hearings before my


    11    Subcommittee on Housing and Community

    12    Opportunity, I heard of the difficulties

    13    borrowers and even their trained advocates

    14    confronted in getting to an actual human to


    15    address their problem, much less on authorized

    16    to execute a long-term sustainable solution

    17    such as a loan modification.  Phone calls go


    18    unanswered.  Borrower inquiries are not

    19    responded to for months.  No real loss

    20    mitigation offer is made until the borrower is

    21    on the verge of foreclosure, if at all, and


    22    then only if the borrower forfeits legal







                                                                         58


     1    rights.  While Countrywide does not appear to

     2    be the worst among servicers, again, it is

     3    difficult to know since none of them are


     4    providing data subject to outside audits.  It

     5    is simply not doing a stellar job as witnesses

     6    at prior public hearings on this transaction


     7    have testified.

     8                Notably, like other servicers,

     9    even as it has been forced by the magnitude of

    10    the crises to expand its servicing operations,


    11    Countrywide has tried to cut costs by

    12    outsourcing these functions to India and Costa

    13    Rica, which seems unlikely to enhance outcomes

    14    for borrowers.  Meanwhile, no such bell piping


    15    seems to have taken place in providing rewards

    16    to the mortgage brokers who originate their

    17    loans, beneficiaries this year of an all-


    18    expense paid trip to Aspen, Colorado.  This

    19    strikes me, at best, a misalignment of

    20    priorities and resources that cannot be

    21    permitted to survive this transaction.


    22                Finally and most important, the







                                                                         59


     1    Federal Reserve must hold Bank of America

     2    accountable for loss mitigation outcomes for

     3    the Countrywide borrowers it inherits.  Here,


     4    the critical questions are will Bank of

     5    America prioritize loss mitigation outcomes

     6    that keep distressed borrowers in their homes,


     7    whenever feasible and when a loan workout is

     8    executed that achieves this goal?  Does the

     9    resulting repayment plan, loan modification,

    10    or other strategy put in place a monthly


    11    payment plan that is affordable and

    12    sustainable for the borrower?

    13                I have introduced legislation, the

    14    Foreclosure Prevention and Sound Mortgage


    15    Servicing Act which would codify this

    16    reasonable standard and require servicers to

    17    report data demonstrating they are meeting it


    18    going forward.  I was compelled to do so

    19    because policy makers have no access to data

    20    to assess definitively whether voluntary

    21    industry efforts like the Hope Now Alliance


    22    are adhering to it, while the limited data







                                                                         60


     1    disclosed by the industry coupled with the

     2    anecdotal reports of counselors, consumer

     3    attorneys and borrowers themselves, strongly


     4    suggest they are not.  

     5                To provide two examples, at my

     6    subcommittee's hearing on April 16th, Hope Now


     7    revealed that fewer than four percent of total

     8    loan workouts resulted in rate modifications

     9    of five years or longer.  Similarly, at the

    10    same hearing, Countrywide reported an


    11    increased pace of loan workout and

    12    modification in comparison to its testimony at

    13    a November 2007 subcommittee hearing. 

    14    Nevertheless, as little as 15 percent of total


    15    loan workout in the six months ending March 31

    16    consisted of rate reduction modifications of

    17    five years or longer.  I say as little as


    18    because again, the data provided to me was

    19    imprecise.  

    20                Step one in analyzing the proposed

    21    outcomes of any strategy Bank of America


    22    furnishes to the Federal Reserve then is to







                                                                         61


     1    insist upon a comprehensive audited data on

     2    both Countrywide's and Bank of America's loss

     3    mitigation activities to date.  This minimum


     4    standard is something that even Secretary

     5    Paulson, no fan of comparing industry behavior

     6    so far during this crisis, apparently took the


     7    major servicers to task for failing to meeting

     8    in a closed door meeting last week.

     9                The most fundamental issue,

    10    however,  extends beyond the question of


    11    forbearance versus repayment plans, versus

    12    loan modifications, versus other loan workout

    13    outcomes.  It is the standards of

    14    affordability that Bank of America will apply 


    15    to any workout.  The bottom line criterion for 

    16    evaluating the workout is whether the payment

    17    plan that results is affordable to the


    18    borrower over the long-term.  And neither Hope

    19    Now, nor Countrywide, nor Bank of America are

    20    willing to be clear about the affordability

    21    standards that are being applied to most of


    22    the distressed loans they are servicing.  This







                                                                         62


     1    cannot be allowed within the plan that Bank of

     2    America submits to the Federal Reserve.  

     3                One of the most striking findings


     4    of my Subcommittee's hearings on mortgage

     5    servicing, was that large services like

     6    Countrywide and Bank of America service


     7    mortgages originated subject to guarantees by

     8    the VA, FHA, and the GSEs, Fannie Mae and


     9    Freddie Mac, as well as large ALTA, that is A-

    10    L-T-A and subprime portfolios which is where


    11    many of the problems lie.  The significant

    12    portion of their portfolios subject to these

    13    government or quasi-governmental guarantees

    14    must adhere to strict loss mitigation guidance


    15    issued by the guarantors, which mandate that

    16    loss mitigation offers meet certain

    17    affordability standards.  


    18                These standards typically require

    19    that the borrower be left with the ratio of

    20    debt to income that is not too high to be

    21    sustained for the long-term.  They also


    22    require that after monthly expenses, including







                                                                         63


     1    debt service on the mortgage and all other

     2    secured and unsecured debt, such as credit

     3    cards and auto loans, are deducted from a


     4    borrower's monthly income enough money is left

     5    over that the borrower will be able to meet

     6    unexpected expenses.  


     7                For example, Fannie Mae requires

     8    that $200 in residual income be available

     9    after making the monthly mortgage payment

    10    under a proposed loan workout, while Freddie


    11    Mac generally adheres to a residual income

    12    standards of 20 percent of the borrower's

    13    monthly income.  In plain English,

    14    Countrywide, Bank of America, and most other


    15    large servicers are adhering to time-tested

    16    affordability standards for a significant

    17    portion of their portfolios, which tend to be


    18    the safer products they service, due to strict

    19    VA, FHA, and GSE underwriting guidelines,

    20    while utterly failing to report to the public 

    21    or policy makers on the affordability


    22    standards they are utilizing in serving the







                                                                         64


     1    ALTA subprimes and other riskier portions of

     2    their portfolios, much less committing to

     3    employing a uniform proven affordability


     4    standard when servicing those loans.

     5                In my view, the Federal Reserve's

     6    assessment of this proposed acquisition must


     7    be considered negligent if Bank of America is

     8    permitted to implement a loss mitigation plan

     9    for the borrowers it currently services and

    10    for those it inherits from Countrywide that


    11    perpetuates this lack of transparency and

    12    uniformity with respect to the affordability

    13    standard it applies to loans it services

    14    falling outside of the purview of the VA, FHA,


    15    and GSEs.  

    16                I conclude by stating that the

    17    American people desperately need for the


    18    Federal Reserve's assessment of this massive

    19    mortgage market-related transaction to present

    20    a triumph of hope over experience, a new

    21    chapter in which the Fed ensures that major


    22    mergers and acquisitions yield positive







                                                                         65


     1    outcomes for consumers and communities, as

     2    well as the institutions involved.  And I do

     3    thank you for holding this hearing today.


     4                DIRECTOR BRAUNSTEIN:  Thank you.

     5                (Applause.)

     6                DIRECTOR BRAUNSTEIN:  Thank you. 


     7    Mr. Bailon.

     8                MR. BAILON:  Yes, my name is

     9    Adolfo Bailon.  I am Senior Field

    10    Representative for United States Senator


    11    Barbara Boxer and I am here to present a

    12    statement on her behalf.

    13                Thank you for the opportunity to

    14    comment on Bank of America's proposed


    15    acquisition of Countrywide Financial.  This is

    16    an important transaction that has the

    17    potential to rescue thousands of borrowers at


    18    risk of losing of their homes, especially here

    19    in California, which has been the epicenter of

    20    the foreclosures crisis.

    21                In the first quarter of this year


    22    alone, the number of homes in California lost







                                                                         66


     1    to the foreclosure grew to an astonishing

     2    47,171, more than four times as many as the

     3    year earlier.  Many of these loans were likely


     4    originated by Countrywide, which was one of

     5    the largest subprime and option ARM lenders in

     6    the state.


     7                Before any mergers is approved, I

     8    believe Bank of America should present a

     9    clear, specific plan on how it will handle

    10    borrowers in Countrywide servicing portfolio


    11    who are at risk of losing their principal

    12    residence.  This plan should, at a minimum,

    13    include the following components.  

    14                One, Countrywide's existing loss


    15    mitigation staff level must be maintained, if

    16    not extended.  Caseloads are growing, as is

    17    the amount of time it takes to reach a


    18    solution.  A condition of the merger should be 

    19    a clear commitment by Bank of America to help

    20    all legitimate homeowners who have been caught

    21    in this crisis.


    22                Two, Bank of America should adopt







                                                                         67


     1    a policy of full and speeding cooperation with

     2    housing counselors while working tirelessly

     3    with homeowners through the nonprofit sector


     4    to award foreclosure. 

     5                Three, borrowers who can avoid

     6    foreclosure through a loan modification should


     7    be able to stay in their homes with loans that

     8    match the current worth of the home and a

     9    fixed rate mortgage they can afford.

    10                Four, in the case of a tenant


    11    occupancy and foreclosed properties, it is

    12    critical not to punish tenants who have paid

    13    their rent on time.

    14                Thank you again for the


    15    opportunity to comment on this important

    16    transaction.  The foreclosures crisis is

    17    having a devastating affect on our families,


    18    our communities, our economy, our state, and

    19    our country.  It will take all of us working

    20    together in the months to come to address this

    21    crisis.  This merger is an opportunity to do


    22    so.







                                                                         68


     1                Thank you.

     2                DIRECTOR BRAUNSTEIN:  Thank you

     3    very much.  Do the panelists have any


     4    questions for  --

     5                MR. ALFRIEND:  No.

     6                CONGRESSWOMAN WATERS:  Well, I


     7    would be happy to take some questions.

     8                (Laughter.)

     9                DIRECTOR BRAUNSTEIN:  I feel like

    10    I should ask you a question, since you don't


    11    hesitate to ask me questions.

    12                (Laughter.)

    13                CONGRESSWOMAN WATERS:  That's

    14    right.  You have got me before you now.  Thank


    15    you very much.


    16                DIRECTOR BRAUNSTEIN:  Interesting

    17    the way we word it.  


    18                MR. TURNER:  Thank you.

    19                MR. ALFRIEND:  Thank you.

    20                MS. ROBINSON:  Thank you.

    21                DIRECTOR BRAUNSTEIN:  Thank you


    22    very much.  You're welcome.







                                                                         69


     1                Would the next panel come forward,

     2    please?

     3                Okay, just more ground rules. 


     4    Please state your name and organization at the

     5    beginning of your statement.  We will start

     6    with Ms. Smith.


     7                MS. SMITH:  Good morning.  My name

     8    is Robyn Smith.  I am a Deputy Attorney

     9    General for the California State Attorney

    10    General's Office. 


    11                Although we are not taking any

    12    position on Bank of America's proposed

    13    acquisition of Countrywide Financial, we

    14    appreciate the opportunity to share a few


    15    concerns.  As the Chief Law Enforcement

    16    Officer of the State of California, the

    17    Attorney General is charged with protecting


    18    the public interest.  The Attorney General's

    19    Office, therefore, has a substantial interest

    20    in the mortgage lending practices and

    21    financial soundness of and healthy competition


    22    among the financial institutions that engage







                                                                         70


     1    in mortgage lending in California.

     2                Both Countrywide and Bank of

     3    America have a significant presence in


     4    California, both as employers and as providers

     5    of financial services.  The financial status

     6    of these companies and the outcome of their


     7    merger are, therefore, of great consequence to

     8    Californians and the communities in which they

     9    live.  The need to carefully examine both the

    10    competitive impact of the proposed merger, as


    11    well as the soundness of the mortgage lending

    12    practices engaged in by the financial

    13    institutions involved has never been more

    14    acute.  Just last week, DataQuick reported


    15    that for the first quarter of 2008, the number

    16    of California homeowners in default on their

    17    mortgages was up 39.4 percent from the first


    18    quarter of 2007.  Even worse, the number of

    19    actual foreclosures in California surged 327

    20    percent from the first quarter of 2007,

    21    reaching an average of over 500 foreclosures


    22    per day.







                                                                         71


     1                DataQuick also reported that most

     2    of these loans were originated between August

     3    of 2005 and October 2006.  This is not


     4    surprising.  During this time period, numerous

     5    financial institutions engaged in unsound

     6    underwriting and business practices that


     7    greatly increased the risk that thousands of

     8    families would lose their homes.  The most

     9    prevalent of these practices involved subprime

    10    mortgage loans, hybrid adjustable rate


    11    mortgage loans and non-traditional mortgage

    12    loans, which the Board has defined as loans

    13    that allowed the deferral of the payment of

    14    interest, principal, or both.  All such loans


    15    are at great risk of default when lenders fail

    16    to document the borrower's ability to repay

    17    the loan.  The likelihood that such loans will


    18    end up in foreclosure is further compounded

    19    when they carry hefty prepayment penalties and

    20    high loan to valuations which effectively

    21    prevent more and more families from


    22    refinancing into affordable loans as the







                                                                         72


     1    housing values in California fall.

     2                Such unsound business practices

     3    engaged in by many financial institutions have


     4    led to the current foreclosure crises.  While

     5    we do not suggest that there has been any

     6    wrongdoing by any of the parties to this


     7    proceeding, we urge the Board to carefully

     8    consider the underwriting and lending

     9    practices of the parties to this proceeding

    10    and whether any potential ongoing, unsound


    11    business practices outweigh any public benefit

    12    that may result from the merger.

    13                If the proposed acquisition is

    14    approved, Bank of America will inherit a large


    15    number of mortgage loans which are in or are

    16    headed for foreclosure.  According to publicly

    17    available data, in the third and fourth


    18    quarters of 2007, Countrywide reported

    19    combined net losses of 1.6 billion dollars. 

    20    Such losses are not likely to abate.  An

    21    increasing number of adjustable rate mortgage


    22    loans and home equity loans will reset in 2008







                                                                         73


     1    and 2009.  And Countrywide has disclosed that

     2    as recent as December 2007, the number of

     3    foreclosures and late payments on its loans


     4    rose to the highest on record.  

     5                The merger, therefore, raises

     6    significant concerns regarding the


     7    concentration of risk that will result from

     8    the transfer of financial liabilities relating

     9    to mortgage loans at-risk of default from

    10    Countrywide to Bank of America.  Bank of


    11    America will also inherit the mortgage lending

    12    practices that led to many of these high risk

    13    loans.  Again, we do not suggest that there

    14    has been any wrong-doing by any of the parties


    15    involved in the present proceeding.  We hope,

    16    however, in coming to a decision, the Board

    17    considers such practices and is careful not to 


    18    impair or compromise the ability of borrowers

    19    to assert their legal rights or the ability of

    20    state law enforcement agencies or regulators

    21    to address past or ongoing misconduct, if any.


    22                Not only will the proposed merger







                                                                         74


     1    concentrate the risk of mortgage loan

     2    foreclosures, it will also have a significant

     3    impact on the mortgage loan options available


     4    to California.  According to a recent report

     5    from the Housing and Economics Rights

     6    Advocates and the California Reinvestment


     7    Coalition, in 2004 and 2005, Countrywide

     8    ranked number one in terms of its total share

     9    of the California mortgage loan market.

    10                According to the same report, Bank


    11    of America ranked fourth in 2004 and fifth in

    12    2005.  The combined market shares of these

    13    lenders was 11.85 percent in 2004 and 10.66

    14    percent in 2005.  These combined shares are


    15    nearly twice the share of the nearest

    16    competitor.  In light of these statistics, we

    17    are concerned that the merger of two of the


    18    largest mortgage lenders in California will

    19    reduce competition in the California mortgage

    20    loan market and, therefore, reduce affordable

    21    options available to borrowers.


    22                Finally, because Bank of America







                                                                         75


     1    will inherit Countrywide's at-risk mortgage

     2    loans, in the event the merger is approved, we

     3    urge the Board to exercise its authority to


     4    impose conditions in order to stem the rising

     5    tide of foreclosures.  The Board should

     6    consider the effect of the merger on


     7    foreclosure activity and the possibility of

     8    requiring the parties to substantially

     9    restructure loans, so that borrowers in

    10    distress have a reasonable prospect of


    11    modified home loans with affordable payments. 

    12    Conditioning the merger on loan modifications

    13    would be particularly appropriate for home

    14    loans made on terms that the Board itself


    15    proposes to prohibit as unfair and deceptive

    16    under the Board's pending rule-making

    17    proceeding to revise Regulation Z.


    18                Thank you for considering our

    19    concerns and for the opportunity to testify at

    20    today's hearing.

    21                DIRECTOR BRAUNSTEIN:  Thank you


    22    very much.  Mr. Wing?







                                                                         76


     1                MR. WING:  Yes, my name is Butch

     2    Wing.  I am the California Coordinator for the

     3    RainbowPUSH Coalition and I am testifying on


     4    behalf of Reverend Jessie Jackson and

     5    RainbowPUSH today.  I want to applaud the

     6    Federal Reserve Board for seeing to it to


     7    request to hold these public hearings

     8    concerning the proposed acquisition of

     9    Countrywide by Bank of America.

    10                Earlier this month, April 4th, the


    11    nation and the world celebrated and

    12    commemorated the 40th anniversary of the

    13    martyrdom of Dr. King.  The cameras of the

    14    nation and the world were in Memphis.  The


    15    spotlight was on.  The nation took hold of the

    16    legacy of Dr. King.

    17                A week later, April 11th, with the


    18    40th anniversary of the signing of the Fair

    19    Housing Act, the last significant civil rights 

    20    legislation of that era but unfortunately, the

    21    cameras were off.  The focus of a week earlier


    22    had dissipated and we were left to evaluate







                                                                         77


     1    the legacy of Dr. King in a different light.

     2                Forty years later, there is much

     3    unfinished business that is left before us. 


     4    And what we are witnessing as a result of the

     5    subprime and the subprime mortgage crisis is

     6    a pattern of lack of funding, of civil rights


     7    laws in the Fair Housing Act in particular,

     8    lack of rules and regulation, lack of

     9    oversight, or no oversight at all, and a

    10    pattern of neglect and ignorance that has left


    11    that legacy of Dr. King one that we must pick

    12    up on today and challenge our government and

    13    its agencies and the private sector to do

    14    more.  Solutions so far have focused on


    15    bailing out the private sector but leaving the

    16    victims without a parachute, without a

    17    lifeline, and without adequate solutions.


    18                Ken Lewis, the CEO of Bank of

    19    America is a leader of distinction.  We grew

    20    up with him over the years and know him to be

    21    a man of integrity.  And so we appeal to him


    22    and Bank of America today to help lead







                                                                         78


     1    America's families out of this crisis and to

     2    meaningfully address the compelling challenges

     3    that come with this proposed merger with


     4    Countrywide.  For all eyes of the world, they

     5    are not just focusing on this merger, but on

     6    the future of the financial services industry


     7    and an economy that is collapsing before our

     8    eyes not just here in the United States, but

     9    worldwide and worldwide as witnessed just a

    10    week ago when the Bank of England had to


    11    universally announce guidelines to help bail

    12    out all of England's banks.  So, we know the

    13    proportions of this crisis are not just

    14    domestic but worldwide and quite obviously,


    15    the worst is yet to come.

    16                The proposed merger is well

    17    documented.  Bank of America is the nation's


    18    biggest bank by market value and its proposed

    19    acquisition of Countrywide will make it the

    20    nation's largest mortgage lender.  Countrywide

    21    was once a high-flying corporation, the


    22    nation's largest mortgage lender and servicer







                                                                         79


     1    but it is now the corporate symbol of all that

     2    has gone wrong with Wall Street's financial

     3    services firms that selfishly engaged in


     4    predatory, in discriminatory lending practices

     5    and the steering of subprime loans to minority

     6    homeowners to maximize enormous and immediate


     7    profits.  

     8                Countrywide is now the subject of

     9    civil and criminal investigations and lawsuits

    10    brought by homeowners by state attorneys


    11    general, by federal agencies.  Bank of America

    12    then, by acquiring Countrywide, assumes these

    13    enormous liabilities and exposure, financial,

    14    legal and moral.  How will it rectify the


    15    legacy of Countrywide which, through its

    16    practices, is synonymous with the nation's

    17    whole foreclosure crisis?  And the spillover


    18    effect has wreaked havoc on the budgets of

    19    states, counties and cities that depend on

    20    property taxes, resulting in profound cutbacks

    21    in social services and education for the


    22    people.  California, for example, now faces a







                                                                         80


     1    14 billion dollar shortfall and all of America

     2    is hurting.

     3                Bank of America's proposed


     4    acquisition of Countrywide stands at this

     5    crossroads a profound housing and overall

     6    economic crisis.  So we comment today not in


     7    support of or in opposition to the proposed

     8    merger, but to challenge the Federal Reserve

     9    and Bank of America on how it will address the

    10    myriad of liabilities that come with its


    11    acquisition of Countrywide.  How you handle

    12    this Countrywide merger and Countrywide's

    13    mortgage portfolio and its enormous

    14    liabilities is critical.


    15                But in every crisis there is

    16    opportunity.  And if bold leadership and

    17    comprehensive solutions are sought, we have


    18    the opportunity to provide relief for millions

    19    of previously harmed homeowners around the

    20    nation.  Bank of America has the capability to

    21    restore integrity and credibility to the


    22    financial services industry and do its part in







                                                                         81


     1    riding the nation's economic ship.  While

     2    Countrywide's lending practices are turning

     3    America's dreams into nightmare, Bank of


     4    America has the challenging task of setting a

     5    new path for the potential newly merged

     6    company.


     7                Our first recommendation is that

     8    Bank of America place an immediate freeze on

     9    all foreclosures pertaining to military

    10    families.  An article just recently published


    11    in the USA Today has indicated an enormous

    12    rise and increase in foreclosures and in debt

    13    of our servicemen.  Every Saturday and Sunday

    14    in Chicago we do a home foreclosures seminar. 


    15    We met recently with a serviceman who is now

    16    on his third tour going back to Iraq.  And as

    17    he was departing, he was hit with a home


    18    foreclosure notice.  This is not right and we

    19    call on Bank of America to fulfill its duty to

    20    the country to immediately announce a freeze

    21    on foreclosures relating to military families.


    22                As the nation's largest bank,







                                                                         82


     1    serving more than 59 million consumers and

     2    small businesses, I believe they have the

     3    responsibility to help lead the nation out of


     4    the present mortgage crisis.  Countrywide, up

     5    to this point, has not set a stellar example

     6    with regard to working out modifications and


     7    other accommodations for homeowners in crisis. 

     8    While albeit they have adopted a relatively

     9    constructive posture toward homeowners facing

    10    foreclosure, Countrywide has been among the


    11    most obstinate in refusing to come to terms

    12    with its customers.  

    13                After the merger, the question is,

    14    which philosophy will prevail?  The fact that


    15    David Sambol, Countrywide's President and

    16    Chief Operating Officer will lead the combined

    17    consumer mortgage business, once Bank of


    18    America's planned purchase of Countrywide is

    19    completed, is not reassuring in this regard.

    20                The efforts of individual banks to

    21    address the mortgage crisis are, right now,


    22    leading to inconsistent results.  Bank of







                                                                         83


     1    America and Countrywide should support

     2    systemic industry changes, such as permitting 

     3    consumers who qualify to modify their


     4    mortgages in bankruptcy, that will lead to

     5    predictability and equal treatment of

     6    homeowners facing foreclosure.


     7                As it now stands, the

     8    constitutionally guaranteed right to a fresh

     9    financial start does most homeowners facing

    10    foreclosure no good.  We also call on Bank of


    11    America and Countrywide to deploy and

    12    compensate the armies of lawyers who represent

    13    them in foreclosure proceedings to first offer

    14    modification and other foreclosure prevention


    15    measures as a matter of course.

    16                The nation's attitude toward

    17    foreclosure has changed over the past year as


    18    American people have slowly and painfully

    19    become aware of the size and scope of the

    20    problem.  More assistance is available today

    21    than it was a year ago.  We call on Bank of


    22    America to establish a 50 million dollar fund







                                                                         84


     1    to reintegrate in the mainstream economy those

     2    whose homes were lost in foreclosure.  Without

     3    targeted support, many of these former


     4    homeowners will fade into the shadows and

     5    never again become homeowners.  It is

     6    ludicrous that we can afford a $7,000 tax



     7    credit for those who purchase foreclosed homes

     8    but do very little for those who, in many

     9    cases, were the victims of overzealous,

    10    unregulated mortgage brokers and speculators.


    11                We support the legislation that

    12    Maxine Waters spoke about.  We support the

    13    Hope for Homeowners Act proposed by Barney

    14    Frank and Senator Dodd.  We reject the premise


    15    that it is impossible to distinguish between

    16    so-called deserving homeowners and profiteers

    17    who should suffer when markets collapse, just


    18    as they rode the crest to record real estate

    19    values.

    20                DIRECTOR BRAUNSTEIN:  Mr. Wing?

    21                MR. WING:  Yes.


    22                DIRECTOR BRAUNSTEIN:  I'm sorry. 







                                                                         85


     1    Your time is up.  Can you wrap up quickly?

     2                MR. WING:  One more paragraph.

     3                DIRECTOR BRAUNSTEIN:  Okay.


     4                MR. WING:  An industry

     5    sophisticated to devise no document loans,

     6    negative amortization and adjustable rate


     7    mortgages can surely divide standards to

     8    separate the wheat from the tares now.  

     9                My last point is this.  The one-

    10    on-one approach to foreclosure prevention is


    11    not enough.  To call homeowners to do door

    12    knocking one-on-one is insignificant relative

    13    to the scope of the problem.  The same amount

    14    of advertising, marketing, and outreach that


    15    is going into market new loans and refinancing

    16    should go into home foreclosure prevention on

    17    a comprehensive holistic basis.  The one-on-


    18    one approach is not good enough.  We need

    19    broader solutions.  Bank of America stands at

    20    this cross roads and the challenge is before

    21    you in the Federal Reserve to make America's


    22    homeowners safe and protected.  







                                                                         86


     1                Thank you very much.

     2                DIRECTOR BRAUNSTEIN:  Thank you. 

     3    Have you any questions for this panel?  No. 


     4                Okay.  Could the next panel please

     5    come forward?         

     6                Welcome to this panel.  And just a


     7    few housekeeping notes.  For one thing, if you

     8    have a BlackBerry on you, could you please

     9    turn it off?  Because I think we are getting

    10    some feedback on the microphones from that.


    11                And secondly, we have a timekeeper

    12    here, Melody, do you want to just -- and she

    13    will have signs telling you when you have two

    14    minutes left and when your time is up.  So,


    15    kind of keep an eye out for her.  And please

    16    open your statement with your name and your

    17    organization so that we can get it on the


    18    record.

    19                And, Kevin are you starting?  

    20                MR. STEIN:  I think Roberto.

    21                DIRECTOR BRAUNSTEIN:  Oh, Roberto. 


    22    Okay.  Mr. Barragan?







                                                                         87


     1                MR. BARRAGAN:  Good morning.  On

     2    behalf of the California Reinvestment

     3    Coalition and being Chairman of the Coalition,


     4    I want to thank the Reserve for allowing these

     5    hearings to proceed.

     6                My name is Roberto Barragan.  I am


     7    President of Valley Economic Development

     8    Center.  We are the largest economic

     9    development organization in the greater San

    10    Fernando Valley, which includes Calabasas and


    11    Simi Valley, headquarters for facilities of

    12    Countrywide.

    13                We serve over 7,000 business

    14    annually, employing over 70,000 residents in


    15    this area, over half of which are B of A

    16    customers and many are Countrywide mortgage

    17    holders.


    18                VEDC is in support of Bank of

    19    America's acquisition of Countrywide.  VEDC

    20    has been on record over the past six years of

    21    being concerned regarding Countrywide's


    22    lending and banking practices.  By some







                                                                         88


     1    estimates, Countrywide has originated over 25

     2    percent of first held mortgages in the San

     3    Fernando Valley.


     4                At the same time, VEDC enjoys a

     5    long and productive relationship with Bank of

     6    America.  We have shared an outcome oriented


     7    customer focused and needs-based program for

     8    serving small businesses.  VEDC supports the

     9    B of A's acquisition with just that approach

    10    in mind.


    11                We support your approval with one

    12    chief request, that the merger take place with

    13    a clear and specific plan for Countrywide

    14    borrowers that builds on what we have seen so


    15    far and today B of A's proposed plan. 

    16    Countrywide is the biggest subprime lender

    17    option ARM lender in the greater San Fernando


    18    Valley.  Foreclosures in the Valley are the

    19    biggest in the LA basin and require that a B

    20    of A plan include what we believe is important

    21    that borrower residents, and I say borrower


    22    residents to differentiate borrower







                                                                         89


     1    speculators, that borrower residents of all

     2    Countrywide mortgages should be allowed to

     3    stay in their homes at fixed mortgages that


     4    they can afford.  In addition, we ask that

     5    adjustable rate mortgages should be fixed at

     6    current rates and future resets canceled to


     7    avoid continuing foreclosures.

     8                Finally, I urge Bank of America to

     9    take all steps possible to mitigate the

    10    eventual layoffs to affect thousands of


    11    Countrywide workers in Calabasas and Simi

    12    Valley.  While a weak sales market

    13    necessitates a decrease in sales staff, we

    14    believe that customer services teams and


    15    counseling require even more staff over the

    16    next two years and steps should be taken to

    17    mitigate the impact of layoffs on employees as


    18    well as San Fernando Valley communities that

    19    they live in.

    20                Thank you very much.

    21                DIRECTOR BRAUNSTEIN:  Thank you. 


    22    Mr. Williams?







                                                                         90


     1                MR. WILLIAMS:  Good morning.  My

     2    name is Clarence Williams and I am President

     3    of California Capital Financial Development


     4    Corporation located in Sacramento, California

     5    and a member of the California Reinvestment

     6    Coalition Board of Directors.


     7                For 25 years, California Capital,

     8    an independent nonprofit corporation has

     9    served 23 counties throughout northern

    10    California providing financial literacy


    11    education, business technical assistance,

    12    micro loans and loan guarantees for small

    13    businesses and residents within predominately

    14    low and moderate income communities.  In


    15    addition, we have provided these services in

    16    nine languages for our region's growing number

    17    of immigrants and limited non-English speaking


    18    individuals and business owners.

    19                Nonprofit organizations like

    20    California Capital exist because of historical

    21    failures within the financial services


    22    industry to meet the credit needs of our







                                                                         91


     1    constituent communities and their residents. 

     2    Although we, like many others, have been the

     3    recipient of funding by Bank of America, much


     4    of the positive impact of this funding is

     5    being stripped away by the devastating affects

     6    of foreclosures in the communities we serve. 


     7    I have testified at and participated in a

     8    number of public hearings held by the Federal

     9    Reserve Bank.  I have testified enough times

    10    that it has become a blinding glimpse of the


    11    obvious, that the elegance of simplicity of a

    12    recommendation to support or oppose fails to

    13    take advantage of the opportunity that is

    14    before this body in regard to the planned


    15    purchase of Countrywide Financial Corporation

    16    by Bank of America. 

    17                With all due respect, the


    18    likelihood of Bank of America's petition to

    19    acquire Countrywide will be granted is a

    20    foregone conclusion.  Notwithstanding, I am

    21    compelled to urge the Federal Reserve Bank to


    22    deny this application unless clear conditions







                                                                         92


     1    and a specific plan is agreed upon to mitigate

     2    and prevent the further erosion of our

     3    community's ability to build wealth and


     4    assets.  To protect Countrywide borrowers from

     5    impending foreclosures, it is incumbent upon

     6    the Federal Reserve Bank to be sure that this


     7    agreement and the plan to execute the strategy

     8    takes place prior to the approval of this

     9    petition, not after the close of purchase and

    10    oversight that guarantees transparency of Bank


    11    of America's execution of its promised

    12    commitment.

    13                As a regulator, it should be the

    14    responsibility of the Federal Reserve Bank to


    15    see that financial institutions meet their

    16    obligations to be responsible lenders.  This 

    17    petition for merger represents an opportunity


    18    to mitigate Countrywide's contribution to our

    19    nation's devastating credit and foreclosure

    20    crisis and provides us with lessons learned to

    21    prevent this from ever happening again.


    22                As a condition to the approval of







                                                                         93


     1    this application, I urge the Federal Reserve

     2    Bank to include recommendations made by the

     3    California reinvestment coalition, which will


     4    be offered by Alan Fisher, CEO of CRC.  Thank

     5    you.

     6                DIRECTOR BRAUNSTEIN:  Ms. Kinlaw?


     7                MS. KINLAW:  My name is Sharon

     8    Kinlaw.  I am the Associate Director of the

     9    Fair Housing Counsel of the San Fernando

    10    Valley and a Board Member of the California


    11    Reinvestment Committee.  The Counsel is a 49

    12    year old organization, a nonprofit whose

    13    primary goal is to investigate and eradicate

    14    all forms of illegal housing and lending


    15    discrimination.  I am here today to discuss

    16    the plight of tenants in the unfolding

    17    foreclosure fiasco.


    18                Tenants are the collateral damage

    19    in the foreclosure crisis and very little is

    20    being done to emphasize or solve the

    21    unintended quagmire that tenants find


    22    themselves in through no fault of their own. 







                                                                         94


     1    An estimated 20 to 25 percent of the

     2    foreclosures that take place in California

     3    involve properties that are not owner


     4    occupied.  Those numbers are exceeding higher

     5    in some markets and lead to the instability of

     6    families and communities.  The tenants that


     7    call our agency are mostly low income single

     8    mothers with children, seniors, and persons

     9    with disabilities who have few options.  This

    10    acquisition gives us an opportunity to work


    11    together to aid families and individuals who

    12    are caught in the crossfire of banks,

    13    borrowers, and investors, unarmed, unprepared,

    14    and mostly forgotten.  


    15                Tenants are harmed in a number of

    16    ways.  Many are thrust into homelessness after

    17    having paid their rent timely.  Many lose


    18    thousands of dollars in the non-return of

    19    security deposits.  Some find themselves in

    20    the dark with no electricity or running water

    21    after the utilities are turned off.  Some find


    22    themselves in court facing eviction, which







                                                                         95


     1    damages their rental history for the next

     2    seven years and makes it virtually impossible

     3    for them to find safe and habitable housing. 


     4    And with landlords struggling to hold on to

     5    their properties, some tenants oftentimes find

     6    themselves with whopping rent increases


     7    anywhere from $400 to $1,000 per month to

     8    remain in their homes, only to pay it and then

     9    to eventually find themselves on the street,

    10    as a result of the property being foreclosed


    11    on. 

    12                There are few proposed solutions

    13    and we would ask that with this  merger being

    14    taken into account, the Federal Reserve would


    15    look to Bank of America for specific

    16    solutions.  One would be to create an entity

    17    or partner with a nonprofit to manage


    18    foreclosed properties that are tenant occupied

    19    enter into a short-term rental agreements with

    20    tenants who are unable to move because of

    21    disabilities, cash flow, or other mitigating


    22    factors; refer tenants who may be able to







                                                                         96


     1    purchase housing to counseling agencies for

     2    assistance with purchase; implement a lease to

     3    own program for tenants which will provide a


     4    credit towards the down payment for their

     5    security deposits; voluntarily agree to give

     6    tenants a 90 day notice and for disabled and


     7    senior tenants, extend the notice to 120 days.

     8    Sixty days is not enough in this market. 

     9    Provide grants to nonprofits to help tenants

    10    relocate and also provide grants to nonprofits


    11    to help tenants with relocation expenses;

    12    lobby congress to grant a tax credit to

    13    financial institutions that create innovative

    14    programs such as lease to own or nonprofit


    15    receivership as well as to owners of property

    16    who will agree to rent to homeowners and/or

    17    tenants; and honor existing leases.  


    18                And finally, with regard to

    19    predatory and unfair lending practice, the

    20    Federal Reserve should require that, as a

    21    condition of this merger, the institutions


    22    undertake a review or an audit of all at-risk







                                                                         97


     1    loans to determine if any fraud, steering, or 

     2    unfair lending practices occurred.  For those

     3    brokers whose names that show up frequently,


     4    a host of scrutiny should be paid to their

     5    portfolio and proper referrals to regulatory

     6    and law enforcement agencies should be made so


     7    that those individuals are not left to prey on 

     8    unsophisticated and unsuspecting borrowers. 

     9    Thank you.

    10                DIRECTOR BRAUNSTEIN:  Thank you. 


    11    Mr. Stein?

    12                MR. STEIN:  Good morning.  My name

    13    is Kevin Stein and I am with the California

    14    Reinvestment Coalition.  We are an advocacy


    15    coalition of 250 community based organizations

    16    throughout California.  We believe the

    17    proposed merger should not be approved without


    18    substantial conditions.  To do otherwise would

    19    not produce benefits to the public that

    20    outweigh possible adverse impacts and we do

    21    not believe that the two institutions are


    22    currently adequately meeting the community's







                                                                         98


     1    credit needs.

     2                There are three main issues I want

     3    to quickly address.  One is fair lending


     4    concerns at Countrywide Financial.  Secondly,

     5    Bank of America's offering and financing of

     6    predatory mortgage loans.  And third,


     7    inadequate servicing practices that will not

     8    guarantee that borrowers remain in their

     9    homes.

    10                On the first, on the fair lending


    11    issues, a couple of years ago, the New York

    12    Attorney General's Office looked at Home

    13    Mortgage Disclosure Act data and saw that

    14    Countrywide was roughly two times as likely to


    15    be making subprime loans to Latino and African

    16    American borrowers in that state and proceeded

    17    with a fair lending examination investigation


    18    and case that ultimately resulted in a

    19    settlement agreement, at which time he said

    20    they couldn't fully explain all of the

    21    disparities.


    22                Well, in California, we see the







                                                                         99


     1    same, if not worse, disparities.  And so we

     2    would urge the Fed to look closely at those

     3    fair lending disparities with African


     4    Americans and Latinos roughly two times as

     5    likely to be getting high cost subprime loans

     6    as compared to whites.  


     7                And I think there is a precedent

     8    in looking back at the Fed's review of the

     9    Citigroup Cal Fed Merger after Citigroup had

    10    bought the associate's portfolio.  And the Fed


    11    looked at not only did Citi have a plan in

    12    place to ensure that borrowers got the best

    13    product for which they qualified, the lowest

    14    product that they qualified for, but also that


    15    the existing customers at those institutions

    16    were put into loans that they deserved in the

    17    first place.  And we would urge the Fed to do


    18    that.

    19                Secondly, on the issue of

    20    financing and offering of subprime loans at

    21    Bank of America, Bank of America asserts that


    22    they have been out of the subprime business







                                                                        100


     1    for a long time and we disagree with that.  Up

     2    until a few years ago, Bank of America had for

     3    Fed purposes, according to the Federal


     4    Reserve, had a controlling interest in large

     5    subprime mortgage lender Ownit Mortgage

     6    Solutions, one of the largest subprime lenders


     7    in California, to the point of when we asked

     8    for HMDA data, they would give us the Ownit

     9    Mortgage Solutions data.  

    10                Ownit Mortgage Solutions was one


    11    of the first subprime lenders to go out of

    12    business over a year ago for making too many

    13    bad subprime loans for too many loans that

    14    went into default.  So Ownit is no longer


    15    around.  But guess what?   All of the loans

    16    that it made are still sitting out there in

    17    our communities and Bank of America has its


    18    fingerprints on those loans.

    19                Further, Bank of America continues

    20    to securitize problematic subprime loans. 

    21    Last year, Bank of America was reported in


    22    industry publications as being the tenth







                                                                        101


     1    largest underwriter of mortgaged backed

     2    securities.  Just to give one example, this

     3    comes from Asset Backed Funding Corporation,


     4    Asset Backed certificate series 2006 HE1. 

     5    This was a deal of a large number of subprime

     6    loans where Bank of America and affiliates


     7    were the sponsor and the depositor for the

     8    deal.  The loans were made not by Bank of

     9    America, you know, as they assert, were made

    10    instead by Ameriquest, NC Capital, which I


    11    think is New Century, Option One WMC.  These

    12    subprime lenders are all out of business for,

    13    in large part, making too many bad loans. 

    14                Twenty-five percent of the loans


    15    in that pool were in California.  This is why

    16    we care.  Seventy-two of them were ARM loans. 

    17    Forty-one percent of the loans were balloons. 


    18    Twenty-two percent had simultaneous second

    19    lien loans, so putting borrowers at risk. 

    20    Seventy-five percent have prepayment penalties

    21    and some of those prepayment penalty


    22    provisions lasted for five years, which is







                                                                        102


     1    probably longer than the initial interest

     2    rate, which is contrary to current Federal

     3    Reserve guidelines.


     4                Interest rates on some of the

     5    loans began at 13 percent with maximum

     6    interest rates going up to 20 percent.  And 40


     7    percent of the loans, roughly, were less than

     8    full documentation.  So, Bank of America is

     9    not making these loans but the borrowers who

    10    got these loans who were going into


    11    foreclosure don't particularly care that the

    12    loan was made by Ameriquest if it was financed

    13    by Bank of America.

    14                Bank of America needs to establish


    15    some standards, as we urged them to do years

    16    ago, so they are not involved in financing

    17    predatory mortgage loans.  This is not help


    18    that community credit needs.

    19                Lastly, on the issue of servicing. 

    20    In think, Ms. Robinson, in your question, you

    21    raised concerns that the existing Countrywide


    22    practices around keeping borrowers in their







                                                                        103


     1    homes are not sufficient.  And the response is

     2    well, we are going to have the Bank of America

     3    values.  I'm not really sure how that plays


     4    itself out.  Bank of America is not servicing

     5    subprime loans.  I assume all of the people

     6    who were -- a lot of the people who are


     7    servicing the loans now at Countrywide would

     8    be the people who would continue to service

     9    the loans going forward.  So, it would seem

    10    that a substantial and clear transparent


    11    commitment of resources would need to be made

    12    to ensure that practices are better going

    13    forward.

    14                I would like to just reflect some


    15    of the comments from counseling agencies who

    16    we surveyed in the State of California about

    17    whether lenders were keeping borrowers in


    18    their homes.  

    19                Just another minute.  Would that

    20    be okay?

    21                DIRECTOR BRAUNSTEIN:  One minute.


    22                MR. STEIN:  Great, thanks. 







                                                                        104


     1                So, we asked the question, who are

     2    the hardest servicers to work with and

     3    Countrywide came up a few times and here were


     4    some of the quotes.

     5                Countrywide is not willing to

     6    modify any of their rates in my experience. 


     7    Countrywide has been exceptionally hard to

     8    work with.  Countrywide takes too long to

     9    resolve the problem.  Countrywide is the

    10    worst.  They have the most loans of our


    11    customers.  They seem to only want to modify

    12    the loan to another neg-am loan, the only

    13    difference being a lower initial rate to begin

    14    with.  And they only try to attempt


    15    modification on rare instances.

    16                In B of A's presentation, they

    17    discussed their plan for dealing with the


    18    problem.  They put a dollar figure and they

    19    identify some number of customers.  And it

    20    seems that that is really just an attempt to

    21    put a fence around a problem and say this is


    22    what we are prepared to do.  And the one thing







                                                                        105


     1    that has been clear over the last year and a

     2    half is that no one really has a good

     3    understanding, including Bank of America, of


     4    how bad the problem is.  And so I think to put

     5    a dollar figure and say that this is what we

     6    are going to do is not necessarily a solution


     7    to the problem, especially in California where

     8    we have folks who have the largest loan sizes. 

     9    We have probably the largest number of option

    10    ARM borrowers.  And there really needs to be 


    11    a plan for the option ARM borrowers.  

    12                They report over a billion dollars

    13    in loans where already the loans have a

    14    negative amortizing component to them.  And I


    15    don't believe that those folks are going to be

    16    part of the plan.  It was mentioned earlier,

    17    who are the speculators that are kind of


    18    walled outside of this plan for relief?  Are

    19    they the mom and pops of some of our members? 

    20    Does this small homeowners who were induced by

    21    predatory brokers to buy properties and then


    22    so they are going to be owners and investors







                                                                        106


     1    and now they have two properties, except both

     2    of the loans go bad and now they are looking

     3    at foreclosure?  Are those the folks who are


     4    out of business?  Are they folks who can

     5    afford to pay?  They are only going to help

     6    folks who can afford to pay.  Are those not


     7    option ARM borrowers who really got so

     8    victimized during the loan that they never

     9    should have been in?  So they are going to be

    10    left to their own devices.  There needs to be


    11    a plan.

    12                DIRECTOR BRAUNSTEIN:  Mr. Stein --

    13                MR. STEIN:  And I guess in

    14    conclusion, I would just urge, you know, Bank


    15    of America would like this to go quickly,

    16    would like you to move quickly.  We urge you

    17    to think very seriously about all of these


    18    issues, to be deliberate in light of the new

    19    information that was presented by Bank of

    20    America today.  We would formally ask that

    21    there be an extension of the comment period,


    22    which the Fed has done in the past, so that we







                                                                        107


     1    could review that plan and provide some

     2    thoughtful comments to you.

     3                Thank you very much.


     4                DIRECTOR BRAUNSTEIN:  Mr. Fisher.

     5                MR. FISHER:  Yes.  I will try to

     6    be short.  I know we were a little bit large


     7    on the panel but we wanted to give well-

     8    rounded presentation.  Thank you for the

     9    opportunity.  Thank you for holding hearings

    10    on this so that there is a chance to speak


    11    about it.

    12                I think that what B of A has

    13    presented is a good broad brush discussion but

    14    without specifics that really matter.  For


    15    example, 40 billion dollars for 165,000

    16    borrowers.  That is 150,000 per home.  In

    17    California, that is half, one-third of the


    18    price of a home.  So how much is that going to

    19    get out?

    20                I think that we think that 75

    21    percent of subprime borrowers could be okay


    22    with their loans if the loans were set at the







                                                                        108


     1    real value now, which we would say was what is

     2    at auction, 50 or 60 percent in a fixed rate

     3    loan that is affordable.  And then those


     4    neighborhoods would not be damaged by the

     5    foreclosure of that and the bank the wouldn't

     6    be damaged by losing another 50,000 because


     7    that is all the money they are going to get

     8    out of it in the beginning and 50,000 to

     9    foreclose.

    10                We think that those people's whose


    11    homes are going to be foreclosed need a soft

    12    landing because they can't rent a home for

    13    their family if their credit is ruined.  So,

    14    we have concerns about homelessness with that.


    15                I think that with tenants, that it

    16    is a good beginning what B of A talked a bout. 

    17    But I don't think 60 days may be long enough,


    18    given the rental climate that we have in

    19    California.

    20                We think that as the major

    21    investor and packager of subprime mortgage


    22    backed securities, that B of A should have a







                                                                        109


     1    plan for those inside of those mortgaged

     2    backed security pools for what is going to

     3    happen to them.  This is another place.  And


     4    we think this needs to happen now.  B of A

     5    have said that they don't own Countrywide yet,

     6    but anytime you buy something, there are terms


     7    of purchase.  Terms of purchase should include

     8    this because people are losing their homes, I

     9    think in LA every half hour or so.  Half a

    10    minute?  Half hour.  So, there is a great


    11    danger.

    12                And the other thing is for us, we

    13    are very disturbed that this purchase because

    14    of the OTS regulation of Countrywide allows


    15    the breach of the antimonopoly standard of ten

    16    percent of deposits, taking it to 11.8.

    17                There are other things I will put


    18    into written testimony.  But I thank you.  I

    19    think this merger is emblematic of the entire

    20    mortgage crisis and that we hope that you will

    21    take upon yourselves responsibility to be sure


    22    that you set a standard for the rest of the







                                                                        110


     1    mortgage industry in this.  And we hope that

     2    Bank of America, now being the biggest, after

     3    the approval which we again assume probably


     4    will happen, being the biggest bank, the

     5    biggest mortgage lender will take on that

     6    responsibility too, in a specific way.


     7                Thank you.

     8                DIRECTOR BRAUNSTEIN:  Thank you

     9    very much.  Any questions for this panel?  

    10                MS. ROBINSON:  No.


    11                DIRECTOR BRAUNSTEIN:  Thank you. 

    12    Please bring the next panel forward.

    13                Welcome.  A few housekeeping

    14    notes.  There is a timekeeper.  Everybody has


    15    five minutes for their statement.  The

    16    timekeeper will signal you when you have two

    17    minutes left and then tell you when your time


    18    is up.  We would ask that you start your

    19    statement by clearly saying your name and

    20    organization so that we can get it on the

    21    record. 


    22                And with that, Mr. Rubinger, would







                                                                        111


     1    you like you to start?

     2                MR. RUBINGER:  Thank you very

     3    much.  Good morning.  My name is Michael


     4    Rubinger and I am the President and CEO of

     5    LISC, the Local Initiative Support

     6    Corporation.  We greatly value our partnership


     7    with the Bank of America and I am pleased to

     8    be here to support the company's proposed

     9    acquisition of Countrywide Financial

    10    Corporation.


    11                In our experience, Bank of America

    12    has been a leader in working to revitalize low

    13    income communities throughout the United

    14    States.  By expanding their market footprint


    15    through Countrywide, we expect that this

    16    dedication to community improvement will

    17    extend to even more low income families.


    18                I base this judgment on LISC's

    19    extensive engagement with the Bank of America

    20    and on its leadership and long commitment to

    21    our work in low income communities.  LISC is


    22    one of the nation's largest nonprofit







                                                                        112


     1    community development support organizations. 

     2    Since 1980 we have invested over 8.6 billion

     3    dollars in low income urban neighborhoods and


     4    rural areas.  This investment has leveraged an

     5    additional 25 billion dollars, leading to the

     6    construction and rehabilitation of over


     7    230,000 affordable homes and 32 million square

     8    feet of economic development facilities,

     9    employing over 91,000 individuals.  We have

    10    helped to finance daycare centers, health


    11    clinics, schools, and community centers, all

    12    serving lower income inner city and rural

    13    residents.  

    14                Over the years, Bank of America


    15    has provided LISC with 27 million dollars in

    16    grants, 75 million dollars in below market

    17    loans, and nearly 750 million dollars in


    18    equity investments, all in furtherance of our

    19    mission to revitalize low income neighborhoods

    20    and serve the residents of these communities. 

    21    Clearly, an enormous and impressive commitment


    22    by any standard.







                                                                        113


     1                In virtually every innovative new

     2    program we have launched, Bank of America has

     3    been at the forefront, willing to take risks


     4    in the interest of progress.  In the early

     5    1980s, for example, Bank of America approved

     6    our very first bank loan.  That expression of


     7    confidence and support opened the door to

     8    other financial institutions and to our

     9    subsequent growth.  Later, Bank of America was

    10    one of the first corporations to invest in


    11    federal low income housing tax credits and

    12    remains one of our top five housing credit

    13    investors.  Bank of America also helped us to

    14    create and implement each of the following, a


    15    secondary market for community development

    16    loans, an equity investment fund for intercity 

    17    supermarkets, the nation's first real estate


    18    investment trust dedicated to community

    19    development, training and technical assistance

    20    programs to strengthen the organizational

    21    capacity of neighborhood based CDCs, and a


    22    partnership to help public housing authorities







                                                                        114


     1    access private financing.

     2                In 1995 when LISC made the

     3    decision to expand our program into low income


     4    rural communities, Bank of America was one of

     5    the first financial institutions to join us in

     6    that undertaking, recognizing that affordable


     7    housing, job creation and the other benefits

     8    of community development are just as vitally

     9    needed in rural areas as in our cities.

    10                In our work in low income


    11    communities, it is LISC's role to provide the

    12    early stage and high risk capital that most

    13    community development projects need.  But our

    14    efforts can succeed only if banks are willing


    15    to provide direct conventional financing as

    16    well.  Bank of America has been in important

    17    source of construction and permanent financing


    18    for these projects, even in some of the

    19    toughest high risk markets.  And more often

    20    than not, their involvement is also

    21    characterized by innovation and creativity in


    22    the interest of community improvement.







                                                                        115


     1                If time permitted, I could site

     2    numerous examples from all over the country

     3    and I have included some of these in my


     4    written testimony.  But for now, suffice it to

     5    say that Bank of America has been a vital and

     6    productive partner for LISC in our community


     7    revitalization efforts on behalf of lower

     8    income families and individuals nationwide.

     9                If the acquisition before you is

    10    approved, we firmly believe that that


    11    partnership and those efforts will be deepened

    12    and broadened and that communities all across

    13    the country will benefit enormously as Bank of

    14    America brings its unique blend of


    15    professionalism, commitment, and community

    16    sensitivity to Countrywide's market footprint

    17    and operations.


    18                Thank you.

    19                DIRECTOR BRAUNSTEIN:  Thank you

    20    very much.  Ms. Kennedy?

    21                MS. KENNEDY:  My name is Judith


    22    Kennedy.  I am President and CEO of the







                                                                        116


     1    National Association of Affordable Housing

     2    Lenders that are known as NAAHL.  NAAHL

     3    represents America's leaders in moving private


     4    capital to those in need, 200 organizations

     5    committed to low and moderate income

     6    communities.  The who is who of private sector


     7    lenders and investors in affordable and

     8    community development; banks, thrifts, loan

     9    consortia, local and national nonprofits,

    10    mortgage companies, foundations and pension


    11    funds.

    12                Our experienced practitioners of

    13    the community investment has 30 years of

    14    experience now in making private capital


    15    available in underserved areas but they

    16    realize that the lending is only part of the

    17    job.  Building communities and decent housing


    18    affordable to low and moderate income

    19    households is not only about providing capital

    20    and bricks and mortar, it also involves

    21    policy.  It involves mastering regulations


    22    about initiatives like the New Markets Tax







                                                                        117


     1    Credit.  It involves educating policy makers

     2    about the partnerships between banks and local

     3    nonprofits to meet community's needs and


     4    leverage scarce federal funds.  It is about

     5    helping to preserve needed federal community

     6    and economic development programs through


     7    advocacy and policy analysis.  As always, the

     8    devil is in the details and only the most

     9    committed practitioners dedicate the resources

    10    necessary to master those details, advocate


    11    for the policies, basically, show up and do

    12    the job.

    13                Bank of America directly and

    14    through NAAHL consistently provides the


    15    necessary resources.  Let me share just a few

    16    examples.  You know that Bank of America has

    17    tackled some of the most complex


    18    redevelopment, often involving conflicting

    19    state and federal regulations and, in places

    20    like Harlem and other older neighborhoods, it

    21    is paying off.  Nothing about this work is


    22    easy or glamorous and almost all of it goes







                                                                        118


     1    unnoticed.  Woody Allen is credited with

     2    saying that 80 percent of success is just

     3    showing up.  Bank of America consistently


     4    shows up wherever policy makers and other

     5    practitioners need more knowledge, experience

     6    or practical solutions to spur more private


     7    capital loans and investments in under served

     8    areas.

     9                For example, partnering with NAAHL

    10    and other advocacy organizations, it was Bank


    11    of America that worked persistently in

    12    Congress to help create the innovative New

    13    Markets Tax Credit, to preserve the Community

    14    Development Financial Institutions Program,


    15    and the Community Development Block Grant

    16    Program.  Bank executives testified before

    17    Congress, made time for staff briefings, and


    18    always are there to provide comments on

    19    legislative proposals to ensure the efficient

    20    use of federal funds.

    21                Even after New Markets Tax Credit


    22    have been signed into law, the Internal







                                                                        119


     1    Revenue Service, very unfamiliar with

     2    community development, promulgated rules that

     3    could have made the credit virtually useless. 


     4    Bank of America once again showed up,

     5    providing professionals in community and

     6    economic development for many many hours of


     7    meetings over many many months.  The bank

     8    played such a valuable role in helping to

     9    educate the authors of tax rules on how to fix

    10    the proposed regulations consistent not only


    11    with federal tax policy, but also with

    12    community development challenges.

    13                In early as 2001, and then again

    14    in 2004, Bank of America helped NAAHL to hold


    15    the first symposia on practical solutions to

    16    predatory lending, featuring the late Federal

    17    Reserve Governor Edward Gramlich and our


    18    reports of those symposia are known as the

    19    Bibles on Capital Hill.

    20                When HUD proposed eliminating the

    21    Hope VI program that has revitalized so many 


    22    communities, Bank of America was willing to







                                                                        120


     1    show up once again, testifying in support of

     2    the program before Congress and spending

     3    countless hours with members and their staff,


     4    working collegiately on ways to improve the

     5    program so that Congress could preserve Hope

     6    VI and it did.


     7                When HUD proposed eliminating

     8    Section 8 housing subsidies, Bank of America's 

     9    opposition was very important to the

    10    Republican majority in Congress.


    11                Bank of America has also brought

    12    to the federal policy arena its experience

    13    from a very unique partnership with public

    14    housing authorities throughout our nation. 


    15    The bank provides private capital financing

    16    technical assistance and just moral support on

    17    ways that public housing authorities can


    18    increase their operational efficiency and

    19    financing sources.

    20                When other insured institutions or

    21    policy makers are looking for innovative ways


    22    to help bring un-banked individuals into the







                                                                        121


     1    financial mainstream, Bank of America always

     2    responds.  The Bank's Sesame Street for Adults

     3    video helps break the ice at financial


     4    literacy training and is much in demand in

     5    Washington and everywhere else, as are

     6    customer documents in languages like Farsi and 


     7    Bosnian.

     8                When California lenders, both

     9    banks and nonprofits, were having trouble

    10    qualifying for New Markets Tax Credits, still


    11    a very brain damaging initiative, Bank of

    12    America willingly sent staff to Washington,

    13    D.C. to San Francisco to teach others in

    14    California how to compete successfully and on


    15    a federal holiday, at that.

    16                Communities throughout the country

    17    are benefiting from Bank of America's


    18    leadership, knowledge, experience and

    19    advocacy.  We support the proposed

    20    acquisition.

    21                DIRECTOR BRAUNSTEIN:  Thank you. 


    22    Ms. Koo?







                                                                        122


     1                MS. KOO:  Good morning.  My name

     2    is  Doris Koo.  I am President and CEO of

     3    Enterprise Community Partners.  I appreciate


     4    the opportunity to testify today in support of

     5    the proposed merger of Bank of America

     6    Corporation and Countrywide Financial


     7    Corporation.

     8                Enterprise was founded in 1982 by

     9    the late developer, Jim Rouse, who believed

    10    that all low income families should have


    11    access to safe and affordable housing as the

    12    first step in overcoming poverty.  

    13                With support from long-standing

    14    partners, including the Bank of America,


    15    Enterprise is now providing a billion dollars

    16    a year investment in low income communities

    17    and over the last 25 years, have raised and


    18    invested nine billion dollars in equity grants

    19    and loans to support the creation of over

    20    240,000 affordable homes.  

    21                We did not do this by ourselves. 


    22    Throughout our history, Bank of America has







                                                                        123


     1    been one of Enterprises leading financial

     2    institution partners.  As of 2008, the total

     3    investment made by the Bank of America through


     4    Enterprise to support low and moderate income

     5    communities well exceeded one billion dollars. 

     6    This long-term partnership has created and


     7    preserves more than 26,000 affordable homes

     8    and brought critical investments to low and

     9    moderate income communities throughout the

    10    nation.  More than 60 percent of the houses


    11    produced with assistance from Bank of America

    12    in 2007 are affordable to households earning

    13    less than 50 percent of annual median income.

    14                Bank of America has demonstrated


    15    its community investment commitment over and

    16    over again by being a major provider of equity

    17    investment in low income housing tax credits


    18    and New Market Tax Credit programs by

    19    providing below market rate loans to

    20    communities and by providing more than 13

    21    million dollars through enterprise to support


    22    a wide variety of programs, as well as







                                                                        124


     1    community development partners.  Bank of

     2    America also has been an instrumental partner

     3    in the National Community Development


     4    Initiative known as living cities, which work

     5    with major philanthropic foundations,

     6    corporations, financial institutions and HUD


     7    to invest in and stimulate the capacity of

     8    community development corporations to build,

     9    promote, and sustain healthy communities in

    10    urban centers.


    11                I am not going to go in the detail

    12    of Bank of America's investment.  They are

    13    contained in my written testimony.  We do

    14    commend this wide-ranging and crucial support


    15    from Bank of America which has helped

    16    enterprise innovate and take community

    17    development models to scale.  We believe that


    18    with the merger, Bank of America can and will

    19    pay an even greater role in key issues

    20    affecting low and very low income communities.

    21                As you consider the request for


    22    approval on this merger, we believe that it is







                                                                        125


     1    appropriate to expect and insist on a high

     2    level of commitment to serve current and

     3    future customers, especially those from low,


     4    very low, and extremely low communities, as

     5    well as the very communities in which they

     6    live.  We feel that B of A will step up to the


     7    challenge.

     8                I want to highlight three issues

     9    for our discussion this morning.  One is the

    10    home foreclosure crisis an the need to


    11    stabilize communities hardest hit by the wave

    12    of foreclosures and high cost mortgage

    13    lending.  We support and are part of the

    14    alliance to help millions of homeowners who


    15    are facing foreclosures and loss of their

    16    homes.  But in addition to helping these

    17    homeowners in every way we can, we must also


    18    consider the impacts of the foreclosure crisis

    19    on low, moderate, very low, and extremely low

    20    income neighborhoods.  We must do more and we

    21    believe that Bank of America will again take


    22    leadership in this area.







                                                                        126


     1                There are many foreclosed

     2    properties known as real estate owned

     3    properties or REOs that can further trigger


     4    cycles of disinvestment and abandonment in

     5    communities hardest hit by the crisis.  We

     6    have seen these in intercity communities from


     7    Cleveland to Detroit and here in Los Angeles. 

     8                Enterprise is working closely with

     9    national and local partners to develop

    10    effective REO disposition programs.  In order


    11    for these programs to work, we need support

    12    and leadership from important financial

    13    institutions, such as Bank of America.  Bank

    14    of America can and should invest in these


    15    efforts by providing key initial capital to

    16    help leverage other public and philanthropic

    17    foundation support.


    18                Furthermore, Bank of America's

    19    banking regulator, the Office of the

    20    Comptroller of Currency, should encourage Bank

    21    of America's REO disposition effort by


    22    providing appropriate credits through its







                                                                        127


     1    community reinvestment act examinations, if

     2    they bank would be willing to bundle some of

     3    these foreclosed properties that are impacting


     4    loans in moderate income communities into

     5    properties that nonprofit community partners

     6    can take on to revitalize those very


     7    communities.

     8                We also want to encourage

     9    financial institutions to go beyond just the

    10    foreclosure crisis and the focus on the


    11    foreclosure crisis.  As we said, neighborhood

    12    stabilization has been the mainstay of our

    13    work.  We also see that building healthier,

    14    energy efficient and sustainable communities


    15    will be the solution for the future.  Bank of

    16    America has been the leading supporter of

    17    Enterprise's Green Communities Initiatives. 


    18    And we expect and would welcome continuing

    19    leadership from Bank of America to address one

    20    of the greatest challenges faced by our

    21    country in an equitable and systemic way. 


    22    Green investment is good community investment.







                                                                        128


     1                Finally, as we fight to preserve

     2    communities, we have to also fight to preserve

     3    the nation's affordable housing rentals,


     4    rental housing stock that are at risk of

     5    conversion or disposition.  For the last ten

     6    years, this nation has lost more than 300,000


     7    affordable and subsidized apartments through

     8    physical deterioration or conversion to market

     9    rate housing.  During the next five, we will

    10    anticipate more than one million Section 8


    11    units to expire, presenting a huge challenge

    12    to organizations committed to preserving this

    13    valuable housing stock for low, moderate

    14    income, and very low income residents.  As a


    15    leading investor in affordable rental housing,

    16    we encourage the Bank of America to step up

    17    and finance the preservation of these


    18    affordable units, so that we can preserve them

    19    for generations of low income residents to

    20    come.

    21                In conclusion, we appreciate Bank


    22    of America's leadership in the community







                                                                        129


     1    development work around the country.  We

     2    expect that they will continue this leadership

     3    after the successful merger with Countrywide


     4    Financial.

     5                Thank you.

     6                DIRECTOR BRAUNSTEIN:  Thank you. 


     7    Ms. Galante?

     8                MS. GALANTE:  Yes, good morning. 

     9    Thank you for the opportunity to be here.  My

    10    name is Carol Galante.  I am the President and


    11    CO of Bridge Housing Corporation.  Bridge is

    12    the largest developer of affordable housing

    13    and community development efforts in

    14    California.  We are headquartered in San


    15    Francisco and also have offices in San Diego

    16    and Los Angeles.  We have developed about

    17    13,000 homes and apartments affordable to low


    18    and moderate income individuals.

    19                I am here today to speak to the

    20    credibility and commitment of Bank of America

    21    to community development.  And I want to focus


    22    on four areas, credit, investment, mortgage







                                                                        130


     1    lending, and industry leadership.

     2                Bank of America has a very strong

     3    ongoing commitment to Bridge and organizations


     4    like ours to construction lending and perm

     5    lending throughout California.  They have

     6    continually demonstrated to have the most


     7    innovative pricing and products available in

     8    the marketplace.  And I will give you two

     9    examples.  We currently have a 30 million

    10    dollar construction loan on affordable


    11    condominiums in the Bayview-Hunter's Point

    12    neighborhood of San Francisco.  And we also

    13    have an acquisition and construction to perm

    14    loan with them on a very challenging property


    15    in Stockton, California, where as part of a

    16    neighborhood stabilization strategy, we agreed

    17    to take on the worst apartment complex in the


    18    city of Stockton with the highest number of

    19    police calls and convert that into an ongoing

    20    asset to the community.  And Bank of America

    21    has stepped up to help us in that effort.


    22                Even more impressive, I think, is







                                                                        131


     1    their commitment to investment and I want to

     2    mention two examples of this.  I think their

     3    purchase of low income housing tax credits,


     4    particularly in today's market and I think

     5    everybody knows that we are in a very

     6    challenging time with respect to investors in


     7    low income housing tax credits.  Many

     8    investors are now sitting on the sidelines. 

     9    Pricing has plummeted for developers who very

    10    much need this equity investment to enable our


    11    affordable housing developments to continue. 

    12                Bank of America has always been a

    13    leader but even in these challenging times,

    14    they have been incredibly aggressive and


    15    available to us.  We currently have seven

    16    developments that we are bidding for equity

    17    and I can tell you that Bank of America is in


    18    play on every one of those investments in a

    19    number of different markets in California. 

    20    So, this is of very critical importance to us

    21    in the investment area.


    22                They have also invested in Bridge







                                                                        132


     1    as an organization, lending us at very low

     2    interest rates money for us to put out the

     3    most riskiest capital, the early pre-


     4    development capital.  This is money totally at

     5    Bridge's discretion and they are relying on

     6    our judgment to make good judgments and we


     7    very much appreciate that commitment to us. 

     8    And that kind of investment is as important a

     9    the direct project investments that Bank of

    10    America makes.


    11                On mortgage lending, Bank of

    12    America is our go-to bank for single family

    13    mortgage lending.  The Acorn product that they

    14    make available to first time home buyers is


    15    the best in the country and I hope and expect

    16    that we will continue to see that type of

    17    product,  even in this challenging mortgage


    18    environment. There are low income home owners

    19    out there who need mortgage product

    20    availability and this has been, as I said, our

    21    go-to product on our for sale affordable


    22    developments.







                                                                        133


     1                Last but not least, I do want to

     2    mention Bank of America has taken a true

     3    leadership position in California in assisting


     4    the nonprofit development community in

     5    advocating for and raising public resources. 

     6    Bank of America was the first lending


     7    institution to step up.  I think it was about

     8    $150,000 grant to help groups like ourselves

     9    and California Housing Consortium get a two

    10    billion dollar affordable housing bond measure


    11    on State of California's ballot.  That was

    12    approved and is now actively out participating

    13    in development activity.  And if it weren't

    14    for Bank of America stepping up, I don't think


    15    some of the other lenders would have followed

    16    suit.  And that money was of critical

    17    importance to leveraging the public resources.


    18                So, those are just a sampling of

    19    the commitment that we see the Bank of America

    20    having to community development.  And for that

    21    reason, we expect that to continue with the


    22    merger with Countrywide and we are supportive







                                                                        134


     1    of that effort.  Thank you.

     2                DIRECTOR BRAUNSTEIN:  Thank you

     3    very much.  Any questions fro this panel?  No. 


     4    Well then, thank you very much for your

     5    testimony.

     6                We are going to take a short


     7    break.  We will reconvene at 11:00.

     8                (Whereupon, the hearing went off

     9    the record at 10:45 a.m. and went back on the

    10    record at 11:03 a.m.)


    11                DIRECTOR BRAUNSTEIN:  Okay.  We

    12    are reconvening.  And I do have one

    13    announcement to make for the members of the

    14    public who are here is that the Federal


    15    Reserve Bank of Los Angeles, the branch has

    16    graciously offered to  allow the members of

    17    the public who want lunch to use their


    18    cafeteria.  So, it will be open, I don't know,

    19    starting at -- where is John -- what time, do

    20    you know?

    21                MR. TURNER:  It probably opens


    22    early like 11:30 or something.







                                                                        135


     1                DIRECTOR BRAUNSTEIN:  Okay.  And

     2    we will have a lunch break but you are welcome

     3    to use the cafeteria to buy lunch as opposed


     4    to having to go outside the building.

     5                Okay.  We are going to start with

     6    this panel.  We have a total of 45 minutes for


     7    this panel, divided up among however many

     8    people you can get in during that 45 minutes. 

     9    So with that, we will get started. 

    10                Mr. Aguilar?


    11                MR. AGUILAR:  Thank you, Sandy. 

    12    Once again, my name is Orson Aguilar.  I am

    13    the Executive Director designee of the

    14    Greenling Institute.  First I want to say


    15    thank you to the Federal Reserve for holding

    16    this hearing in my hometown, LA.  I grew up

    17    real close to here in Boyle Heights.  And I


    18    also want to thank the B of A in our

    19    leadership and willingness to engage in a

    20    dialogue that we share will really lead to a 

    21    really fruitful engagement and partnership


    22    over the next ten years.







                                                                        136


     1                We are here during a major crisis,

     2    as we all know.  Many people say that perhaps 

     3    this a crisis that could have been averted by


     4    the Federal Reserve.  And we are also here

     5    because the company being acquired is

     6    considered to be mostly responsible for the


     7    crisis we are seeing here in California.  And

     8    I want to say that this is much larger than

     9    just a foreclosure crisis.  This is a

    10    community crisis and I want to make sure that


    11    we don't overlook that because this is not

    12    just about homes and mortgages.  This is about

    13    entire communities.  The community where I

    14    currently live in East Oakland, you basically


    15    see a parallel.  I'm sure the Federal Reserve 

    16    put its research to look at the incidents of

    17    crime and homicides.  I am sure that they are


    18    almost synonymous and parallel those of the

    19    homicide rates and other community indicators. 

    20    so this is a very serious issue that can't be

    21    taken lightly.  And I think that when people


    22    seem to be upset and angered at some of the







                                                                        137


     1    things we have heard today it is because it is

     2    a very serious issue that I see first hand on

     3    my home from work and driving to work.


     4                I first want to applaud B of A.  I

     5    know that it seems like the applause hasn't

     6    really been there because there is a huge


     7    issue but 1.5 trillion commitment is huge.  It

     8    is the biggest ever done.  We are quite

     9    confident that based on B of A's previous

    10    record that they will exceed this commitment,


    11    as they have their prior commitments.  It is

    12    also a great step during a time when most

    13    banks seem to be pulling back.  There are no

    14    other banks that I know of that are actually


    15    putting in more philanthropic dollars, that

    16    are doing more as the way B of A is.  So, I

    17    really want to commend the B of A for going in


    18    this positive direction and announcing this

    19    today.

    20                One of the things that when I

    21    think of this one and a half trillion


    22    commitment, I think this is great for the







                                                                        138


     1    long-term success and sustainability of the

     2    communities that I come from.  But one of the

     3    things that seems to kind of concern and worry


     4    me is what we are doing about the short term. 

     5    And there appears to be some contradictory

     6    marks about the short term.  For example, I


     7    heard the phrase we will continue to do this,

     8    we will continue to this, referring to the

     9    loss mitigation strategies that have, for the

    10    most part, failed our communities.  And then


    11    I heard something a little more positive that

    12    perhaps a little more details could make me

    13    not so concerned and worried.  And that was in

    14    the Q and A when Andrew Plepler and Janet and


    15    Liam McGee stated that they wanted to be the

    16    most creative in this effort.  And rather than

    17    stay on the negative, I am going to latch onto


    18    the positive of the creativity part because

    19    this is what we really need.

    20                I think this is the perfect time

    21    for creativity.  The Federal Reserve knows


    22    well about creativity.  They have done things







                                                                        139


     1    they have never done.  They have used tax

     2    dollars to bail out large corporations and

     3    Wall Street companies that haven't


     4    participated in CRA activities.  And we think

     5    the same type of spirit of creativity fostered

     6    by the Federal Reserve could lead to some very


     7    meaningful things for our community.  

     8                I think we really need to think

     9    much bigger than what Countrywide is doing. 

    10    And nobody here has any hope whatsoever in


    11    Countrywide's practices.  Those practices just

    12    need to be stopped and we need something new. 

    13    The 20 million dollars is a good first step

    14    but it is only a beginning.  Angelo Mozilo was


    15    very creative.  You know, he made out like a

    16    bandit with 450 million right before this

    17    thing crashed.  So we need, you know, we are


    18    not asking for everything that he took.  You

    19    know, we are simply going to ask that you put

    20    in half, 250 million to save some of these

    21    communities in the short term.


    22                Now, one of the things you are







                                                                        140


     1    going to be hearing from today is a very

     2    diverse multi-ethnic, multi-issue panel that

     3    we think can help you work towards this


     4    creativity.  And one of the things we are

     5    urging and recommending is a meeting very

     6    soon, within the next 15 days with key


     7    community leaders in California to work on the

     8    details of what your B of A creativity plan

     9    will be.  

    10                To my right is Pastor John Hunter


    11    who perhaps has one of the most creative

    12    programs that, with adequate philanthropy,

    13    with a small portion of the 250 million we

    14    hope you will commit, can really do some


    15    things to save the communities from some of

    16    the things I see.  Thank you very much.

    17                MR. HUNTER:  Thank you.  I am John


    18    Hunter.  I am the Senior Pastor and the Chief

    19    Executive Officer of First African Methodist

    20    Episcopal Church here in Los Angeles.  It is

    21    the oldest congregation established by African


    22    Americans in the city.  We have 13







                                                                        141


     1    corporations and to my right is the President

     2    of our corporations.

     3                Rather than condemning past


     4    practices, I think it has been well documented

     5    the failures of financial institutions such as

     6    Countrywide and even some of the shortcomings


     7    of Bank of America.  We realize that we are at

     8    a critical moment and now that Bank of America

     9    will be taking an unprecedented leadership

    10    role as a mortgage banker granter, equally


    11    they must take a leadership role in solving

    12    the problem in being proactive.  Under whom

    13    much is given, much is required.  And

    14    certainly, much is going to be given with the


    15    new status that I think almost all of us

    16    assume that the merger will be approved by

    17    this Board.


    18                And so we look at how we address

    19    the issues that are confronting our nation and

    20    our community.  In the 1960s, we hade the

    21    civil rights era.  There was advocacy.  There


    22    was litigation.  There was agitation,







                                                                        142


     1    marching, etcetera for civil rights.  The

     2    frontier for civil rights now is in the

     3    banking world and in the economic development


     4    sphere where there is still great disparity. 

     5    It has been stated several times that a number

     6    disproportionately of these subprime loans


     7    were given to African Americans and Latinos,

     8    many of whom qualify for regular loans.  And

     9    so we find now disproportionately this is

    10    adversely affecting minority communities.  It


    11    is of great concern and we want Bank of

    12    America to be very specific about how it is

    13    going to address these issues.  We are

    14    encouraged to hear the figures that have been


    15    laid out in front of us today but we need to

    16    make sure because now always have we found

    17    that Bank of America has been, in comparison


    18    to their competitors, a leader in

    19    philanthropic enterprises within the African

    20    American Community and has not always stepped

    21    up to the plate has been requested or needed


    22    when it comes to economic development within







                                                                        143


     1    the African American Community.

     2                So, clearly, we have a window of

     3    opportunity to take advantage of what can come


     4    out of the merger and Bank of America

     5    certainly has the opportunity to emerge as an

     6    industry leader, setting a standard, a tone,


     7    and an atmosphere for other institutions to

     8    emulate.  But clearly, it must be specific. 

     9    We are here to engage and to work with the

    10    bank as we are with other institutions to


    11    specifically mold and shape programs that will

    12    help solve this problem.  

    13                And so we say this to the Federal

    14    Reserve Board that with conditions and with


    15    this understanding of the new opportunity and

    16    responsibility that will fall on the shoulders

    17    of Bank of America with this merger, we would


    18    state our concern and express it in this

    19    manner.

    20                MS. HUNTER:  Thank you for this

    21    opportunity.  My name is Denise Hunter and I


    22    am the President and COO of FAME Corporations. 







                                                                        144


     1    Annually, we at FAME Corporations provide

     2    services to more than one million California

     3    residents in the area of housing, health


     4    services, transportation, business development

     5    and environmental protection.  I come to you

     6    today as a voice of those one million.  


     7                FAME Corporation offers its

     8    conditional support of the Bank of America

     9    acquisition of Countrywide.  Conditional

    10    support because of its far reaching affect on


    11    the minority communities and conditional

    12    because of Bank of America's marginal

    13    philanthropic efforts in the minority

    14    community.  


    15                As we find ourselves in the midst

    16    of a crisis whose affects will be felt for

    17    generations to come, it is imperative that


    18    measures be immediately instituted to help

    19    those persons who have been victimized by

    20    Countrywide's questionable lending practices

    21    and their overall lack of concern for the


    22    welfare of their customers.  While I







                                                                        145


     1    appreciate Bank of America's CRA commitment of

     2    1.5 trillion and their philanthropic

     3    commitment of 2.0 billion and also their


     4    equally wonderful commitment to creative and

     5    innovative programs to address the foreclosure

     6    crisis.  My concern is how this commitment


     7    will translate to substantive and meaningful

     8    programs and whether any of these dollars will

     9    ever reach those who need them most.

    10                My request is that B of A make a


    11    quantitative and qualitative commitment to

    12    work with faith based and community based

    13    organizations to provide funding for programs

    14    currently in place, programs such as FAME's


    15    Project Save Our Homes, which was endorsed by

    16    the editorial board of the LA Times as a

    17    viable option in addressing the foreclosure


    18    crisis.  

    19                Project Save Our Homes is an

    20    effort to provide support for those homeowners

    21    who are not on any other financial


    22    institution's radars.  Those whose voices have







                                                                        146


     1    gone unheard and whose cries have gone

     2    unnoticed.  My request is that Bank of America

     3    will make clear and specific commitments to


     4    support shoe of us who each and every day

     5    provide services to those who have been turned

     6    away by Countrywide, those who are left


     7    without options after losing their most

     8    valuable asset.  This crisis for so many has

     9    meant complete devastation of their lives. 

    10    Those business owners who have used their


    11    homes as collateral for their small business

    12    loans now find themselves homeless and without

    13    businesses.  These losses are real.  Not just

    14    for the homeowners, but for all of us who live


    15    in this country.  Their loss if our loss.  My

    16    hope is that Bank of America will recognize

    17    and address the pain and devastation and


    18    mistrust left by the questionable lending

    19    practices of Countrywide, recognize that if

    20    this acquisition is approved, that

    21    Countrywide's devastation becomes Bank of


    22    America's devastation, and recognize that that







                                                                        147


     1    responsibility must be taken seriously as we

     2    call work together to rebuild our communities.

     3                Thank you.


     4                MS. BAUTISTA:  I am Faith

     5    Bautista, Executive Director of Mabuhay

     6    Alliance and part of The Greenlining


     7    Institute.  I am going to talk about what is

     8    going on in the street.

     9                When a homeowner comes to our

    10    office and asks for help, I immediately tell


    11    them, it is not your fault.  First, Allen

    12    Greenspan allowed subprime when he in fact did

    13    not believe in subprime.  He wants certainty. 

    14    The bankers give subprime loan even half of


    15    those people were qualified for prime loans

    16    and now, you are the victim.  

    17                What I am asking the Federal


    18    Reserve is do approve it soon but Bank of

    19    America do everything they can to help the

    20    homeowners.  It is too late now, actually, for

    21    a lot of people.  They own homes and still


    22    foreclose but there are still so many homes







                                                                        148


     1    that we can save.

     2                Bankers doesn't want to help

     3    people unless they are already in trouble.  I


     4    myself cannot be helped because I am still not

     5    delinquent in my loans.  Do I have to wait for

     6    that?  Loss mitigation, counseling.  It is


     7    beyond counseling.  Financial literacy has to

     8    be in place.  Not just savings, not just

     9    balancing the checkbook.  It is really

    10    creating a literacy that it will not happen


    11    this problem again.  If we had a good

    12    financial literacy, a basic one, starting when

    13    they are in fifth grade, probably we would

    14    have not this much of a problem.


    15                I am asking Countrywide can only

    16    do so much.  As you know, there are so many,

    17    half a million.  Counselor can only counsel


    18    two people at a time.  There are so many

    19    people in  line.  1-800-995-HOPE.  I call that

    20    1-800-995-HOPE or Hope Now.  It is nothing. 

    21    It is months, in fact years before they can


    22    even be helped.  I would say the regulators,







                                                                        149


     1    OTS, we met with OTS.  Countrywide has to do

     2    more now even without this merger.  Bank of

     3    America has to step on the plate right now. 


     4    Don't even wait for that one.  

     5                We are post a massive counseling

     6    that can really do loan modification.  One


     7    counselor, home counseling in San Diego have

     8    600 files.  I asked them, out of your 600

     9    files, how many have you really modified? 

    10    People are losing hope with the regulators,


    11    with the banks, with community leaders.  We

    12    can counsel as much as we can, but the buck

    13    stops with Bank of America or Countrywide. 

    14    They have to do something on that loan


    15    modification.  They have to realize that

    16    talking is not good enough.  Put more teeth on

    17    that.  People don't care anymore.  They need


    18    their home.

    19                It is affecting so much of their

    20    emotional, their character, the kids.  Like my

    21    daughter asked me, are we going to lose a


    22    home?  I said no, I am going to fight until we







                                                                        150


     1    can keep this home.  And there are so many

     2    people, like Andrew is saying, are qualified

     3    to stay in their home but not being modified. 


     4                So, I am asking Countrywide, Bank

     5    of America, and the regulators to put the

     6    solution today, not even tomorrow.  Thank you.


     7                MS. MONTOYA:  Good morning.  My

     8    name is Martha Montoya and I am the Southern

     9    Region  Chair Board Member for the California

    10    Hispanic  Chamber of Commerce.  More


    11    important, I am the chair statewide for the

    12    Access to Business Capital.

    13                CHCC, California Hispanic Chamber

    14    of Commerce, represents over 65 chambers with


    15    over 475,000 business owners.  Myu job today

    16    is to bring awareness to you, as I did to

    17    Senator John Kerry on a couple of issues that


    18    are happening.

    19                The collapse of subprime mortgage

    20    and market affects business.  That collapse

    21    caused lenders and investors to go back from


    22    the credit and debit market which drive







                                                                        151


     1    business expansion.  To this you can add slow

     2    payment on our company's receivables starting

     3    to create a cash flow crunch.  I will present


     4    the best we have compiled so far because it is

     5    really brand new throughout this research.

     6                Then they get the ripple affect on


     7    small business, minority and Hispanic in

     8    particular, which are the livelihood of this

     9    American economy are caused by subprime

    10    mortgage.  It continues and not only the


    11    prices are climbing on oil, but the going

    12    green, it is also putting pressure on the

    13    small business, overwhelming them.

    14                Credit access, cash flow, payment


    15    and credit lines on time, expansion and other

    16    financial elements are now at the forefront of

    17    many small business's firms.  And Hispanics


    18    who have learned to work and trust financial

    19    institutions for their businesses by now see

    20    the doors closing on them.  Bankers estimate

    21    that at least 90 percent of first time


    22    business owners use their homes as collateral







                                                                        152


     1    on small business loans.  This statistic is

     2    not so surprising when you consider that a new

     3    business often does not have enough assets to


     4    serve as collateral for the entire loan.  But

     5    what happens if the business fails? 

     6    Generally, both private banks and the U.S.


     7    Small Business Administration with banks

     8    billions in loans, with repayment guarantees

     9    to the banks, try to negotiate payment plans

    10    that allow the former business owner to repay


    11    the debt gradually without being thrown out of

    12    his home.  When the VA or a bank accepts a

    13    home as collateral on a business loan, they

    14    put a lien on the home for the value of the


    15    entire debt, even if the debt is more than the

    16    owner's equity.  The thinking is that the

    17    equity will increase through continued


    18    mortgage payments and appreciation of the home

    19    during the life of the loan.  Any such lien

    20    holder's claim would be secondary to that of

    21    a primary mortgage holder.


    22                The Committee of Small Business







                                                                        153


     1    and Entrepreneurship hearing headed by Senator

     2    John Kerry a week ago in Washington, D.C., we

     3    have started to compile information that will


     4    give you a landscape of small business but not

     5    yet on minority owned business.  These become

     6    an ongoing research for the California


     7    Hispanic Chamber of Commerce, who have seen

     8    more companies downsizing or closing. 

     9    Collapse of subprime mortgages market affect

    10    business.  The ripple affects on the mortgage


    11    crisis are a threat to America's small

    12    business, since approximately 30 percent of

    13    all business owners rely on home equity to

    14    finance their small business operations or to


    15    expand lines of credits.  This, in general,

    16    across the board.  

    17                The Federal Reserve Board of


    18    Governors Member Frederick Mishkin testified

    19    that credit standards have tightened for small

    20    business, making it more expensive and harder

    21    for small business owners to obtain loans. 


    22    Theoretically, the SBA's program should play







                                                                        154


     1    a key role in filling the gaps left by a

     2    tightened credit market.  However, this hasn't

     3    occurred this time around.  SBA loan activity


     4    is down program-wise.  Activity at the SBA

     5    7(a) Loan Program, the largest single source

     6    of long-term capital for small businesses


     7    appears to be in freefall.  The number of 7(a)

     8    loans approved by SBA lenders, has increased

     9    by about 18 percent compared with the same

    10    period last year.  In terms of dollars, the


    11    7(a) program is down by over 641 million

    12    dollars.  John Graham, a professor of finance

    13    at Duke University and CFO Magazine, do a test

    14    continuously and they say that companies, one-


    15    third of them have credit problems throughout.

    16                NFIB, National Federation Business

    17    have said that they do an optimism small


    18    business survey and have sold 3.3 per month

    19    for the last three months.

    20                In conclusion, as a business

    21    leader and speaking on behalf of others in our


    22    chambers, I would like to see clear programs







                                                                        155


     1    and long-term commitments, I am talking three

     2    to five years, to one, embrace new business

     3    owners because Congresswoman Nydia Velasquez


     4    said more employed people will open more

     5    businesses.  Sustainable program for existing

     6    programs such as procurement.  Mr. Assemblyman


     7    Arambula says there are enough contracts by

     8    government, state and federal that we can

     9    apply for.  So we need procurement programs

    10    and the emerging domestic market investment


    11    into smaller funds, so we can fund the small

    12    companies.  This will give our business owners

    13    the tools to survive and keep a roof over them

    14    and their employees.  Thank you.


    15                DIRECTOR BRAUNSTEIN:  Thank you.

    16                MR. FIGUEROA:  My name is Steve

    17    Figueroa.  I am with the Inland Empire Latino


    18    Coalition.  It is a coalition of 40

    19    organizations in the Inland Empire, San

    20    Bernardino Riverside areas.  

    21                And as I understand, Bank of


    22    America has made some commitments to meet in







                                                                        156


     1    the Inland Empire within 15 days.  We would

     2    expect you to live up to your words not only

     3    to being there but to have the plan in place


     4    within 30 days.  In some of our neighborhoods,

     5    the Inland Empire is the heart of the

     6    foreclosure depression.  Let's not call it a


     7    crisis.  It is a depression.  Let's call it

     8    what it is.  Okay?

     9                There are four or five homes on

    10    every block.  Brand new homes.  Even as they


    11    build new homes right around the block.  And

    12    we see homes that once sold for $600,000 now

    13    selling for $300,000.  I myself and my wife

    14    are victims of this foreclosure crisis.  And


    15    we are seeing victims -- now, I am not a

    16    victim type person.  Okay?  We expect Bank of

    17    America to fix their Humpty Dumpty they just


    18    bought.  And if they can put all the shells

    19    back together, that would be really cool

    20    because they need to step up to the plate. 

    21    They bought the eggshell.  Now, it is time to


    22    repair the eggshell and all the damage that it







                                                                        157


     1    has done.  I kind of feel like I am here

     2    before Solomon and you are making a decision. 

     3    And any decision that you are making in


     4    dividing this baby, I ask that you hold Bank

     5    of America and the other lending institutions

     6    accountable with sanctions to say if you don't


     7    live up to your commitments, these are the

     8    sanctions.  You will make these buyer's homes. 

     9    If you can do it for Bear Stearns, you can do

    10    it for the taxpayer who bailed out Bear


    11    Stearns.  It is only fair.  It is only

    12    reasonable that you give us what you gave Bear

    13    Stearns, after all, we are going to end up

    14    paying the bill.  


    15                And as far as Bank of America, you

    16    know, their philanthropy in the Inland Empire

    17    really needs to improve because I work with a


    18    number of nonprofits that have come to Bank of

    19    America only to have the doors shut on them. 

    20    They walk -- they don't walk what they talk. 

    21    Bottom line.


    22                So, any commitment, what they live







                                                                        158


     1    up to, we would like to see them with

     2    sanctions of they cannot walk what they talk. 

     3    That is what is missing.  Many of us would


     4    have better off going to the Mafia with our

     5    loans.  At least then, we would have had

     6    someone we could go to for a final outcome. 


     7    But in this particular case, we get phone

     8    calls.  You get, a month later you get a call. 

     9    They are still advising you to go into

    10    foreclosure.


    11                Thank you.

    12                MR. DEAN:  Good morning.  I am

    13    George Dean and I am testifying as President

    14    of the Greater Phoenix Urban League in Phoenix


    15    Arizona, as well as I serve as co-chair of the

    16    Greenlining Coalition.

    17                Bank of America is a major player


    18    in the Arizona marketplace and has potential. 

    19    It has the potential if it develops specific

    20    programs with the Arizona minority community

    21    to both prevent massive foreclosures and to


    22    help close the minority home ownership gap in







                                                                        159


     1    Arizona.

     2                As the nation's largest bank, we

     3    expect Bank of America under condition for


     4    Federal Reserve approval to set the highest

     5    standards for not only Arizona but for

     6    America.


     7                For more than 30 years, I have

     8    been a part of urging Bank of America, as well

     9    as other banks to do business with America's

    10    five million minority owned business.  The B


    11    of A, at one time, has promised to be number

    12    one.  In the past the B of A has promised to

    13    be number one, but this is still an

    14    unfulfilled promise.  And we at the Urban


    15    League hope and expect that CEO Ken Lewis

    16    saying Bank of America to be number one in

    17    Arizona and the nation by next year.


    18                In conclusion, we would like to

    19    have Ken Lewis to fly from Charlotte to

    20    Phoenix to  fully understand the plight of

    21    Arizonan's who live from paycheck to paycheck. 


    22    I said to someone earlier that B of A is







                                                                        160


     1    acquiring, is attempting to acquire the devil. 

     2    And they are going to have to do a lot to make

     3    up for the kinds of devastation that has been


     4    caused in this country and especially here in

     5    Arizona and we urge, I urge you to strongly

     6    consider all of those merits and conditions


     7    before giving final approval to this

     8    particular merger.

     9                DIRECTOR BRAUNSTEIN:  Thank you.

    10                MS. LOPEZ:  Good morning.  My name


    11    is Ortensia Lopez.  I am executive Director of 

    12    El Concilio of San Mateo County, also co-chair

    13    of the Greenlining Institute.  And I want

    14    thank you first for the opportunity to be here


    15    to speak.  And secondly, I also wanted to

    16    acknowledge B of A for the leadership that

    17    they have played to date on some.  And this


    18    probably presents a very good opportunity to

    19    go from good to great in terms of a leadership

    20    institution. 

    21                And having said that, I wanted to


    22    share just some observations and perhaps some







                                                                        161


     1    recommendations that should be considered

     2    before this acquisition goes through.  But I

     3    first want to echo all of my colleagues'


     4    comments.  I think you can all see it is also

     5    very emotional for us.  We see people every

     6    day.  I want to put a picture to one of those


     7    people we see.  It is a couple probably in

     8    their mid-60s, ready to retire, had a home

     9    involved in this debacle that happened, lost

    10    the home now, and one of the partners has a


    11    chronic disease like diabetes which requires

    12    extra resources to maintain and caretaking. 

    13    Now they don't have a home.  They don't have

    14    resources, they don't know how the caretaking


    15    is going to be handled.  They now have to go

    16    back to their children who have a home that

    17    they are now potentially losing.  So the


    18    impact on that debacle goes down the line to

    19    the other children.

    20                So I think that is a picture of

    21    what we are looking at and I think that is


    22    what we are all getting very emotional about







                                                                        162



     1    because we see it every day in our

     2    communities.  We have seen a 25 percent

     3    increase in the number of people that are in


     4    the situation of foreclosure.

     5                So, it is impacting our

     6    communities.  I think that you can see that. 


     7    It happens that California has the minority

     8    being the majority now.  So everybody says it

     9    is the minorities that have create this.  No,

    10    it is not because there are minorities that


    11    have decent jobs, decent jobs and can afford

    12    to maintain their homes, given the opportunity

    13    and a fair rate.

    14                So, we would like you to consider


    15    that in this acquisition.  I think that to

    16    date, there has been very little aggressive

    17    and intervention from financial institutions


    18    and the Feds to help address this big 800

    19    pound gorilla is what I am calling it for lack

    20    of a better term.  And I think that we ought

    21    to look at B of A working with communities to


    22    develop short term and long term strategies to







                                                                        163


     1    address this together.  I think we have a 

     2    community that is committed.  I think we have

     3    an institution that has the leadership, and


     4    the capability and resources.  And so I think

     5    if this acquisition is considered that the

     6    strategies that have been suggested be


     7    considered at the same time.

     8                And I think the last thing I want

     9    to say is that historically we have found and

    10    when acquisitions and mergers are happening,


    11    there are a lot of promises made but it is

    12    always the follow through that has to be

    13    followed, the promises have to be kept.  

    14                Thank you.


    15                MR. THOMPSON:  Good morning.  I am

    16    Pastor George Thompson with Faithful Central

    17    Bible Church.  And we started teaching


    18    financial seminars when we acquired the forum,

    19    just around the forum, and now we teach them

    20    nationwide, hundreds of seminars.  I say that

    21    because I am a front line person, someone that


    22    deals with individuals that have financial







                                                                        164


     1    issues.  The problems have already been talked

     2    about with the teaser rates, the ARMs, the

     3    negative amortized, which is one of the most


     4    difficult areas that we deal with.  But most

     5    importantly, what I wanted to talk about,

     6    which is the biggest I think hasn't been


     7    talked about today is the psychological affect

     8    that that is having on our economy.  The stock

     9    market is down, the bond market is down, and

    10    the real estate market is down because there


    11    is people on pause right now because as they

    12    see gas prices rising, they are saying where

    13    am I going to live or what am I going to do

    14    now?  


    15                And I think there are certain

    16    things that need to be done before this goes

    17    forward.  And the first is education.  I think


    18    people are not educated about their loans and

    19    the way that they should be working.  We

    20    should start with the ones that are people

    21    that are in foreclosures.  But then also, even


    22    when people first time acquire a home, that







                                                                        165


     1    that should be also something that is taught

     2    at Bank of America and with this merger.  And

     3    these are things that should be taught in all


     4    areas, not just bank of America.  Other

     5    lenders should be doing this as well.

     6                And the second thing is the loan


     7    mitigations.  There should be something where

     8    when we are talking to someone about their

     9    loan, there should be some level of

    10    accountability, where after we do this, that


    11    they have an advocate for them.  If someone

    12    went to the court of law right now, they would

    13    have someone to help defend them.  That many

    14    times, the nonprofits, also the faith based


    15    organizations, having an advocate on their

    16    side to help them to negotiate the loan, which

    17    leads me to my third point.


    18                Us having a phone number that we

    19    can call to mitigate that loan.  One person

    20    that we are dealing with or one department, as

    21    opposed to just calling into customer service


    22    because that is now working right now.







                                                                        166


     1                And then last, is to let banks

     2    start lending again, meaning there are people

     3    that could have qualified for loans two years


     4    ago and now we can't even talk about those

     5    type of loans.  So one of the things that we

     6    need to do is make sure that they have the


     7    same, some lending requirements or some

     8    programs that are available for them right now

     9    to let them stay in their homes and be able to

    10    keep them. 


    11                Thank you. 

    12                MS. VIEK:  Good morning.  My name

    13    is Claudia Viek and I am the CEO OF THE

    14    California Association for Microenterprise


    15    Opportunity, also known as CAMEO.  And I am

    16    going to be talking about the impact on small

    17    and microbusinesses of under fie employees and


    18    the self-employed.

    19                At CAMEO, our mission is to

    20    promote economic opportunity through

    21    microenterprise development.  Our 130 members


    22    are a voice for an estimated two million lower







                                                                        167


     1    income entrepreneurs throughout California.

     2                I want to applaud Bank of America

     3    for being the best SBA lender and bringing


     4    support to a lot of start ups.  However,

     5    Countrywide, we know there are a lot of small

     6    and microbusiness owners who have home equity


     7    loans.  I myself, personally, have 20 years

     8    experience working with women, minority owned

     9    businesses and self employed and startup

    10    businesses.  And I know that when those


    11    businesses, little businesses begin to turn a

    12    profit, pretty much the first purchase that is

    13    made is a home.  And these businesses finance

    14    their business growth through their home


    15    equity lines.  There is, therefore, enormous

    16    risk for what you might even say a foreclosure

    17    on microbusiness due to the current situation.


    18                And we really don't have a lot of

    19    data.  I think Martha Montoya was very helpful

    20    in some of the data she gave.  And I would

    21    like the Federal Reserve and also Bank of


    22    America to take a look at the home equity







                                                                        168


     1    lines because as these neighborhoods, as you

     2    so eloquently said, are beginning to, you

     3    know, we lose our resolve and the values go


     4    lower, people's home values are going lower,

     5    their lines are being canceled or are

     6    retreating and that means a very negative


     7    impact on our small business growth.  And you

     8    know, 88 percent of business in California are

     9    under five employees.

    10                As a result of this, I would like


    11    to invite B of A and I am glad Andrew has been

    12    here, to meet with CAMEO and our board to talk

    13    about some remedies for the home equity issue. 

    14    Thank you.


    15                MR. CORRELAJO:  Good morning.  My

    16    name is Jorge Correlajo.  I am a business

    17    owners and have been a member of chambers of


    18    commerce for the past 25 years, mostly serving

    19    as a board member.  I am currently

    20    incorporating a new Latino chamber in the City

    21    of Los Angeles and we expect to be the home


    22    for hundreds of businesses in the very near







                                                                        169


     1    future.

     2                I have got to say that I am very

     3    delighted that Bank of America is taking


     4    control of Countrywide Mortgage because we are

     5    very familiar with the damage that has been

     6    done, particularly by Countrywide Mortgage.


     7                As has been stated already, you

     8    are well aware that Latinos, as well as other

     9    ethnic minorities very often utilize home

    10    equity as a basis for business capital.  Fair


    11    and competitive products must be a part of the

    12    formula for success of all parties, including

    13    families, small businesses, and mortgage

    14    holders.  Of great significance today is the


    15    fact that Bank of America is taking the

    16    leadership position that it should as it

    17    becomes the country's largest mortgage lender


    18    in this nation.  We are pleased that B of A

    19    had determined that they will provide for

    20    modified mortgages into affordable fixed rate

    21    loans in this foreclosure crisis and stay out


    22    of the subprime loans altogether.  There is no







                                                                        170


     1    doubt, in my mind, that they will set the

     2    standard to responsible home lending

     3    mortgages/business products in the future.


     4                Congratulations to Bank of America

     5    on this important acquisition.  We look

     6    forward to working with them specifically on


     7    the details and as small business issues as

     8    well.  Thank you very much.

     9                MR. ORTEGA:  Hi, my name is Larry

    10    Ortega.  I am President and CEO of Community


    11    Union.  We are a nonprofit organization based

    12    out in Los Angeles and we have training

    13    centers throughout Los Angeles and San

    14    Bernardino Counties.  We currently have an


    15    alumni of over 14,000 constituents that we

    16    have served over the last 15 years.

    17                I am here to talk about the lack


    18    of recognition that neither the Federal

    19    Reserve Board or Bank of America has

    20    acknowledged with regard to the return on

    21    investment.  I think there needs to be a


    22    better -- the vision needs to be crystallized







                                                                        171


     1    as to what actually that is.  I know that Bank

     2    of America has made a statement that they are

     3    going to do X amount of dollars more in


     4    philanthropic activities but they haven't

     5    really articulated clearly what that means as

     6    it relates to return on investment.  And that


     7    is disappointing because it makes it seems as

     8    though it is charity and it is not charity. 

     9    It is an investment that needs to be looked

    10    at.  


    11                And I would strongly recommend to

    12    the Federal Reserve Board that because there

    13    are so many of us that are stipulating

    14    contingencies and conditional support on the


    15    merger, that there be a creation of a

    16    committee that holds the Bank of America

    17    accountable to each and every contingency that


    18    has been stipulated here by all of the members

    19    that are speaking today, so that we can ensure

    20    that this, the partnership and it is a win-win

    21    for not only community based organizations and


    22    not only the home owners that are losing their







                                                                        172


     1    homes that are in foreclosures, not only for

     2    the churches but for the bank itself.

     3                This is no secret.  Bank of


     4    America is going to get a windfall of

     5    clientele, a windfall of depositors.  And they

     6    have a lot to gain.  They are making a huge,


     7    huge gain here.  And they are, in my opinion,

     8    my humble opinion, no knight in shining armor

     9    because they are talking over Countrywide.  It

    10    is a very strategic, it is a very business


    11    oriented decision.  There is no philanthropic

    12    charity vision that is part of this whole

    13    decision that they have made to take over

    14    Countrywide.  It is very strategic.  It is


    15    very business oriented.  

    16                And as such, because there is so

    17    many concerns on the side of nonprofit,


    18    churches, communities, etcetera, I strongly

    19    recommend to the Federal Reserve Board that

    20    there be a committee be put in place so that

    21    we can watch this transition go through, that


    22    we watch this step-by-step and that you allow







                                                                        173


     1    us to be heard on a continuous basis to ensure

     2    that Bank of America actually does implement

     3    and follow through with all of their


     4    commitments, as they have said that they have

     5    done.  And if not, as was suggested, that

     6    there be some stipulation by this Board that


     7    says okay, here are the consequences Bank of

     8    America and you didn't do one or two of these

     9    things, here are the consequences and that be

    10    specifically laid out.  We leave too much to


    11    chance in these mergers and I think it is

    12    important that we be specific.  Thank you.

    13                MS. DANGTU:  Ladies and gentlemen,

    14    my name is Lynn Dangtu, founder, President and


    15    CEO of Economic Business Development, a

    16    nonprofit organization designated to serve

    17    more than 500,000 Vietnamese and 5,000 small


    18    businesses in southern California, an area

    19    known as Little Saigon, the largest Vietnamese

    20    population outside of Vietnam.

    21                I am also a community leader who


    22    has been advocating for my community for the







                                                                        174


     1    past, for more than a decade.  My community

     2    comprises mostly the first generation

     3    immigrants who are still experiencing cultural


     4    and language barriers but work very hard to

     5    earn their living by running small businesses. 

     6    These are the ones that are mostly affected by


     7    the mortgage crisis and are also former

     8    customers of Countrywide who have a very large

     9    office in the heart of Little Saigon.  Small

    10    businesses are affected by the mortgage crisis


    11    as well because they often use their homes as

    12    collateral to borrow money for their

    13    businesses.  

    14                On behalf of my community, the


    15    Vietnamese community, I would like to

    16    conditionally support the B of A's takeover of

    17    Countrywide but ask B of A to have a far more


    18    effective loss mitigation program by working

    19    with Vietnamese community based organizations

    20    to reach the Vietnamese homeowner and dedicate

    21    a larger philanthropy budget to nonprofit


    22    organizations to enable them to have the 5,000







                                                                        175


     1    Vietnamese business owners in Little Saigon

     2    survive during and after the mortgage crisis.

     3                I also hope that Janet Lamkin, B


     4    of A California President will visit our

     5    community within the next 15 days.  Thank you.

     6                MR. QUINTO:  Good morning.  I am


     7    Joey Quinto, publisher of California Journal

     8    for Filipino Americans and also a member of

     9    the Greenlining Coalition.

    10                For so many years, Filipinos


    11    became invisible to the radar screen of Bank

    12    of America and Countrywide.  My community

    13    almost got nothing from both giant companies. 

    14    This may be a problem right now but I am sure


    15    that Bank of America is always a problem

    16    solver and will solve the problem.

    17                I am hoping that when the two


    18    giant companies will merge, that they will

    19    recognize the Filipino Americans who also want

    20    to participate in their philanthropic and

    21    marketing dollars and supply diversity.  There


    22    are about five million Filipinos nationwide







                                                                        176


     1    and also participate in the small business

     2    loans.

     3                Filipino Americans are qualified


     4    for any promotions.  There are very few

     5    Filipinos in your giant companies who could

     6    climb the corporate ladder.  We hope that you


     7    could help Filipinos climb the corporate

     8    ladder.  We are not looking for handouts. 

     9    They are highly qualified to do any task. 

    10    When Bank of America becomes a larger player


    11    in the banking and mortgage market, we are

    12    hoping that they will be there to serve all of

    13    the communities.  Do not make Filipinos an

    14    invisible market.  Do not make your loan


    15    products as a best kept secret.  Let the

    16    Filipino Americans that you have a great loan

    17    product.  Do work with the homeowners who are


    18    in foreclosure and also in default.  More

    19    foreclosure will mean lowering the home prices

    20    in those neighborhoods.  If this trend will

    21    continue, even the good paying mortgage


    22    borrowers will start to walk about because







                                                                        177


     1    they will no longer have the equity in their

     2    homes.

     3                After the merger, B of A will not


     4    profit from any foreclosure.  You will be at

     5    loss.  B of A should take the leadership to

     6    work with everyone in this foreclosure crisis.


     7                In closure, we appeal to Bank of

     8    America, who will be the largest home lender

     9    to give solutions to the homeowners who will

    10    be in any type of assistance.  We appeal to


    11    the Federal Reserve to have the conditional

    12    merger approval to commit to help the

    13    community needs and also to have an oversight

    14    committee to monitor if their commitments are


    15    being met.  Thank you.  

    16                MR. GNAIZDA:  -- Elaine

    17    Braithwaite.  As you have heard from the 15


    18    members of Greenlining, they support this

    19    acquisition but believe there must be more

    20    specificity and it must be developed quickly,

    21    including the input of Ken Lewis.  As Liam


    22    McGee said, there is much more to do.  We







                                                                        178


     1    concur.  And as he responded to a Federal

     2    Reserve question, we are going to have to do

     3    it with more creativity.  


     4                B of A cannot be Countrywide. 

     5    There is no support for Countrywide anywhere

     6    in this state.  The B of A has taken on a


     7    pariah.  As one member said, a devil.  We are

     8    expecting that the B of A will set the highest

     9    standards  immediately.  It must lead not just

    10    countrywide.  It must lead all banks in the


    11    same way that Countrywide led all banks

    12    negatively with the worst subprime.  The B of

    13    A standards should be very simple.  Would you

    14    make this loan to your mother?  That is all we


    15    ask.  

    16                The highest standard should be

    17    consistent with what presidential candidates


    18    Obama and Clinton have raised, what Maxine

    19    Waters has so eloquently raised this morning,

    20    and Jessie Jackson's representative has raised

    21    and what CRC has raised.  


    22                The 1.5 trillion is to be







                                                                        179


     1    commended, as Orson Aguilar stated.  It is by

     2    far the largest.  And the two billion in

     3    philanthropy is to be commended.  It is by far


     4    the largest.  But, all of us know that the B

     5    of A is going to dominate the home

     6    originations.  It will immediately be 25


     7    percent.  Within two to three years, it will

     8    be 35 to 40 and within five years, 50 percent

     9    of the market.  We, in California, expect one-

    10    third of that 1.5 trillion to go to California


    11    groups and B of A's loss mitigation is not

    12    acceptable.  Twenty million is a drop in the

    13    bucket.  As Orson Aguilar stated, we assume

    14    that there will be a 250 million dollar fund,


    15    or what is half of what Mozilo has taken from

    16    us.

    17                Lastly, Ken Lewis must visit


    18    California, much as he must visit Arizona. 

    19    And within the next 15 days, all of us expect

    20    that the B of A's top team, some of whom are

    21    represented here will be in the Inland Empire,


    22    meeting on the worse foreclosure crisis in the







                                                                        180


     1    country and within 30 days have a solution in

     2    the Inland Empire that will be a model for

     3    every crisis area in California, if not the


     4    nation. 

     5                And for the Federal Reserve, we

     6    say the following.  Act quickly as the B of A


     7    wishes, but act wisely.  Act with vision and

     8    compel the highest standard.  Would you make

     9    that loan to your mother?

    10                On behalf of Greenlining, we thank


    11    you all.

    12                DIRECTOR BRAUNSTEIN:  Thank you

    13    for your testimony today.  Could you please

    14    bring forward the next panel?


    15                Okay, good morning and thank you

    16    for joining us.  Just to restate some

    17    housekeeping, we have a timekeeper, you each


    18    have five minutes and you will be signaled

    19    when you have two minutes left and then when

    20    your time is up.  So, kind of keep an eye out

    21    for that.  And also, we ask that you begin


    22    each of your statements by clearly stating







                                                                        181


     1    your name and organization so that we can get

     2    it on the record.

     3                Thank you and you can begin, Ms.


     4    Trujillo.

     5                MS. TRUJILLO:  Sure.  I am Lez

     6    Trujillo, Field Director of ACORN Housing


     7    Corporation, which is a HUD housing counseling

     8    national intermediary.  ACORN housing has

     9    worked with Bank of America since 1990.  We

    10    have closed over 90,000 mortgages valued over


    11    12 billion with Bank of America.  We can

    12    safely say that this is the kind of community

    13    reinvestment lending that needed to be done. 

    14    Fixed interest rates, no teaser rates, no high


    15    fees, no negative amortization, no balloons,

    16    no prepayment penalties.  And even though many

    17    of the borrowers had a small down payment,


    18    nontraditional income, low credit scores and 

    19    risk, these Bank of America loans coming

    20    through the ACORN Housing Program, have none

    21    of the problems of the subprime market.  


    22                For this reason, ACORN is speaking







                                                                        182


     1    in favor of the Bank of America acquisition of

     2    Countrywide Home Loans.  Bank of America has

     3    been an industry leader and an excellent


     4    partner in delivering needed loan products to 

     5    under served communities.  We have complete

     6    confidence in the loss mitigation team of Bank


     7    of America.

     8                While hundreds of thousands of

     9    homeowners are at risk of foreclosure with

    10    Countrywide Loans, our experience with the


    11    Bank of America's team is that they are

    12    prepared to rework the loans into affordable

    13    and sustainable resolution.  And they are much

    14    better than most mortgage servicers.


    15                However, we must say that the

    16    Federal Reserve has not gone far enough in

    17    addressing the failure of the mortgage


    18    servicing industry in the investors to address

    19    this foreclosure crisis.  Instead of letting 

    20    each foreclosure workout drag on for months,

    21    the industry needs to adopt a simple


    22    streamline  affordability formula, based on







                                                                        183


     1    the incoming  expenses of the homeowners to

     2    quickly establish a sustainable house payment

     3    for the family.  And then, if the investor


     4    does not lose money when compared to

     5    foreclosure, modify the mortgage for the

     6    remaining life of the loan.


     7                The carrying costs of the current

     8    case-by-case system is a major drag on the

     9    investor and has serious consequences

    10    emotionally and financially to the stranded


    11    homeowner.  Our program with HSBC with an

    12    affordability formula gets resolutions in two

    13    weeks, not the three months we are seeing with

    14    other servicers.


    15                The next wave of problems will be

    16    from the pay option ARM which were sold to

    17    people with good credit.  The Federal Reserve



    18    needs to call for principal reduction, fixed

    19    interest rate and a ban on selling

    20    inappropriate loans to unsuspecting

    21    homeowners.  These homeowners did not deserve


    22    to get these complex loans with negative







                                                                        184


     1    amortization and no possibility of refinance. 

     2    The current move to require lower loan to

     3    value ratios in what are labeled as declining


     4    value communities, has set a standard of

     5    requiring higher down payments in communities

     6    which are disproportionately urban and


     7    minority.  This represents a new version of

     8    red lining.  It is far better to rely on more

     9    accurate appraisals than it is to penalize new

    10    buyers.


    11                Going forward, the Federal Reserve

    12    needs to make sure that the bad products

    13    peddled by the subprime industry do not define

    14    community reinvestment lending.  We have


    15    already seen mortgage lenders stop lending to

    16    people with credit scores below 620 and to

    17    price community reinvestment loans higher,


    18    even though they perform well.  This is just

    19    perpetrating all of the problems of red lining

    20    in the lower levels of home ownership for

    21    African American and Hispanic households.


    22                Our program with Bank of America







                                                                        185


     1    has shown that providing housing counseling,

     2    appropriate underwriting, and fixed interest

     3    rate loans will create thousands of well


     4    performing loans.  The high-risking mortgage

     5    lender, however, is under regulated mortgage

     6    market where mortgage brokers can sell


     7    adjustable rate loans, teaser rates, high

     8    fees, and prepayment penalties.  The Federal

     9    Reserve needs to embrace underwriting

    10    flexibilities tied to housing counseling,


    11    pricing discounts for well-counseled

    12    nontraditional loans in lender-community

    13    partnerships.  

    14                In the current environment, the


    15    exact opposite has happened and the home

    16    owners we know could succeed are being priced

    17    and underwritten out of the market.


    18                MS. SANBRANO:  Good morning.  My

    19    name is Angela Sanbrano.  I am the former

    20    Executive Director of the Central American

    21    Resource Center, CARECEN, which is located at


    22    2845 West 7th Street in Los Angeles.







                                                                        186


     1                I had the privilege of working

     2    closely with the staff of Bank of America

     3    during my 12 year tenure at CARECEN.  And


     4    CARECEN was founded 25 years ago by Central

     5    American refugees who were forced to leave

     6    their country due to the civil war.  CARECEN 


     7    has moved from a small storefront to owning a

     8    30,000 square foot building in the Pico Union/

     9    West Lake area, four miles west of downtown

    10    Los Angeles.  And last year CARECEN served


    11    over 75,000 low income immigrant families.

    12                Bank of America has been a strong

    13    pillar in support of CARECEN's becoming the

    14    largest Central American Community Center in


    15    the United States.  CARECEN in the community

    16    we serve has benefited from Bank of America's

    17    involvement and long-term commitment to


    18    community development in West Lake.  Seven

    19    years ago when the bank first interviewed the

    20    block-by-block program, CARECEN was selected

    21    as one of the five local community-based


    22    agencies to offer community referrals among







                                                                        187


     1    the community-based organizations and

     2    educational institutions with quality

     3    employment opportunities.  This program


     4    strengthened the networking among CEOs in the

     5    West Lake/Pico Union area offering a variety

     6    of services to the community.


     7                In 2005, CARECEN was selected as a

     8    neighborhood builder award recipient.  This

     9    support was critical investment in the

    10    organization's capacity building strategic


    11    planning and leadership development of

    12    emerging leaders.  Marvin Andrade, CARECEN's

    13    new Executive Director, is an example of the

    14    success of the emerging leaders' project


    15    supported by Bank of America.  

    16                We also have worked with

    17    Countrywide Home Loans.  Many of the families


    18    we served at CARECEN, including several of

    19    CARECEN's staff,  received home loans through

    20    the Countrywide program.  And Countrywide also

    21    helped many of the families in our area to


    22    become first time home owners.  Owning a home







                                                                        188


     1    is a most important asset in the Latino

     2    community and I trust that with a track record

     3    of Bank of America focusing on the financial


     4    needs of the community and the bank's

     5    involvement in strategic partnership, they

     6    help the development of our communities and


     7    the many families that need support in

     8    avoiding foreclosure of the mortgages, which

     9    is one of the most critical financial

    10    challenges facing our community.  


    11                We trust and we believe that a

    12    merger of Bank of America and Countrywide will

    13    be a positive step forward for our community. 

    14    And I think you very much for your


    15    consideration.  Thank you.

    16                DIRECTOR BRAUNSTEIN:  Thank you. 

    17    Mr. Andrade?


    18                MR. ANDRADE:  Good morning.  My

    19    name is Marvin Andrade.  I am the Executive

    20    Director at the Central American Resource

    21    Center CARECEN in Los Angeles.


    22                My organization serves low income







                                                                        189


     1    immigrant Latinos with legal services,

     2    education and technology, civic participation

     3    and employment for day laborers.  We are


     4    located in Pico Union/West Lake, a

     5    neighborhood referred as a primary portal for

     6    Latino immigrants throughout Latin America.


     7                In addition to the enduring

     8    relationship with Bank of America, CARECEN has

     9    also had a long-standing relationship with

    10    Countrywide Financial.  Together, we have


    11    assisted new immigrants to become home owners

    12    through the new immigrant loan program.  Both

    13    Countrywide and Bank of America have had

    14    booths at our annual community fair in order


    15    to educate our community over the many

    16    opportunities both companies have to offer.

    17                Owning a home is the single


    18    largest asset for Latino families and, like

    19    many others, it defines having a piece of the

    20    American dream.  We find it very positive and

    21    encouraging that Bank of America is willing


    22    and able to work with Countrywide and find







                                                                        190


     1    ways to assist the thousands of families in

     2    need, helping the community retain its assets

     3    and help them grow economically shows great


     4    corporate leadership and responsibility.  

     5                And so this is why we support this

     6    acquisition.  Thank you.


     7                DIRECTOR BRAUNSTEIN: Thank you

     8    very much.  Ms. Kaiser?

     9                MS. KAISER:  Thank you.  My name

    10    is Mary Kaiser and I am the President of the


    11    California Community Reinvestment Corporation. 

    12    I am here this morning also to testify in

    13    favor of the Bank of America-Countrywide

    14    merger.


    15                CCRC is a nonprofit lending

    16    consortia made up of banks in the State of

    17    California created in 1989 to finance what was


    18    then the lack of permanent financing for

    19    affordable rental housing in California.  This

    20    innovative financial model, which was spurred

    21    by the creation for the low income housing tax


    22    credit created some 19 years ago to provide







                                                                        191


     1    access to capital to low and moderate income 

     2    communities and now has become a model across

     3    the country.  And Bank of America was at the


     4    table from the very inception.

     5                B of A, along with the Federal

     6    Reserve Bank of San Francisco was part of the


     7    original task force providing the leadership

     8    for 56 other banks in California to join the

     9    membership and we formed our first loan pool,

    10    which became a replicable model throughout the


    11    country.  They continue to be at the table

    12    today, leading by example, encouraging banks

    13    to participate by providing representation on

    14    our Board and all of our loan committees.


    15                Their current Western Region

    16    Market Executive, Gail Lannoy just finished

    17    her third year as Board Chair and we have


    18    always had someone from Bank of America both

    19    on our board and all of our lending

    20    committees.  Even when B of A had their own

    21    community development bank and we, on any


    22    given day, competed with them, they offered







                                                                        192


     1    many of the same products we provided, they

     2    continued to support and provide that

     3    leadership and leading by example for other


     4    banks to stay in the consortia and leveraged

     5    over 400 million dollars in credit lines that

     6    we have today.


     7                B of A provides CCRC a 72 million

     8    dollar credit line for the funding of taxable

     9    mortgages.  They are a 23 percent participant

    10    in every loan that we make.  Since inception,


    11    we have funded over 554 million dollars in

    12    permanent loans, providing over 19,000

    13    affordable rental units to families and

    14    seniors earning 60 percent or less of the area


    15    median income.  

    16                In addition, many of these housing

    17    units are created by using the private


    18    activity bond in California and Bank of

    19    America is a 33 percent participant in each of

    20    the bonds that we source.  They provide CCRC

    21    a 35 million dollar credit facility for those


    22    transactions.  That 100 million dollars that







                                                                        193


     1    they have provided has now been revolved over

     2    the last 19 years, as we amass product and

     3    sell it into the secondary market.


     4                In addition, today CCRC has over

     5    184 million dollars in forward commitments,

     6    commitments we have made to provide permanent


     7    mortgages on products that are currently under

     8    construction and Bank of America is bound to

     9    participate in those as well.

    10                It is clear from their level of


    11    activity and our level of production that

    12    without their leadership, we would have had a

    13    very difficult time then, let alone now,

    14    finding that hundred million dollar credit


    15    facility.

    16                I would also like to emphasize

    17    that the credit quality of this affordable


    18    housing mortgage portfolio, which we have

    19    amassed under their leadership is a testimony

    20    to the ability to provide safe, sound lending

    21    products on products that serve such a


    22    critical market.  Three years ago, we launched







                                                                        194


     1    an equity product for the developers of for-

     2    sale affordable housing in California, the

     3    CCRC Workforce Housing Fund.  B of A committed


     4    three million dollars to that fund as well,

     5    which would have been ten percent of the total

     6    fund.  While this innovative product has


     7    fallen victim to the current real estate

     8    collapse, Bank of America was there for us, as

     9    well as for the fledgling developers who

    10    proved to be too fledgling for the market but


    11    they were there to weather the storm.  We

    12    still try to provide the financial tools to

    13    make for-sale affordable and available to the

    14    income levels that we serve.


    15                While CCRC's lending activities

    16    are confined strictly to California, I serve

    17    on a variety of boards throughout the country


    18    and I have yet to sit on one board where Bank

    19    of America hasn't provided leadership, as well

    20    as financial support.  Many of those

    21    organizations are here today.


    22                I applaud the bank's willingness







                                                                        195


     1    to take on the unknown risks associated with

     2    the acquisition of Countrywide.  Given what we

     3    now know to be the depth of the subprime


     4    implosion, I quite honestly am surprised that

     5    anyone would want to take on this acquisition,

     6    especially given the distractions in their own


     7    financial institution for the financial woes

     8    and the real estate woes across the country. 

     9    Clearly, they have both reputational and

    10    financial risk at stake.


    11                I am clearly not a fan of the

    12    evolution of the underwriting practices that

    13    got us all to this point, having been a banker

    14    for 35 years of my career.  But if they are


    15    willing to pledge their balance sheet and

    16    evaluate what can and cannot be fixed, how

    17    people can stay in their homes, how


    18    neighborhoods can be stabilized, I support

    19    them and our organization stands ready to

    20    participate in whatever ways it can to join

    21    the team in stabilizing our financial markets


    22    in California and our neighborhoods and the







                                                                        196


     1    families that they support.

     2                I trust that the regulatory

     3    environment which has certainly stepped up in


     4    this current day, will provide the oversight

     5    to ensure transparency through the transition

     6    and I support many of the detailed programs


     7    that have been presented here today to put

     8    specificity on their plans.  

     9                As a very astute Federal Reserve

    10    person said to me a few weeks ago, mistakes


    11    were made by all.  We didn't get here

    12    overnight and we won't get out of it

    13    overnight.  I support the acquisition and

    14    encourage others to give this organization


    15    proven to be committed to improving the

    16    communities they serve their support as well. 

    17    I can't figure out who else would be strong


    18    enough to take this on.  Thank you.

    19                DIRECTOR BRAUNSTEIN:  Thank you,

    20    very much.  Thank you for your testimony. 

    21                Next panel.  Okay, just to restate


    22    some housekeeping, we have a timekeeper.  You







                                                                        197


     1    each have five minutes.  You will get a sign

     2    when two minutes left and then when your time

     3    is up.  And I would ask that you start your


     4    statements by stating your name and your

     5    organization at the top.  And I gather, Ms.

     6    McNeil, you are substituting for Gilda Haas? 


     7    You may start.

     8                MS. MCNEILL:  Hi.  My name is

     9    Sandra McNeill.  I am with the Figueroa

    10    Corridor Community Land Trust.  Our land trust


    11    is based in the neighborhoods to the south of

    12    this building, which stretch three miles from

    13    the Staple's Center into south LA.  We

    14    established the land trust as a response to


    15    the building boom in downtown LA and around

    16    the University of Southern California, which

    17    has driven property values up dramatically


    18    since 2000. 

    19                In these past years, we have seen

    20    many hundreds of families who have been long-

    21    term renters forced out of their homes and


    22    subsequently out of our neighborhoods by way







                                                                        198


     1    of development, which has brought soaring

     2    investment income to some but economic and

     3    social devastation to so many local families. 


     4    We continue to be a neighborhood of renters

     5    with 86 percent of folks who live in our

     6    neighborhoods not owning their homes.  Incomes


     7    are low, at half of the median income, which

     8    means that a family of four living on under

     9    $2,500 a month.  

    10                We established our land trust as


    11    an effort to remove land from the speculative

    12    market, to steward that land in perpetuity and 

    13    make it available to build housing that is

    14    affordable to local families.  It is our


    15    effort to stabilize property values, so at

    16    least some local families are not at the mercy

    17    of our real estate market, which is bucking


    18    wildly out of control.

    19                I tell you this because in the

    20    month of February alone, Countrywide

    21    foreclosed on 29 homes in our neighborhood, 29


    22    families who had represented stability for our







                                                                        199


     1    community which for decades has been ravaged

     2    by the dynamics of absentee ownership.  Those

     3    families lost their homes.  Twenty-nine may


     4    seem like a small number in the scope of this

     5    national crisis, but for us these foreclosures

     6    mean that the Carcamo family, along with the


     7    Hortons, the Medranos and the Sabirs, the

     8    Dellatores, the Garcias, the Randolphs, the

     9    Walcotts, the Estradas, and 18 other families

    10    will no longer  be sweeping up the sidewalk in


    11    front of their homes, no longer attending the

    12    community meeting about the new school to be

    13    built on the adjacent block, no longer

    14    shopping at the corner store, or perhaps no


    15    longer renting their home to another family

    16    who plays just those types of roles in the

    17    community.


    18                Our neighborhoods cannot handle

    19    another wave of speculators sweeping through

    20    and feasting on the carrion left by this

    21    particular disaster.  We already have such


    22    startling levels of absentee ownership in our 







                                                                        200


     1    neighborhoods because of a long history of

     2    failed policies and unjust practices, race

     3    restricted housing covenants which were


     4    followed by decades of redlining, the city's

     5    lack of investment over decades in services

     6    and infrastructure in our working class


     7    communities which have left our streets frayed

     8    and tattered and right for the picking. 

     9    Salaries which are still held down at inhumane

    10    levels because of immigration policies that


    11    won't allow some of our neighbors who have

    12    been working and paying taxes in our country

    13    for over a decade to obtain legal status.

    14                Every foreclosed property picked


    15    up by speculators will further aggravate our

    16    own economic crisis locally.  We want an

    17    intelligent response to this situation.  A


    18    creative response as offered by Mr. McGee

    19    earlier.  First and foremost, as those who

    20    have spoken before me have said, every effort

    21    must be made to avert foreclosure and keep


    22    people in their homes with affordable







                                                                        201


     1    mortgages.  By revaluing and restructuring a

     2    defaulted mortgage based on the auction price

     3    of a home, Bank of America would be working to


     4    keep those families in their homes and

     5    communities and to keep that property out of

     6    the hands of speculators.


     7                In the unfortunate situation where

     8    a mortgage proceeds, we do expect Bank of

     9    America to facilitate the transfer of those

    10    properties to a nonprofit affordable housing


    11    developer or a land trust.  This means that we

    12    need those properties bundled and discounted

    13    and we need to be given time to work with our

    14    local government agencies to arrange the


    15    funding.  This will not happen at the speed of

    16    an auction but we absolutely need the bank to

    17    collaborate with us again to keep these


    18    properties out of the hands of speculators and

    19    instead to house community residents at

    20    affordable rents and mortgages.

    21                In the case that there are renters


    22    in the property, as with over 35,000 of







                                                                        202


     1    Countrywide's mortgages in California, we must

     2    work to keep those renting families in their

     3    homes.  Our housing market and economy simply


     4    cannot handle additional evictions on top of

     5    the 80,000 eviction notices already filed in

     6    the County of LA every year.


     7                Coming into possession of hundreds

     8    of loans in our neighborhoods means that Bank

     9    of America will be in a position to create yet

    10    more instability in our community or to work


    11    collaboratively with us to increase the

    12    stability of our neighborhoods.  We expect the

    13    latter and ask the Federal Reserve to support

    14    that aim by laying necessary conditions on


    15    this merger.  Thank you.

    16                DIRECTOR BRAUNSTEIN:  Thank you. 

    17    Mr. Baldwin?


    18                MR. BALDWIN:  Good afternoon.  I

    19    am Allen Baldwin, Executive Director, Orange

    20    County Community Housing Corporation.

    21                In Orange County, Countrywide Home


    22    Loans was under one in Orange County for home







                                                                        203


     1    loans and this was in 2006 and B of A number

     2    three.  Countrywide Bank was number five for

     3    home purchase loans.  The Federal Reserve Bank


     4    can correct bad lending practice and

     5    foreclosure practice for the majority of those

     6    in default danger in my county of Orange.  


     7                I am here to encourage the Federal

     8    Reserve to use this seemingly necessary

     9    acquisition to correct fatal errors in the

    10    mortgage lending system in the United States. 


    11    If not with this acquisition and if not now,

    12    it will never be done and the once revered

    13    Federal Reserve Bank will suffer to the point

    14    that even reorganization will not save it from


    15    the scrap heap of failed bureaucracies.

    16                Thank you for considering our

    17    request for this public hearing.  We believe


    18    that your willingness to open this hearing

    19    will result in actions by one of this nation's

    20    largest financial institutions that will

    21    create community reinvestment relationships


    22    that are important to the restoration and







                                                                        204


     1    vitality for home ownership, neighborhoods,

     2    communities and the banking confidence.

     3                As a 30 year major customer of the


     4    Bank of America, as well as a charity with a

     5    mission of transitioning extremely low income

     6    families to greater self-sufficiency, we and


     7    our clients have a life-sustaining interest in

     8    this merger, resulting in better banking for

     9    low income persons in low income

    10    neighborhoods.  As a borrower and a grantee of


    11    the Bank of America, we have an ongoing

    12    interest in seeing this merger strengthen our

    13    neighborhoods and our families.  As an

    14    educator of families in financial planning, we


    15    have an interest in working more closely with

    16    the merged institutions which will engage the 

    17    community in substantive measured agreements,


    18    to provide grants, counsel, and products to

    19    low income persons and communities.

    20                Providers of housing for low

    21    income families have had waiting lists that


    22    provide little hope for those looking for







                                                                        205


     1    affordable housing.  There is no room at the

     2    inn for families that are being displaced by

     3    lenders, especially by those such as


     4    Countrywide, who provide most of the subprime

     5    and ARM mortgages in the United States.  There

     6    is no room for those displaced by the Bank of


     7    America, once a major subprime lender and,

     8    until recently, they have been one of the

     9    major packagers of subprime loans in a

    10    mortgage backed securities.  The Federal


    11    Reserve now has an opportunity to provide

    12    leadership that will result in the restoration

    13    of these families to debt products that will

    14    restore their banking relationships, our


    15    neighborhoods, and this nation.

    16                The mortgagees who live in these

    17    foreclosed properties and the tenants who rent


    18    properties in foreclosure are not the problem. 

    19    They are the customers of a restored mortgage

    20    industry in this nation.  The Federal Reserve

    21    Bank has its foot on this nation's recovery


    22    throttle.  If you don't use the opportunity of







                                                                        206


     1    this merger to speed up recovery of the

     2    banking industry through the creation of a

     3    better more able mortgagee, you will never


     4    again have such an opportunity.  The combined

     5    strength of Countrywide and Bank of America

     6    can take regulatory steps at this time that


     7    can get this nation's borrowers and savers

     8    back on their feet, so as to get this nation's

     9    banking industry back on its feet.

    10                Just one comment and I just got an


    11    email from one of the major packagers of tax

    12    credits, in the event, he says, that Bank of

    13    America is able to shelter significantly their

    14    tax liability as a result of the acquisition


    15    through attendant losses post-merger, there

    16    could be a dramatic adverse impact on the

    17    bank's low income tax credit investment and


    18    the future development of low income housing

    19    in the nation.  So, one of the questions I

    20    would ask that the Federal Reserve to do is to

    21    ask with that, how much of that tax liability


    22    is going to be sheltered and where will the







                                                                        207


     1    bank be on tax credit investments post-merger.

     2                Thank you.

     3                DIRECTOR BRAUNSTEIN:  Thank you


     4    very much.  Ms. Burks? 

     5                MS. BURKS:  Thank you.  For the

     6    record, my name is Gail Burks.  I am President


     7    and CEO with Nevada Fair Housing Center in Los

     8    Vegas, Nevada.  Our program serves the state,

     9    as well as three sister states, Washington

    10    state, Arizona, and Utah.


    11                I would like to talk a little bit

    12    about the economic impact of the foreclosure

    13    in terms of the Nevada perspective and then go

    14    to what we have been working through in our


    15    state with respect to potential solutions,

    16    some of which I think could be addressed

    17    today.


    18                In Nevada in 2006, we had 4,731

    19    foreclosures.  As of October 2007, that number

    20    rose to 28,655.  Forty-seven percent of those

    21    properties are vacant.  According to data that


    22    was submitted to the Nevada legislative







                                                                        208


     1    interim subcommittee on mortgage lending from

     2    2006 to 2007, the total number of foreclosures

     3    start rose from 2.8 percent to 4.1 percent. 


     4    Now, although this is below the national

     5    average, we continue to see this rise to the

     6    point that today we were at about 1.57 percent


     7    per quarter.

     8                I would like to make a distinction

     9    between what we consider to be clients that

    10    are just in need of counseling, versus clients


    11    that truly are in need of foreclosure

    12    prevention.  And for the record, I would like

    13    to say in our community as of last month, Bank

    14    of America had less than 20 foreclosures,


    15    which is a very, very, very minute number

    16    compared to other lenders in the area.

    17                Of those clients seeking


    18    assistance, we consider clients that need

    19    delinquency counseling are those clients that

    20    are dated 30 days late or less on their

    21    mortgage.  Those that are in default, the ones


    22    that we call foreclosure starts, are those







                                                                        209


     1    clients who are 31 days plus past due, meaning

     2    an actual public notice has been filed with

     3    the County Recorder.  The others that are in


     4    foreclosure, means they have a sale date

     5    pending.  And typically, an examination of

     6    actual files shows that most of these


     7    consumers, if we had the ability and we could

     8    stabilize the housing market, could actually

     9    be refinanced because they could afford the

    10    loan, if it were a different product and if


    11    the loan to values were there.

    12                In my written testimony, I

    13    provided on pages three and four a list of zip

    14    codes hardest hit by the foreclosures that I


    15    have talked about.  Only 32 percent of the

    16    homes in foreclosure in Nevada are what we

    17    call investor loans.  We begin to see those in


    18    2007 and today, we are seeing mostly owner

    19    occupied loans.

    20                The general concern, as one of our

    21    state senators put it, is that Wall Street


    22    investors and corporate builders that have a







                                                                        210


     1    significant influence on the mortgage lending

     2    industry assume no responsibility to the

     3    communities that are affected.  This comment


     4    was made in looking at what we are seeing in

     5    Nevada, a phenomenon that we call home rage. 

     6    This that we helped in conjunction with Power


     7    House Realty sheltered the media on the 23rd

     8    of this month are consumers who are not

     9    typically connected to a nonprofit that are

    10    literally destroying the homes, causing


    11    financial damage to common interest

    12    communities and to lenders because of their

    13    frustration.  We believe if we could connect

    14    more consumers with assistance, we could sort


    15    of overcome some of this rage and clear some

    16    of the vacant inventory in our community.

    17                Now, in developing a plan, why


    18    should the local economic conditions play a

    19    factor?  Well, in Nevada, for example, the

    20    2007-2008 taxable value of single family

    21    residential development was worth 148 billion


    22    dollars, according to applied analysis report







                                                                        211


     1    to our state legislative subcommittee.  As we

     2    lose property through foreclosure, a near one

     3    percent decline in value results in greater


     4    than a one billion dollar impact on

     5    residential homeowners.  So we are concerned

     6    that whatever we come up with, it helps


     7    stabilize our market.

     8                We have a couple of

     9    recommendations that we believe would be

    10    specific and we know that there is a tendency


    11    to come up with national initiatives that are

    12    supposed to trickle down.  Bank of America has

    13    been a good partner in our community before

    14    with respect to first time home buyers and


    15    with respect to community development.  And if

    16    I could just run through those real quick, if

    17    I may.


    18                First, the development of a

    19    market-specific product that would address the

    20    issues germane to Nevada.  We are still a

    21    vibrant growing community.  Unlike some


    22    communities, we do have an increased growth







                                                                        212


     1    rate.  The renter notification policy, we have

     2    a high incidence of renters that are adversely

     3    affected.  We have worked together with such


     4    agencies as United Way and the American Red

     5    Cross to provide temporary housing, to provide

     6    debit cards for things like clothing and food


     7    when they are evicted by the constable.  And

     8    in our state, an eviction can occur three days

     9    after the foreclosure, which technically means

    10    you can be locked out in four days.


    11                We are looking for a market-

    12    specific  plan to reduce the inventory,

    13    although we had started some of these

    14    discussions prior to the announcement of the


    15    merger with Countrywide, we have not yet

    16    developed anything specific for the community

    17    and so we look forward to doing that.  We


    18    believe perhaps a temporary CRA type credit

    19    for dilapidated properties that are really

    20    impacting the value of the community.  If they

    21    are given to the community, to local


    22    government, or to nonprofits through REO







                                                                        213


     1    gifting could be offered.  We also believe in

     2    incentive or potential investment credit for

     3    the principal  reduction of the principal


     4    balance of clients that cannot be refinanced

     5    would also be helpful.  Again, many of these

     6    clients do have good credit and we could


     7    refinance the loans, but the loan to value is

     8    not there.

     9                And finally, we think we need to

    10    track the success of servicer modifications. 


    11    We negotiate our cases in bulk.  We do the

    12    actual negotiation with the lender versus

    13    telling them to call a lender.  We believe

    14    that is a more successful model than referring


    15    people to just a toll free number.  Thank you.

    16                DIRECTOR BRAUNSTEIN:  Thank you. 

    17    Mr. Cavazos?


    18                MR. CAVAZOS:  Yes, good afternoon. 

    19    My name is Rudy Cavazos and I am the Regional

    20    Director of Development for Money Management

    21    International.  I also sit as chairman of the


    22    Asset Building Committee with the Alliance for







                                                                        214


     1    Economic Inclusion.

     2                Again, thank you for providing me

     3    with the opportunity to address this panel


     4    about our organization's long-term partnership

     5    with Bank of America.  For over 50 years,

     6    Money Management International and its family


     7    of consumer credit counseling services

     8    agencies have worked to support clients with

     9    one-on-one budget and debt counseling and

    10    education.  Since 2004, Bank of America has


    11    supported these efforts by providing

    12    contributions to fund some of the free or low-

    13    cost educational services we offer.

    14                In 2007, MMI reached over 80,000


    15    consumers with our community education and

    16    outreach programs.  This education ensures

    17    that individuals and families are equipped to


    18    navigate today's increasingly complex

    19    financial world.  Bank of America has created

    20    a seamless relationship between business,

    21    community, consumers, and financial education. 


    22    To demonstrate why Bank of America's







                                                                        215



     1    commitment to education fits so well within

     2    out mission, I will provide a brief overview

     3    of Money Management International.


     4                Money Management International and

     5    its family of consumer credit counseling

     6    service agencies is the largest nonprofit


     7    credit counseling agency and educational

     8    organization in the country.  Our goal is to

     9    assist consumers and families who are

    10    experiencing financial difficulties and


    11    educate them about their healthier financial

    12    habits, provide proactive and confidential

    13    financial counseling and education.  We are

    14    proud to be the member of three of the


    15    industry's trade associations, the National

    16    Foundation of Credit Counseling, the

    17    Association of Independent Consumer Credit


    18    Counseling Agencies and the American

    19    Association of Debt Management Organizations. 

    20    In addition, Money Management International

    21    has gone through a stringent third-party


    22    accreditation process with the Counsel on







                                                                        216


     1    Accreditation.

     2                Last year, we provided free

     3    counseling services to more than 217,000


     4    financially stressed consumers, including

     5    100,000 free housing counseling sessions.  In

     6    fact the need for housing-related services has


     7    grown tremendously in the past few years.  We

     8    provide foreclosure prevention and loss

     9    mitigation with counseling services to

    10    thousands of home owners through the


    11    nationally endorsed Hope Hotline and our own

    12    housing counseling department.  Above all, our

    13    mission is to improve lives through financial

    14    education.


    15                Bank of America is a great example

    16    of a corporation that is truly dedicated to

    17    improving financial literacy.  And since 2004,


    18    Bank of America has been a key supporter of

    19    our educational initiatives through the Bank

    20    of America Charitable Foundation.  The

    21    Foundation provides funding for community-


    22    based financial education in Arizona, New







                                                                        217


     1    Mexico, Rhode Island, and Texas.  Local Bank

     2    of America managers work closely with our

     3    education teams in each state to carry out


     4    programs designed to meet community needs,

     5    especially to low to moderate income consumers

     6    and households.  These programs have helped


     7    more than 5,000 consumers and their families

     8    build a strong financial foundation.

     9                Our partnership has grown and last

    10    fall, Bank of America invited us to conduct a


    11    financial literacy campaign, bringing out

    12    understanding money and credit workshops to

    13    seven states, Arkansas, Arizona, Illinois,

    14    Kansas, Missouri, and Texas.  The UMC


    15    workshops are designed to provide low to

    16    moderate income consumers with financial

    17    empowerment and self-sufficiency to cover five


    18    basic steps, assessing financial situations,

    19    setting financial goals, creating spending

    20    plans that work, using credit wisely, and

    21    committing to savings plans.  


    22                Our organization also partners







                                                                        218


     1    with Bank of America Credit Counseling Grant

     2    Advisory Board.  Since its inception in 2005,

     3    the Board has provided funding for special


     4    projects designed to address financial

     5    education needs nationwide.

     6                For example, in 2006 MMI received


     7    funding to develop and launch online financial

     8    education in two formats, live web seminars

     9    and on-demand webcasts.  In 2007, MMI received

    10    funding to expand our Certified Money


    11    Management Volunteer Program, increasing our 

    12    capacity to meet growing demand for in-person

    13    community based education.  Our volunteer

    14    program now incorporates advances in best


    15    practices, volunteer engagement in online

    16    communication, allowing us to attract more

    17    community volunteers, from baby boomers,


    18    leaving a workforce to financial service

    19    professionals.

    20                Therefore, I believe that our

    21    partnership demonstrates Bank of America's


    22    dedication to building the financial well-







                                                                        219


     1    being of its customers and low to moderate

     2    income consumers in the communities they serve

     3    nationwide.  We are proud of our partnership,


     4    what it has accomplished in communities across

     5    America and are excited about the potential of

     6    working with Bank of America and future


     7    financial educational initiatives.

     8                Thank you.

     9                DIRECTOR BRAUNSTEIN:  Thank you

    10    very much.  Thank you to this panel.  


    11                And could the next panel please

    12    come forward? 

    13                Okay, welcome.

    14                UNIDENTIFIED SPEAKER:  Welcome.


    15                DIRECTOR BRAUNSTEIN:  Just to go

    16    over housekeeping notes, you have five minutes

    17    for your testimony and there is a timekeeper


    18    that will show you a sign when you have two

    19    minutes left and then when your time is up. 

    20    Kind of keep an eye over there.  And then

    21    please start each statement by stating your


    22    name and organization, so that we can get it







                                                                        220


     1    on the record.

     2                Okay, thank you and you can go

     3    first, Mr. Lizarraga.  Oh, no, I'm sorry.  Mr.


     4    Knowles.

     5                MR. KNOWLES:  Hello, my name is Ty

     6    Knowles and I am a home owner in Southern


     7    California and I represent a lot of the issues

     8    that you have heard here, foreclosures.  And

     9    I am proud to be able to speak my piece and

    10    represent as a person who has dealt with a


    11    foreclosure.

    12                I have been dealing with

    13    Countrywide now.  So my attempt here today

    14    will be to give you a synopsis and timeline of


    15    what has happened.  I have been dealing with

    16    Countrywide now for over two years. 

    17    Initially, my problem with Countrywide did not


    18    begin until June 2007.  I contacted

    19    Countrywide last June to request a loan

    20    modification on a loan to get a fixed rate. 

    21    We were falling one month behind in our


    22    mortgage and I immediately contacted them and







                                                                        221


     1    notified them of the problem.  They requested

     2    I write a hardship letter and submit my

     3    financials, along with check stubs.  The


     4    letter and documents were faxed to them on

     5    July 19th of 2007.  I have a copy of the

     6    letter with me today.


     7                I got a call a couple of days

     8    later from a very rude and arrogant person

     9    telling me she was my workout agent and did

    10    not qualify for loan modification but they


    11    would put us on a repayment plan.  I asked if

    12    there were any other options.  She explained

    13    that that was the only option.  Initially, I

    14    was skeptical but she explained to me that


    15    these payments had to be made through Western

    16    Union and I could not pay on line or mail my

    17    payments.  I should note this was in addition


    18    to my normal payments of my house mortgage of

    19    over $500 extra per month.

    20                During the time I was on the

    21    repayment plan, I ran our credit to see if we


    22    could get a home loan, away from being with







                                                                        222


     1    Countrywide.  We then noticed our credit

     2    scores had started to plummet significantly. 

     3    I called Countrywide and was told my workout


     4    agent had changed.  I left a message to have

     5    my workout agent call.  I kept calling and got

     6    no response, got no phone call.  I asked for


     7    the supervisor and manager but still not

     8    response.  I continued to pay on the repayment

     9    plan.

    10                Then toward the end of October of


    11    '07, I saw a commercial or advertisement

    12    announcing the New Hope Team at Countrywide. 

    13    I thought, finally, help.  I knew the team was

    14    put in place to help people which were really


    15    in trouble such as ourselves, but I thought

    16    maybe they could help.  Again, I start leaving

    17    messages for my workout agent.  I spoke to a


    18    loan consultant at Countrywide who said he

    19    would relay the information to the workout

    20    agent and he gave him a call.  He looked at

    21    the notes in my file and said I would not


    22    qualify for a loan modification because I was







                                                                        223


     1    current with my loan and I would have to be in

     2    default before they could help us.  He told me

     3    to stop my payments, then I would qualify in 


     4    need of help.  That was at the end of October. 

     5    He said the process should take seven to ten

     6    business days to process.


     7                I waited and waited.  No letter. 

     8    No call.  I called and spoke to another rep

     9    who told me that the paperwork was in process

    10    and someone should call me in three business


    11    days.  I asked to be transferred to my workout

    12    agent.  I was told the system does not work

    13    that way.  I leave a message and the workout

    14    agent will call me.


    15                Out of frustration, I called and

    16    kept pushing numbers in the hopes of getting

    17    someone live.  Nothing. I finally tried


    18    dialing different numbers and I got a person

    19    in another area who was very helpful and tried 

    20    to help me.  She said she sent an email and

    21    message to her supervisor.  She gave me her


    22    direct number, if no one called back. 







                                                                        224


     1    Finally, someone who cares at Countrywide.

     2                Days would go by.  Calls made to

     3    Countrywide, different reps would give me


     4    different waiting periods.  Three business

     5    days, five business days.  I'm thinking it has

     6    to be some type of nightmare.  Why don't they


     7    call us back?  Each time I called, the loan

     8    consultant service rep reviews my file and

     9    tells me that someone will call back.

    10                MS. KNOWLES:  Hi, my name is Diane


    11    Knowles.  I just wanted to share with everyone

    12    what actually happened that sort of was the

    13    breaking point for us in our home.  We had

    14    been in our home for 20 years.  We can afford


    15    our mortgage.  That is not the issue.  The

    16    issue is how Countrywide is actually dealing

    17    with their customers.  I mean, we have made


    18    tons of calls to them.  No one has called us

    19    at all.  I am leaving messages to have a new

    20    workout agent call me.  They are going to send

    21    that person an email.  They send the


    22    supervisor an email.  No one calls at all.  







                                                                        225


     1                We were home one Saturday and it

     2    just broke me down completely to see someone

     3    come up to your house and take a picture of


     4    your house.  You are like what is going on? 

     5    We can afford our mortgage.  Why are they not

     6    calling us back?  And so that day, that


     7    Saturday, I was like in tears and I called

     8    Countrywide again and found out like on the

     9    weekends, Saturday and Sundays, the calls are

    10    routed to India.  


    11                A person came on the phone and

    12    said basically not to worry.  And I was like

    13    you have no idea what I am experiencing on my

    14    end.  I appreciate you saying that but you


    15    don't understand.  Someone just took a picture

    16    of our home.  And so he looked in the system,

    17    looked in the system.  He ended up getting the


    18    home telephone number to our workout agent. 

    19    Me not knowing that that was her home number,

    20    I called and thought I would leave a message. 

    21    Hopefully the person would call me on Monday.


    22                So, I called, she answered the







                                                                        226


     1    phone and she was like why are you calling? 

     2    This is  my home.  Who are you?  And I said I

     3    am a Countrywide customer.  I gave her the


     4    name and number of the person in India who

     5    gave me her number.  And she was like well how

     6    did he get my home number?  And I am like I


     7    don't know but can you help us?  Like, I am

     8    desperate at this point.  So, she takes all

     9    the information, our loan number, everything

    10    and  says she promises to call on Monday.


    11                And so she does call and she is

    12    like can you submit your financials again? 

    13    Now, she told me she has anywhere from 1,000

    14    to 1,500 cases, each of the reps in their


    15    office and that she will definitely put mine

    16    ahead of all the other files once she gets in. 

    17    She is new in the department and she will see


    18    what is going on.  

    19                I just feel like I am so

    20    frustrated.  We can afford our mortgage.  Why

    21    are we grouped in this pile of like, this


    22    black hole and no one is trying to help us? 







                                                                        227


     1    And we are reaching out to them and they are

     2    not responding to us.  And I am just like

     3    fearful what is going to happen when Bank of


     4    America comes.  Like, what is going to happen

     5    to us?

     6                MR. KNOWLES:  The issue here is


     7    that our mortgage, we were not in the recent

     8    subprime rate issues.  

     9                MS. KNOWLES:  It was an interest

    10    only.


    11                MR. KNOWLES:  It was not an

    12    interest only loan.  Our mortgage was sold to

    13    Countrywide from another competitor.  And once

    14    we were told to stop paying our mortgage, we


    15    did what we could to quality for this Hope

    16    Program.  We then end up being in default.  We

    17    then see our foreclosure notice on our home. 


    18    You know what that means with your FICA score. 

    19    Okay?  So, we cannot qualify for even the

    20    amount of money to get out of this hole.  Yet,

    21    we had an April 15th sales date.  By the


    22    grace, we were told this person postponed it







                                                                        228


     1    and now it is May 15th.  So at this very

     2    moment, at this very minute, we have a May

     3    15th sales date on our house in which we can


     4    pay the mortgage.  We have no problem with

     5    that.  But we cannot, we are unable to get

     6    anyone at Countrywide to establish a


     7    modification plan or any plan for us to pay

     8    back our mortgage.

     9                We are homeowners.  We are

    10    Americans and we pay our taxes.  And I just


    11    think that is an atrocity to a lot of people

    12    that this is happening to all across the

    13    country.

    14                Thank you.


    15                DIRECTOR BRAUNSTEIN:  Thank you. 

    16    Ms. Rubio?

    17                MS. RUBIO:  Okay.  Hello and good


    18    afternoon.  My name is Angelica Rubio and I am

    19    the Director of the East LA Community

    20    Corporation's First Time Home Buyer and

    21    Financial Literacy Department and a former


    22    housing counselor for a foreclosure prevention







                                                                        229


     1    program.  I would like to thank the Federal 

     2    Reserve for allowing me to speak today on

     3    behalf of our clients.  


     4                As advocates, East LA Community

     5    Corporation asks that the merger between Bank

     6    of America and Countrywide be halted until


     7    Bank of America builds and establishes an

     8    infrastructure that can effectively respond to

     9    the subprime foreclosure crisis.  A merger

    10    should be contingent on making this happen.


    11                Since 2006, East LA Community

    12    Corporation's housing counselors have been

    13    answering calls from homeowners facing

    14    foreclosure throughout Southern California. 


    15    These calls, steadily increasing over time in

    16    the early months of 2007, were the beginning

    17    of a tidal wave of foreclosures that has


    18    destroyed the American dreams of millions of

    19    homeowners.  This waive prompted us to launch

    20    our foreclosure prevention program and to

    21    build the infrastructure necessary to conduct


    22    face-to-face counseling and advocate to







                                                                        230


     1    lenders on behalf of our clients.  

     2                Since June 2007, we have served

     3    over 200 families.  Thirty percent of those


     4    clients have held subprime loan products from

     5    Countrywide.  For many families who purchased

     6    their home in 2005 through 2006, their


     7    interest rates have begun to reset and it is

     8    almost impossible to keep monthly payments

     9    affordable.  The resulting losses of homes are

    10    putting families out in an extremely tight


    11    rental market.  In this situation,

    12    homelessness is a very real risk.  

    13                It is East LA Community

    14    Corporation's position that neither


    15    Countrywide nor Bank of America has equipped

    16    themselves to effectively deal with this

    17    situation.  During the time in which we have


    18    been working with families on loss litigation,

    19    Countrywide has been the most difficult

    20    mortgage company to work with.  Not one loan

    21    modification or loan workout that is both


    22    logical and realistic has been granted by







                                                                        231


     1    Countrywide.  

     2                In the beginning, we understood

     3    the limited capacity and/or the challenges


     4    that they faced, not having prepared for the

     5    initial wave of foreclosures in 2007, and

     6    thus, had no formal institutionalized


     7    structure to deal with the sudden increase in

     8    defaults.  As advocates, we were patient and

     9    worked diligently to support countrywide,

    10    understanding that it was difficult to handle


    11    the influx of calls coming into the servicing

    12    centers all over the country.  We were told

    13    that a structure was being implemented and we

    14    hoped for the best in the coming months. 


    15                However, more than a year has

    16    passed and nothing has changed.  Countrywide

    17    has yet to implement a cohesive infrastructure


    18    and an overall consistent protocol which would

    19    facilitate loss mitigation.  If Countrywide

    20    would develop procedures and protocols to

    21    assist families facing foreclosures, more


    22    families could stay in their homes.  







                                                                        232


     1                While Countrywide's marketing

     2    implores their customers to call them

     3    immediately, stating that if the customer does


     4    not take the first step, nothing can be done,

     5    we at ELAC happen to believe that this is

     6    false advertising.  On numerous occasions, we


     7    have seen the client take the first step to

     8    call and Countrywide does nothing.  Instead,

     9    we are met with challenges.  The loss of

    10    third-party authorization forms.  The constant


    11    re-faxing of documents.  Spending close to an

    12    hour on hold before being able to speak to

    13    someone.  And when we finally do get through,

    14    we are transferred to someone that might be


    15    able to help.

    16                This is a daily challenge that is

    17    met by thousands of advocates all over the


    18    country.  If those of us in this line of work

    19    who have become very familiar with this

    20    process are having a difficult time, imagine

    21    how much more difficult it is for the millions


    22    of customers losing their homes at this every 







                                                                        233


     1    moment.

     2                I have been working with the

     3    homeowner Leonardo Guzman since late 2007.  He


     4    is currently a customer of Countrywide who has

     5    diligently worked with me to find a solution

     6    to his problem.  We pursued an FHA secure loan


     7    product for Mr. Guzman and we began to work

     8    with the Countrywide agent, who informed us

     9    that she would be able to help.  While the FHA

    10    secure is not the best loan product for


    11    everyone, for Mr. Guzman, he is one of the

    12    lucky few who could be saved by this program.

    13                After weeks of working with the

    14    Countrywide agent to produce the typical


    15    documents needed to close on a refinance, the

    16    loan was submitted to underwriting.  However,

    17    we soon received a call from the agent who had


    18    been told that Countrywide was not processing

    19    these FHA secure loans and that she would no

    20    longer be able to assist us.  

    21                The FHA secure loan product was


    22    created by the federal government to assist







                                                                        234


     1    clients like Mr. Guzman, yet with

     2    Countrywide's inability to process this loan 

     3    and its lack of interest in changing the terms


     4    of the current loan, my client will lose his

     5    home.

     6                Bank of America is no better


     7    equipped to handle the millions of loans it

     8    will inherit from Countrywide.  Case in point,

     9    ELAC is currently working with Albert Medina,

    10    who is having difficulties making payments on


    11    his home, whose interest rate recently

    12    adjusted and has done all he can to maintain

    13    payments in order to remain in his home.

    14                Last month, we contacted Bank of


    15    America in hopes to pursue a workout for my

    16    client.  The response that I was given from

    17    Bank of America is that since client is not


    18    yet behind on his mortgage payment, they are

    19    unable to do any sort of workout until he is

    20    at least three months behind.  

    21                This is an example of how ill-


    22    equipped Bank of America is to take on any







                                                                        235


     1    more loans than it can possibly handle. 

     2    Purchasing Countrywide would result in an

     3    incredible disservice to millions of families


     4    all over the country.  

     5                In recent months, Bank of America

     6    and Countrywide have been all over the news


     7    making promises of helping their customers,

     8    giving away millions of dollars to counseling

     9    agencies, attempting to prove to us that they

    10    are doing all they can to help their


    11    customers.  However, this money and this

    12    marketing ploy is pointless if advocates like

    13    myself are unable to have our demands met on

    14    the other end of the phone.


    15                The struggles of families like Mr.

    16    Guzman and Mr. Medina are one of many reasons

    17    why East LA Community Corporation is opposed


    18    to this merger.  Thank you.

    19                DIRECTOR BRAUNSTEIN: Thank you

    20    very much.  Mr. Lizarraga.

    21                MR. LIZARRAGA:  Good afternoon. 


    22    My name is David Lizarraga and I represent







                                                                        236


     1    TELACU, one of America's largest, oldest, and

     2    most established Community Development

     3    Corporations.


     4                For the past 40 years, TELACU has

     5    fulfilled its mission by creating jobs,

     6    providing access to capital, revitalizing


     7    communities, empowering young people and

     8    veterans seeking an education, and providing

     9    affordable housing for families that comprise

    10    our workforce, and for senior citizens who


    11    have built our society.

    12                We accomplish these things through

    13    a unique model in which our parent nonprofit

    14    CDC is self-sustained by a wholly owned family


    15    of companies.  It is a specific business of

    16    these companies to fulfill our mission.

    17                I take a moment to make this


    18    introduction because while I echo many of the

    19    sentiments you will hear and have heard today

    20    concerning Bank of America's acquisition of

    21    Countrywide, I would like to share TELACU's


    22    unique perspective relative to this very







                                                                        237


     1    acquisition.  You see, it very well may be

     2    that TELACU is the only community-based

     3    organization represented here today having a


     4    business relationship with all three of the

     5    associated main entities, Bank of America,

     6    Countrywide, and even the Federal Reserve.


     7                Let me state that TELACU

     8    enthusiastically supports Bank of America's

     9    acquisition of Countrywide.  TELACU has a high

    10    level of confidence that Bank of America will


    11    be well positioned to find solutions to the

    12    housing crisis that our nation now faces. 

    13    However, much has been said about

    14    Countrywide's contributions to creating this


    15    crisis.

    16                I would like TELACU to he heard in

    17    these proceedings in the context of certain


    18    things that Countrywide did right in

    19    supporting home ownership in our community,

    20    things that TELACU asked many other financial

    21    institutions to do, including Bank of America,


    22    for which Bank of America and other







                                                                        238


     1    institutions either declined or did not have

     2    the capacity to do as well as Countrywide.

     3                For TELACU, building communities


     4    has been synonymous with building homes the

     5    working families can afford.  We always

     6    believed that if we could take a hard working


     7    family who has saved up some equity, sell them

     8    one of our homes that we had made affordable

     9    through write downs and other subsidies, and

    10    created an opportunity for them to own a home


    11    for little more than they were already paying

    12    in rent.  Then we would have done a great

    13    thing.  That strategy has always served our

    14    community and TELACU very well.  


    15                It has never been our strategy for

    16    the family we serve to go from, in essence,

    17    renting housing to renting money.  It has


    18    never a part of our strategy to have our home

    19    buyers purchase a TELACU home using financing

    20    whose cost is artificially reduced or

    21    needlessly and surreptitiously overpriced. 


    22    But as a for-sale home builder in distressed







                                                                        239


     1    communities, TELACU needed a partner to

     2    responsibly finance families in our community

     3    needing a new home affordable home.


     4                Several years ago, TELACU's

     5    housing division set out to find a preferred

     6    lender, who would work with an provide


     7    mortgages for a moderate income buyers.  Our

     8    criteria was straight forward and included the

     9    following.  Pre-qualified homeowners based

    10    upon verifiable  income and credit to purchase


    11    our homes, place our buyers into fully

    12    amortized fixed rate mortgages whenever

    13    possible, having a working relationship and

    14    knowledge of special federal, state, and local


    15    housing finance programs that would create

    16    true affordability for our buyers, provide

    17    onsite personnel on weekends to work with


    18    TELACU team members to serve and educate our

    19    buyers, and most importantly, be responsible

    20    to TELACU as a partner in the creation of home

    21    ownership opportunities by having a loan


    22    processing operation that is responsive,







                                                                        240


     1    transparent and fast.

     2                TELACU made this business

     3    opportunity available to many of our financial


     4    partners, Bank of America included. 

     5    Countrywide was the only lender, and I repeat,

     6    the only lender that committed to provide what


     7    we required.  Our other partners flat out told

     8    us they either couldn't service our needs or 

     9    wouldn't even want to try.  But Countrywide's

    10    Builder Division had the products, personnel,


    11    systems, and track record already in place to

    12    provide what we, as an affordable housing

    13    developer needed.

    14                I want you to know that not only


    15    did Countrywide deliver as promised, but

    16    Countrywide has provided a higher standard of

    17    service than we have ever received from the


    18    mortgage industry.  The families that purchase

    19    TELACU homes have been empowered and well

    20    served by the mortgages financed by

    21    Countrywide, in many cases having fixed rate


    22    financing that resulted in mortgage payments







                                                                        241


     1    only slightly higher than their previous

     2    rental payments.  Affordable housing

     3    developers like TELACU need more lenders to


     4    provide this level of service to developers

     5    and homeowners wanting an affordable home in

     6    our communities can do business.


     7                I don't think the fact that

     8    Countrywide did these things more effectively

     9    than other lenders should come as a surprise

    10    to anyone.  It is Bank of America, after all,


    11    that is intent on acquiring Countrywide.  Bank

    12    of America must certainly see that there is

    13    something in Countrywide worth owning.

    14                If we were to see a resurgence in


    15    our communities for families to buy a home in

    16    fulfillment of the American dream, financing

    17    has once again become available to them so


    18    they can do so.  And affordable housing

    19    developers must rely on capable responsible,

    20    financial institutions to partner with us to

    21    make those mortgages available to our buyers.


    22                My friends at Bank of America have







                                                                        242


     1    demonstrated their ability to exceed our

     2    expectations in virtually every area.  Bank of

     3    America has demonstrated its excellence in


     4    being first in small business lending and, to

     5    my knowledge, has the only backed foundation

     6    that provides a minimum of $200,000 grants to


     7    nonprofit community organizations throughout

     8    the United States in the millions that can be

     9    used for capacity building or for creating

    10    investment into businesses that can lead them


    11    into a pathway of self-sufficiency.

    12                I urge my friends at Bank of

    13    America to discover those attributes of the

    14    Countrywide Builder Division business platform


    15    that continue to make the vital difference in

    16    our communities.  In doing so, I can remain

    17    hopeful that the higher standard of service


    18    TELACU families have received from Countrywide

    19    will be enhanced by Bank of America's higher

    20    standard of commitment to this proposed

    21    acquisition.


    22                In conclusion, again, I would like







                                                                        243


     1    to state that TELACU enthusiastically supports

     2    the acquisition of Countrywide by Bank of

     3    America.  Thank you.


     4                DIRECTOR BRAUNSTEIN:  Thank you

     5    very much.  My thanks to this panel.  And Mr.

     6    and Mrs. Knowles, could you stay for a second? 


     7    And thank you very much.

     8                We are going to adjourn now for

     9    lunch and we will reconvene at 1:30.

    10                (Whereupon, at 12:50 p.m., a lunch


    11    recess was taken.)

    12

    13

    14


    15

    16

    17


    18

    19

    20

    21


    22







                                                                        244


     1            A F T E R N O O N  S E S S I O N

     2                                         (1:40 p.m.)

     3                DIRECTOR BRAUNSTEIN:  We're going


     4    to get started.  Just a few housekeeping

     5    notes.  If anybody's here for the open mike

     6    session, could you please go to the


     7    registration table and sign up there.  Make

     8    sure and sign up at the registration table.

     9                And also if anybody who's

    10    testifying this afternoon, if you are able to


    11    give us a written copy of your testimony, it

    12    would be helpful, and you could leave that at

    13    that registration table with the Fed staff.

    14    And with that we'll get started again.  We


    15    have our timekeeper, here, signs, two minutes

    16    left, and then time is up.  Please keep an eye

    17    out.  You have five minutes for your


    18    statements, and please begin your statements

    19    by stating your name and your organization.

    20                And Mr. Pinsky, we'll start with

    21    you.


    22                MR. PINSKY:  Good afternoon.  I am







                                                                        245


     1    Mark Pinsky, president and CEO of Opportunity

     2    Finance Network, the nation's leading network

     3    of Community Development Financial


     4    Institutions, or CDFIs.  CDFIs lend and invest

     5    outside the margins of conventional finance,

     6    to help the people and markets we serve enter


     7    the economic mainstream, and help mainstream

     8    institutions discover these opportunity

     9    markets.

    10                Our industry has financed more


    11    than $25 billion in these opportunity markets

    12    over more than 30 years.

    13                Our net charge-off rates,

    14    cumulatively, are less than one percent,


    15    comparable to mainstream financial

    16    institutions working in more conventional

    17    markets that are commonly assumed to present


    18    less risk.

    19                In addition, I'm chairman of the

    20    Opportunity Mortgage Network, an affiliate of

    21    OFN, that is offering responsible mortgage


    22    products in the places where CDFIs work.







                                                                        246


     1                I want to make four points today. 

     2    First, if there is a single lesson the

     3    Opportunity Finance Network has learned


     4    through our experience and proven through our

     5    practice, it is this.  It is possible to lend

     6    responsibly and profitably in nonconforming


     7    and subprime markets.  It is a matter of

     8    discipline and thought and practice, coupled

     9    with a commitment to producing sustainable

    10    gains for communities, markets, financial


    11    intermediaries, and investors.

    12                Second.  I am confident that Bank

    13    of America's purchase of Countrywide would be

    14    a significant, positive step.  Bank of


    15    America's approach to mortgage lending is


    16    fundamentally responsible.  Countrywide's

    17    approach was not.  Bank of America's mortgage


    18    business was and is based on sound

    19    underwriting credit principles and practices. 

    20    Countrywide's was not.

    21                Bringing the Countrywide mortgage


    22    business within Bank of America seems certain







                                                                        247


     1    to result in a much more disciplined and

     2    responsible practice of providing mortgage

     3    credit.


     4                Third.  Through a financing

     5    partnership centered on California,

     6    Opportunity Finance Network has experienced,


     7    firsthand, the discipline Bank of America

     8    practices in its credit business.

     9                In 2006, OFN borrowed $10 million

    10    from Bank of America to provide liquidity to


    11    some of the financial institutions in our CDFI

    12    network who lend to small businesses and

    13    microenterprises.

    14                Bank of America's underwriting of


    15    OFN was thorough and rigorous, its monitoring

    16    has been comprehensive and respectful, and its

    17    focus on benefiting the low-income and low-


    18    wealth people OFN exists to serve has been

    19    consistent and unrelenting.

    20                This $10 million relationship has

    21    been successful.  We have so far loaned $9


    22    million, almost all of it in California, that







                                                                        248


     1    our network CDFIs have, in turn, reloaned to

     2    small businesses and microenterprises.

     3                Because of the favorable terms and


     4    conditions Bank of America provided, we're

     5    able to serve more entrepreneurs over a longer

     6    period than we would otherwise have served.


     7                Fourth and finally, in my view,

     8    Bank of America is proposing to take on with

     9    its purchase of Countrywide a special

    10    responsibility to look after Countrywide's


    11    customers, to improve the well-being of the

    12    mortgage market, and to help restore safety

    13    and soundness to financial markets.

    14                These are deeply troubling times


    15    for home owners, mortgage lenders, and

    16    financial institutions.

    17                The market is looking for


    18    direction, and I call on Bank of America to

    19    help provide it.  If I did not think Bank of

    20    America were up to this challenge and

    21    committed to meeting a high standard of


    22    responsibility, I would not be testifying







                                                                        249


     1    today in support of the proposed purchase.

     2                It would not be enough, in my

     3    opinion, for Bank of America to simply cease


     4    and desist from some of the irresponsible

     5    lending activities that led Countrywide to

     6    near ruin.


     7                Bank of America should make

     8    extraordinary efforts to work out loans that

     9    are in or near foreclosure, so that home

    10    owners can remain home owners; should


    11    aggressively support credit counseling agency

    12    counselors, not just now but for decades to

    13    come; should continue to support on-the-ground

    14    community development advocates who provide


    15    vital channels to low-income and low-wealth

    16    borrowers, and should do everything possible

    17    to lead the mainstream financial system in


    18    responsible lending.

    19                Thank you.

    20                DIRECTOR BRAUNSTEIN:  Thank you

    21    very much. 


    22                Mr. Cole.







                                                                        250


     1                MR. COLE:  Good afternoon.  I'm

     2    Tim Cole.  I'm the director of Development and

     3    Community Relations at Co-Opportunity in


     4    Hartford, Connecticut.  Thank you for allowing

     5    me to speak on behalf of my colleagues at Co-

     6    Opportunity.  Donna Taglianetti, our executive


     7    director, sends her regrets that she is not

     8    able to share with you today, Co-Opportunity's

     9    deep appreciation for the strong, positive

    10    relationship we have with Bank of America, a


    11    relationship that has grown deeper and

    12    stronger since Bank of America entered the

    13    Connecticut market upon acquiring Fleet Bank.

    14                Co-Opportunity is a community-


    15    based organization whose mission is to create

    16    neighborhood stability and economic prosperity

    17    by increasing earnings and wealth of residents


    18    of the Greater Harford Region.

    19                We accomplish this by providing

    20    services in the areas of financial education

    21    and counseling, asset building, including home


    22    ownership and workforce development.  We are







                                                                        251


     1    the lead agency for the Hartford Asset

     2    Building Collaborative, a consortium of

     3    nonprofits, funders and financial


     4    institutions.

     5                Asset building financial literacy

     6    and home buyer education make up roughly half


     7    of our business.  Our work in these areas

     8    relies on effective and robust partnerships

     9    with a wide range of stakeholders.

    10                These includes faith and


    11    community-based organizations, leading

    12    regional and national foundations, local,

    13    state and federal agencies, and most

    14    especially, private sector financial services


    15    companies.

    16                Asset building strategies are

    17    specifically designed to help low-income


    18    working people enter the financial mainstream

    19    by becoming investors and stakeholders in

    20    their own financial futures.

    21                We help them learn how mainstream


    22    financial institutions and practices work, and







                                                                        252


     1    become comfortable building relationships

     2    based on mutual trust with banks and lenders.

     3                For this to happen, sound,


     4    engaged, creative and dedicated adaptive

     5    partnerships with financial institutions are

     6    essential.


     7                When Co-Opportunity entered the

     8    asset building field in 2001, Fleet Bank, now

     9    a key part of the Bank of America in the

    10    Northeast, immediately became our most


    11    consistent, strongest, and most reliable

    12    partner.  That legacy continued after the

    13    merger with Bank of America.

    14                It goes without saying, that we


    15    are grateful for the substantial financial

    16    investments Bank of America has made in our

    17    programs, particularly our individual


    18    development accounts, the annual EITC campaign

    19    we run, and most recently, the new year-round

    20    financial resource center we launched this

    21    year.


    22                Just as important, however, Bank







                                                                        253


     1    of America has been a great friend by

     2    providing us with access to research on trends

     3    in philanthropy in the nonprofit sector,


     4    technical assistance and professional

     5    development.

     6                We, at Co-Opportunity, and I,


     7    personally, really owe Bank of America a debt

     8    of gratitude for two reasons.

     9                First, as the person responsible

    10    for launching our asset building programs, I


    11    admit, I was apprehensive about what would

    12    happen when Bank of America acquired Fleet,

    13    which was, as I indicated, our most engaged

    14    private sector supporter at the time.


    15                Indeed, I shared such concerns

    16    with Connecticut state treasurer and attorney

    17    general at a hearing much like this one.


    18                I'm pleased to report that Bank of

    19    America took up the Fleet legacy, did the work

    20    necessary to build the systems required to run

    21    IDA programs, assigned dedicated staff and has


    22    continued to build on that legacy with energy







                                                                        254


     1    and enthusiasm.

     2                The bank's conduct in this matter

     3    is one reason I am optimistic the proposed


     4    acquisition of Countrywide will work out well

     5    for all concerned.

     6                The second source of gratitude is


     7    the fact we were selected in 2006 for one of

     8    Bank of America's Neighborhood Builders

     9    Awards.  While the award is intended to give

    10    recognition to outstanding community


    11    development organizations, I think it

    12    demonstrates that the bank has created one of

    13    the most outstanding programs in the world of

    14    corporate philanthropy.


    15                With this program, the bank is

    16    showing true leadership in urging real

    17    rethinking and reworking of how our sector


    18    works and how it is resourced.

    19                I just want to say something about

    20    Hartford, which is sixth poorest city in the

    21    United States.  It has always been tough for


    22    our clients to reach the goal of home







                                                                        255


     1    ownership.  Now more than ever, due to the

     2    subprime lending crisis and the shock going

     3    through our mortgage, through the mortgage and


     4    credit industry, our counsels are now spending

     5    more hours loss mitigation than on looking for

     6    sound mortgage products.


     7                Bank of America's proposed

     8    acquisition of Countrywide, to solve this

     9    crisis singlehandedly, is not something that

    10    I expect, but it gives me a measure of hope to


    11    know that Bank of America, a company that has

    12    demonstrated its willing to put its resources,

    13    imagination, and commitment to work in hurting

    14    communities like Hartford, is now willing to


    15    assume a leading role in the daunting effort

    16    to rebuild the nation's economic foundations,

    17    and with them, the world's.


    18                Thank you for your attention.

    19                DIRECTOR BRAUNSTEIN:  Thank you

    20    very much. 

    21                Mr. Spencer.


    22                MR. SPENCER:  Good afternoon.  My







                                                                        256


     1    name is Marc Spencer.  I'm the executive

     2    director of JUMA Ventures.  I'm neither in

     3    support or against the acquisition but here to


     4    state how Bank of America has supported the

     5    nonprofit I direct, and has been a local

     6    leader in community development in the Bay


     7    Area.

     8                JUMA Ventures recently was awarded

     9    a $200,000 grant from Bank of America through

    10    the Neighborhood Builders Award.  JUMA


    11    Ventures is a national nonprofit organization

    12    that serves low-income teens from inner cities

    13    in San Francisco, Oakland, San Diego and now,

    14    in Washington, D.C.


    15                With B of A support, we have been

    16    to increase the operations of our social

    17    enterprises which are double-bottom lined


    18    businesses, where we employ disadvantaged

    19    youth in our sports stadium concession and

    20    vending businesses.

    21                We have 220 youth employees who


    22    work part time and are saving wages to pay for







                                                                        257


     1    the cost of higher education.

     2                Historically, JUMA has employed

     3    over 2,500 youth in our enterprises.  In


     4    addition, Bank of America funds support our

     5    California statewide financial literacy and

     6    asset building program.  We're building the


     7    capacity of seven other community-based

     8    organizations to offer financial education and

     9    asset building programming.

    10                JUMA is known as a pioneer in


    11    youth individual development accounts that

    12    have incentivized saving opportunities for

    13    youth, to have their deposits matched two to

    14    one.


    15                We have opened over 600 accounts

    16    and will open 150 new accounts this year, some

    17    of which is supported by the grant that B of


    18    A awarded us.  Youths have saved over $500,000

    19    in the IDA program and have invested over

    20    $600,000 in asset purchases.  The vast

    21    majority for covering the costs of higher


    22    education.







                                                                        258


     1                Lastly, Bank of America funds are

     2    supporting our national expansion to scale our

     3    social enterprise and youth development model


     4    to cities across the U.S. and they have

     5    provided us with professional leadership

     6    development opportunities for myself and


     7    senior staff.

     8                JUMA is grateful for the support

     9    of Bank of America.  The Neighborhood 

    10    Builders Award has significantly impacted


    11    JUMA's ability to deliver high quality

    12    services and achieve our mission of

    13    permanently graduating low-income youth out of

    14    poverty.


    15                DIRECTOR BRAUNSTEIN:  Thank you

    16    very much. 

    17                Ms. Wang.


    18                MS. WANG:  Good afternoon.  My

    19    name is Villy Wang.  I am co-founder,

    20    president and CEO of BayCAT, Bayview Hunters

    21    Point Center of Arts and Technology in San


    22    Francisco.  I appreciate the opportunity to







                                                                        259


     1    speak to you today on the strength of Bank of

     2    America as a major stakeholder in our

     3    communities today, and its impact to the


     4    proposed merger.  BayCAT is a nonprofit

     5    501(c)(3) social enterprise.  We educate,

     6    empower and employ youth and adults in


     7    underresourced communities in San Francisco

     8    and the Bay Area in the digital media arts.

     9                Over these last three years, we've

    10    served over a thousand students from these


    11    kinds of communities where poverty levels of

    12    these families, they make less than $20,000

    13    for households of a family of four.

    14                Ironically, these are also areas


    15    where there are the largest percentage of home

    16    ownership populations.  We also have a

    17    professional studio with clients like Yahoo


    18    and Union Bank and Citibank.  Every day, we

    19    witness the gaps, the deep gaps between the

    20    haves and the have-nots.

    21                Although we've been funded by


    22    every bank in the Bay Area, Bank of America







                                                                        260


     1    has stood out as a model to other

     2    organizations and corporations.  Its

     3    philosophic programs are signature.  Over the


     4    last two years, we've been the recipient of

     5    the National Excellence Initiative, very much

     6    so like JUMA Ventures, my colleague here.


     7                This program is a example of B of

     8    A strategically investing in underserved

     9    communities in a signature way.  They've

    10    identified and addressed two of the most


    11    challenging issues in community, that is,

    12    helping organization like ours, A, get access

    13    to unrestricted funding, and B, building a

    14    need for professionalism.


    15                It is this level of thoughtfulness

    16    and risk-taking which is ultimately the kind

    17    of investment that needs to happen to serve


    18    our community better.

    19                Now I understand, although the

    20    seriousness of the foreclosure climate in our

    21    communities is unprecedented, actually deeper


    22    and symptomatic of issues that are plaguing







                                                                        261


     1    our communities.

     2                So just as Bank of America has

     3    been successful in creating a strategic


     4    program to become a very deep stakeholder in

     5    our community, I believe that Bank of America

     6    has the capability of keeping and leveraging


     7    its stake in the community through this

     8    merger.

     9                The philanthropic program that

    10    they have has a snowball effect which reaches


    11    our individuals in our community.  So, for

    12    example, because of the strength of this

    13    program, and they way they have funded our

    14    program to reach thousands of families in our


    15    community, now our community members have a

    16    way to recognize who Bank of America is,

    17    through branches, through faces, and just as


    18    I personally, I happen to have bought a house

    19    in San Francisco from my mom, my mortgage

    20    happens to be with Countrywide.

    21                Because of the strength of Bank of


    22    America's commitment to community, I know I







                                                                        262


     1    have a face to go to in the community as well

     2    as in the corporate sector of Bank of America. 

     3    It is that kind of leverage that they have


     4    created within the community.  Their foresight

     5    in investing in communities in the deepest and

     6    hardest ways, that foreclosure is just one


     7    aspect that I know through the strategies that

     8    they've had already committed to communities,

     9    that they will be able to succeed in.

    10                Thank you for your time.


    11                DIRECTOR BRAUNSTEIN:  Thank you

    12    very much.   Thank you to the panel.

    13                Could the next panel come forward,

    14    please.


    15                Okay.  Thank you for coming today. 

    16    Just a few housekeeping measures.  There is a

    17    timekeeper right there who will show you a


    18    significant when you have two minutes left,

    19    and then when your time is up, and you have

    20    five minutes each for your testimony and

    21    please begin your statement by stating your


    22    name and your organization so we can make sure







                                                                        263


     1    we get it in the record.

     2                And we'll start with Mr. Bivens.

     3                MR. BIVENS:  Good afternoon.  My


     4    name is Robert "Bobby" Bivens, and I'm the

     5    economic development chairperson for the

     6    California State Conference of Branches, and


     7    president of the Stockton Branch, NAACP.

     8                The NAACP is our nation's oldest,

     9    largest, and most widely recognized grassroots

    10    civil rights organization in the United


    11    States.

    12                The State Conference is the

    13    official representative for the NAACP.  We

    14    currently have more than 50 units in


    15    California and over 2,200 membership units in

    16    every state of this country.

    17                The NAACP firmly believes that


    18    there is much the Federal Reserve Board can do

    19    and should do to address the current

    20    foreclosure crisis as it relates to Bank of

    21    America's proposed purchase of Countrywide due


    22    to B of A's history of redlining high interest







                                                                        264


     1    for African Americans and other minorities.

     2                B of A has not been consumer-

     3    friendly in the African American community


     4    with home loans, business loans, or credit

     5    card fees, or interest rates.  If you live

     6    anywhere other than in major metropolitan


     7    areas, charitable contributions do not exist,

     8    the CRA requirements have not been adhered to,

     9    and most bank managers don't want to freely

    10    discuss their poor performance.


    11                We feel it is incumbent upon the

    12    Federal Reserve Board to help families facing

    13    foreclosure to be able to stay in their homes. 

    14    Home ownership makes neighborhoods safer,


    15    encourages community investment, provides

    16    financial security, and improves the lives of

    17    families by helping to provide a safe, secure


    18    and stable home.

    19                It is essential for the Federal

    20    Reserve Board to ensure and guarantee,

    21    refinance sustainable and affordable


    22    mortgages, assure the home owners as well as







                                                                        265


     1    the American public that families are more

     2    important to regulators as is the large

     3    corporations and financial institutions.


     4                In addition to helping consumers,

     5    the NAACP also considers the proposal before

     6    us a win for the lenders.  Although they must,


     7    under current proposed legislation, take a

     8    diminished return on their properties, they

     9    are no longer responsible for foreclosed

    10    properties, and are assured of getting some


    11    return on their investment.

    12                Additionally, an action needs to

    13    be proposed that will help California, and

    14    also help the national economy which is


    15    currently suffering tremendously, largely

    16    because of the foreclosure crisis, due to

    17    insensitive lending institutions such as B of


    18    A and Countrywide.

    19                So the thought of the fox owning

    20    the henhouse is horrifying. 

    21                The NAACP believes it is


    22    imperative for the Fed to take its role more







                                                                        266


     1    seriously in addressing the current economic

     2    crisis faced by our nation, and to initiative

     3    more substantive regulatory controls and put


     4    an end, once and for all, to predatory

     5    lending.

     6                As members of this board, you know


     7    well that the NAACP has been intimately

     8    involved in litigation and legislation to end

     9    predatory lending.

    10                Specifically, we would like to see


    11    legislative regulations that establish higher

    12    standards for loan originators and provide

    13    stronger penalties and remedies for lenders

    14    who break the law.


    15                We also need to be assured that

    16    any purchase of this nature occurring will be

    17    monitored closely by the Federal Reserve Board


    18    to ensure protections for consumers at the

    19    minimum, and that they will be more aggressive

    20    in eliminating predatory lending.

    21                While like many, we're


    22    disappointed with the final version of some of







                                                                        267


     1    the bills that have passed in the House and

     2    the Congress, that we're working hard to see

     3    stronger monitoring, we do very much


     4    appreciate any initiative that would help

     5    eliminate predatory lending.

     6                For decades, predatory lenders


     7    have targeted African Americans and other

     8    racial and ethnic minorities through steering,

     9    and through other immoral practices, with

    10    dubious products that contain prepayment


    11    penalties, the so-called exploding ARMs, and

    12    the list goes on.

    13                In fact, according to the Center

    14    For Responsible Lending, more than 52 percent


    15    of home purchase loans made to African

    16    Americans in 2006 were subprime.

    17                Let's consider the facts for a


    18    moment.  Among subprime loans made in 2005,

    19    and sold to investors, 55 percent went to

    20    people with credit scores high enough to also

    21    qualify for conventional loans with far better


    22    terms.  By the end of 2006, the share of







                                                                        268


     1    overpriced loans rose to 61 percent. 

     2                Okay.  I will submit the rest of

     3    my statement.  The bottom line is we're in


     4    opposition to the purchase.

     5                DIRECTOR BRAUNSTEIN:  Thank you

     6    very much. 


     7                Ms. Molina.

     8                MS. MOLINA:  Hi.  Good afternoon. 

     9    My name is Liliana Molina.  I'm with the

    10    California Reinvestment Coalition and I'm


    11    reading the comments of Matthew Lee, the

    12    executive director of Inner City Press, their

    13    finance watch, opposing the proposal by Bank

    14    of America to acquire Countrywide.


    15                While the grounds include not only

    16    lending disparities but also predatory credit

    17    card practices, enabling of payday lenders,


    18    presumptive violation of the 10 percent

    19    deposit cap and money laundering, since this

    20    is in California, consider that in the first

    21    study of the just-released 2007 mortgage


    22    lending data, Inner City Press, their finance







                                                                        269


     1    watch, has identified worsening disparities by

     2    race and ethnicity in the higher-cost lending

     3    of Countrywide and Bank of America.


     4                Combining these two would only

     5    make things worse.  In the State of California

     6    in 2007, Countrywide confined African


     7    Americans to higher-cost loans 1.43 times more

     8    frequently than whites.

     9                If combined with Bank of America,

    10    North America, the disparity for African


    11    Americans grows to 1.54.  Meanwhile, in the

    12    past week, Bank of America has announced a 77

    13    percent drop in earnings calling into question

    14    even the safety and soundness rationale for


    15    allowing the second largest U.S. bank to buy

    16    a troublesome subprime mortgage lender.

    17                The impunity factor has risen. 


    18    With the news that Countrywide's Angelo

    19    Mozilla made 121 million in 2007 alone,

    20    exercising Countrywide stock options, while

    21    promoting predatory lending and foreclosures


    22    all over the country.  







                                                                        270


     1                The U.S. Federal Reserve Board,

     2    while still trying to avoid any public comment

     3    on or review of the controversial Bear


     4    Stearns/JPMorganChase bailout, has agreed to

     5    hold these public hearings following on in

     6    Chicago on April 22nd.


     7                In Illinois, in 2007, Countrywide

     8    confined African Americans to higher-cost

     9    loans 1.87 times more frequently than whites.

    10                If combined with Bank of America,


    11    and LaSalle, the disparity for African

    12    Americans grows to 1.96.  The disparity for

    13    Latinos, combining Countrywide and Bank of

    14    America would also increase, from 1.31 to


    15    1.36.  And see Chicago Tribune, April 23rd:

    16    "Countrywide Ripped At Hearing.  Bank of

    17    America Told Change Is Needed."  End quote.


    18                Reporting on request to Bank of

    19    America that they respond to the disparities

    20    demonstrated by Fair Finance Watch.

    21                To date, we have not seen any


    22    substantive response by Bank of America.  And







                                                                        271


     1    why no opportunity on the East Coast where

     2    Bank of America is headquartered?

     3                In Delaware, in 2007, Countrywide


     4    confined African Americans to higher-cost

     5    loans 1.84 times more frequently than whites. 

     6    If combined with Bank of America, the


     7    disparity for African Americans grows to 1.94.

     8                The disparity for Latinos would

     9    also increase from 1.29 to 1.32.

    10                Nationwide and hearing are needed


    11    across the nation.  Bank of America, in 2007,

    12    confined African Americans to higher-cost

    13    loans 1.88 times more frequently than whites,

    14    and denied the applications of Latinos 1.62


    15    times more frequently than whites.

    16                Meanwhile, the large and troubled

    17    Countrywide Financial, which Bank of America


    18    has applied to buy, confined African Americans

    19    to higher-cost loans 1.95 times more

    20    frequently than whites and denied applications

    21    of Latinos 1.53 times more frequently than


    22    whites.







                                                                        272


     1                Bank of America continues

     2    supporting payday lender, Advance America Cash

     3    Advance.  See, for example, South Carolina


     4    state of June 8th, 2007.  In July 2004, Bank

     5    of America Corporation arranged a $265 million

     6    credit line for Advance America.  Documents


     7    Advance America filed with the Securities and

     8    Exchange Commission indicate Bank of America

     9    administered the credit line.

    10                Not long after, Advance America


    11    announced an IPO that raised 195 million.  In

    12    2004, filing to the SEC, Advance America,

    13    which is headquartered in Spartanburg, and is

    14    the nation's largest payday lender,


    15    essentially said it wouldn't be as big or as

    16    successful at corralling borrowers without

    17    banks.


    18                Quote.  "We depend on loans from

    19    banks to operate our business.  If banks

    20    decide to stop making loans to companies and

    21    the payday cash advance services industry, it


    22    could have a material adverse effect on our







                                                                        273


     1    business."  Results of operations on financial

     2    condition the company states in the SEC

     3    document. 


     4                In late September of 06, Bank of

     5    America acknowledged that its lax operations

     6    allowed South American money launderers to


     7    illegal move 3 billion through a single

     8    midtown Manhattan branch.

     9                Bank of America said, quote: "it

    10    takes seriously it's anti-money laundering


    11    obligations and it never knowingly does

    12    business with persons, organizations, or

    13    businesses engaged in illegal activities," and

    14    did not in this case.


    15                Most of the funds came from Brazil

    16    via a licensed money transmitter in Uruguay

    17    and then to the Bank of America which allowed


    18    funds to reach licensed money transfer firms

    19    in this area.

    20                Bank of America, with the Federal

    21    Reserve's complicity, has been making a


    22    mockery of the 10 percent deposit cap, which







                                                                        274


     1    is one of the few consumer protections enacted

     2    along with the Interstate Banking Act of 1994.

     3                Bank of America is now arguing the


     4    10 percent deposit cap would not prevent its

     5    proposed acquisition of Countrywide, since

     6    Countrywide holds its deposits in a savings


     7    and loan.

     8                But then the 10 percent deposit

     9    cap means nothing.  An institution could just

    10    shift deposits into a savings and loan, and


    11    keep on buying up other institutions.

    12                May I just finish?  Would that be

    13    okay?

    14                DIRECTOR BRAUNSTEIN:  Quickly.


    15                MS. MOLINA:  Okay; cool.

    16                Countrywide's Angelo Mozilla has

    17    pocketed 410 million in salary, bonuses and


    18    stock option gains since 1999, according to

    19    the executive compensation company, Equliar.

    20                Now he stands to cash in with

    21    severance if Bank of America by Countrywide. 


    22    Consider this from Fox News of August 23rd,







                                                                        275


     1    2007.

     2                Okay.  "The press -- well, it's

     3    just quoting the interview, so you can read


     4    it.

     5                DIRECTOR BRAUNSTEIN:  Okay.  Thank

     6    you very much.


     7                MS. MOLINA:  You're welcome.

     8                DIRECTOR BRAUNSTEIN:  Ms. Ceaser.

     9                MS. CEASER:  Good afternoon.  My

    10    name is Angela Ceaser and I am the home buyer


    11    services manager at HomeSight, a nonprofit

    12    community development corporation in Seattle,

    13    Washington.  

    14                I'm here today to speak to you in


    15    support of the proposed acquisition of

    16    Countrywide Financial by Bank of America.

    17                HomeSight was founded in 1990 with


    18    the mission of building a strong, vibrant

    19    communities through home ownership, economic

    20    development and neighborhood revitalization.

    21                In 2000, we received a charter


    22    membership from Neighborworks America.  We are







                                                                        276


     1    certified by the U.S. Treasury as a community

     2    development financial institution, and we are

     3    a HUD-certified counseling agency.


     4                Over the years, we have built

     5    close to 400 units of single family homes and

     6    condominiums.  We have originated over 700


     7    loans to low-income, first-time home buyers,

     8    and we have created over 1300 low-income,

     9    first-time home owners in the Seattle area.

    10                More importantly, over 90 percent


    11    of those who've purchased homes built by

    12    HomeSight continue to own and occupy them.

    13                HomeSight strongly supports the

    14    merger of Bank of America and Countrywide


    15    Financial because it is an opportunity to

    16    strengthen two of our nation's largest lenders

    17    during these very troubled times.


    18                Bank of America has been a steady

    19    partner of HomeSight's, in many ways, over the

    20    years.  First, Bank of America has been the

    21    strongest bank partner of our Home Buyer


    22    Counseling and Education program, at a time 







                                                                        277


     1    when most national institutions eliminated

     2    home buyer education requirements for first-

     3    time buyers, Bank of America remained


     4    steadfast and retained its commitment, by

     5    requiring the highest education and counseling

     6    standards in the industry.


     7                In fact, Bank of America loan

     8    officers have provided more direct referrals

     9    to the HomeSight home buyer education program

    10    than any other lender.


    11                Second.  HomeSight is proud to

    12    have been selected as an inaugural recipient

    13    of the Bank of America Neighborhood Excellence

    14    Award in 2004.  This two year award provided


    15    unrestricted core operating support for us to

    16    enhance our capacity in many ways, including

    17    a year-long strategic planning process that


    18    engaged our community-based board at a very

    19    new level.

    20                In addition, through volunteer

    21    service, Bank of America employees have


    22    provided expertise to HomeSight's board of







                                                                        278


     1    directors and board committees with an ongoing

     2    and genuine commitment of their personal time.

     3                Another example of Bank of


     4    America's commitment to community development

     5    is the construction loan the bank provided for

     6    our recently completed and totally sold out 19


     7    unit Cocafi Condominium project.  Throughout

     8    the construction loan process, from

     9    origination to closeout, Bank of America

    10    proved to be a solution-oriented partner.


    11                For the past few years, Bank of

    12    America's community commitment loan product

    13    provided very competitively-priced loans that

    14    HomeSight, as a licensed mortgage broker, was


    15    able to originate to our first-time buyers.

    16                While Bank of America found it

    17    necessary to curtail mortgage broker


    18    relationships nationally, in response to

    19    recent market conditions, we deeply value the

    20    strength this relationship brought to our

    21    lending operations.


    22                We are continuing to explore







                                                                        279


     1    alternative channels to provide these products

     2    to our borrowers.  Whether it i sin the near

     3    term or not until stability is restored in the


     4    national housing market, we look forward to

     5    renewing our loan origination relationship

     6    with Bank of America.  While HomeSight has not


     7    had a direct working relationship with

     8    Countrywide Financial, we are familiar with

     9    them as the servicer for all loans funded by

    10    the Washington State Housing Finance


    11    Commission, our state's housing finance

    12    agency.

    13                Unless the past servicer for our

    14    state's bond finance loan program, we have


    15    never had a complaint from any of our

    16    borrowers regarding the loan servicing

    17    provided by Countrywide.


    18                In conclusion, we believe the

    19    proposed acquisition of Countrywide Financial

    20    by Bank of America will bring Bank of

    21    America's disciplined lending approach to


    22    Countrywide's far-reaching lending and







                                                                        280


     1    servicing infrastructure, resulting in a solid

     2    financial institution that will help stabilize

     3    a currently volatile marketplace.


     4                Thank you very much for your time

     5    and we appreciate the opportunity to share our

     6    experience and views with you today.


     7                DIRECTOR BRAUNSTEIN:  Thank you

     8    very much. 

     9                Dr. Araque.

    10                DR. ARAQUE:  Araque.  Good


    11    afternoon.  My name is Juan Carlos Araque,

    12    vice president of community investments for

    13    Orange County United Way.  I am here to

    14    express our support to Bank of America


    15    employees, corporation, and foundation, and

    16    share with you our long-time contribution to

    17    social change, and efforts, not only national


    18    but in Orange County, California.

    19                Orange County United Way is a $23

    20    million organization supporting agencies in

    21    Orange County, in our 34 cities.  We have


    22    almost 300,000 people who live under $40,000







                                                                        281


     1    of income every year.  Bank of America support

     2    has been in three specific areas.  Funding,

     3    expertise and board members.


     4                In terms of funding, we receive

     5    over $700,000 a year from the employees, the

     6    corporation and the foundation.  And these


     7    past five years has been a total of over $3

     8    million.  

     9                In terms of expertise, we have Ben

    10    prince, who is our current board member for


    11    Orange County United Way, as well as Bill

    12    Boffer who is a former United Way board

    13    member, and Tom Farrell who is a member of our

    14    Education Council.


    15                Bank of America has supported two

    16    specific programs in Orange County.  One is

    17    the earned income tax credit and the other one


    18    is the Latino educational attainment

    19    initiative.

    20                In terms of the earned income tax

    21    credit, the IRS estimates that up to 25


    22    percent of individuals eligible for the tax







                                                                        282


     1    credit do not claim it, and this adds up to

     2    about $65 million, just in Orange County.

     3                Because of United Way, and our


     4    contributions, as well as our partnership with

     5    Bank of America, two years ago, we started

     6    helping people that make less than $39,000 a


     7    year to complete their tax returns for free

     8    and get their money back within a week.

     9                We started with 300 people

    10    receiving about $200,000 in one year.  This


    11    year alone, we have served over 3000 people,

    12    receiving over $3 million back.  This is

    13    earned income, hard work.  The people in need

    14    need it back.


    15                The other key effort has been the

    16    Latino educational attainment.  This is a

    17    partnership with Orange County Business


    18    Council, the Orange County Register, the

    19    Department of Education and United Way.

    20                Half of our students are Latino in

    21    Orange County, that's up to 240,000 students,


    22    and the majority of them have academic







                                                                        283


     1    trouble.  We know that these students, half of

     2    them almost do not graduate in four years, and

     3    about 70 percent -- we lose 30 percent of them


     4    due to dropout rates.  These initiatives have

     5    helped us, mapping how many low-performing

     6    schools in Orange County we have.  That adds


     7    up to 87 low-performing schools, almost 17

     8    percent of all the schools in Orange County

     9    Public.  

    10                And we have created a coalition of


    11    parents.  We teach them how to navigate a

    12    school system and how they work with their

    13    children and their educators to improve their

    14    children's ability to do well in school.


    15                Bank of America is truly a model

    16    for other corporations in their social

    17    responsibility.  They have contributed to us


    18    for over five years, and to help families in 

    19    need in Orange County.  I am confident that

    20    this acquisition will continue this tradition

    21    for many years to come.


    22                The United Way appreciates Bank of







                                                                        284


     1    America Employees Corporation and Foundation

     2    for all their ongoing support.  Thank you very

     3    much for your attention.


     4                DIRECTOR BRAUNSTEIN:  Thank you

     5    very much, and thank you to the panel.

     6                MR. BIVENS:  Where do we submit


     7    this for the record at?

     8                DIRECTOR BRAUNSTEIN:  The desk

     9    outside, or you can give it to that gentleman

    10    in the glasses.  He can take it.  For the


    11    record, Mr. Bivens spoke.


    12                DIRECTOR BRAUNSTEIN:  Than you all

    13    for coming and just a few housekeeping notes. 

    14    We have a timekeeper right there who will


    15    flash signs when you have two minutes left,

    16    and when your time is up.  You each have five

    17    minutes for your statement and please begin


    18    your statement by stating your name and

    19    organization for the record.  Thank you.

    20                Ms. Vizinau.

    21                MS. VIZINAU:  Hi.  My name is


    22    Katrina Vizinau and I'm with Community Housing







                                                                        285


     1    Development Corporation in Richmond,

     2    California, and we are an affordable housing

     3    developer, and a HUD-approved home ownership


     4    counseling agency.  I work i the capacity of

     5    a senior housing counselor, and I've been

     6    working with clients who are having problems


     7    with their mortgage, for many years now, and

     8    since the beginning -- or the end of 2005,

     9    beginning of 2006, we went from receiving like

    10    three to five default calls a week to over 20


    11    calls a week.

    12                And it's been very discouraging,

    13    these past few months, because we have clients

    14    that call every day and they're saying I hear


    15    in the news that we're going to get help.  The

    16    Federal Government says there's been, you

    17    know, tons of dollars that are given to the


    18    agencies, and now you're able to help us, or

    19    they have these different programs, now we can

    20    refinance, or we can do a loan modification.

    21                And so we have, out of, say, five


    22    clients, about four of them are Countrywide







                                                                        286


     1    borrowers, and what I came here today to say

     2    is we've been working with Countrywide and I

     3    commend them for trying to respond to the


     4    thousands of requests that they're probably

     5    getting.

     6                And currently, the response has


     7    not been very good.  I know they have a

     8    program.  I'm here to ask Bank of America to

     9    look at the program that they've tried to

    10    implement.  The concept is good, where they're


    11    trying to work with the different counseling

    12    agencies, and dedicating a loss mitigation

    13    negotiator, so that the process can run

    14    smoother.


    15                However, in practicality, that has

    16    not been the case.  Much like the previous

    17    home owners who we're talking about, they had


    18    called the loss mitigation department and they

    19    were transferred from one person to another.

    20                That pretty much happens to the

    21    housing counselors as well.  Unless you have


    22    a really active housing counselor, they're







                                                                        287


     1    pretty much going to get the same run-around.

     2                It's only been because of my

     3    relationships, or the relationships of other


     4    counselors with individuals that can make

     5    decisions, where decisions have been made to

     6    help home owners reach a resolution, and so


     7    I'm just here to encourage Bank of America and

     8    Countrywide to look at that plan that they

     9    have in place and to try and make it more

    10    user-friendly.


    11                Then I also want to focus on the

    12    solution.  We're looking for quality, not

    13    quantity.  We have a lot of -- you get a lot

    14    of loan modifications being offered but


    15    they're really not affordable, although they

    16    say they are, and home owners are pressured

    17    into taking these low modification because


    18    they feel like if they don't, then they're

    19    going to end up losing their homes.

    20                The other area that I want to

    21    focus on is when a home owner does -- and it's


    22    no other choice but they are going into







                                                                        288


     1    foreclosure and losing their homes, then

     2    they're being confronted by a local realtor

     3    who knocks on their door and says, "you gotta


     4    move, you gotta get out," and a lotta times

     5    these are monolingual home owners and they

     6    don't understand, and they're being told that


     7    they have to get out in a couple of days.

     8                There's a program, Cash For Keys,

     9    relocation, and that needs to have some

    10    oversight by the Countrywide, by the REO


    11    Department and that's not being done, I don't

    12    believe.

    13                And lastly, I just want to say

    14    that if you can also consider maybe a short-


    15    term lease rent-back for home owners that need

    16    time to prepare, to be able to move and find

    17    a place to relocate to, a lot of times they


    18    don't have the money that's necessary to move

    19    out.  They don't have first and last month's

    20    rent, and the average move-out or rental right

    21    now is around $2000 in the Contra Costa and


    22    Alameida County area.







                                                                        289


     1                So I'm just asking you to please

     2    consider the different programs that they

     3    have, and tweak them and make them better for


     4    the home owners.

     5                DIRECTOR BRAUNSTEIN:  Thank you

     6    very much. 


     7                Ms. Guillory.

     8                MS. GUILLORY:  Yes.  Hi.  My name

     9    is Gertrude Guillory and I come here today

    10    from Oakland, California, and I too have, and


    11    my husband as well, have a Countrywide

    12    mortgage.

    13                My experience with Countrywide has

    14    not been very good.  When I first received my


    15    loan, which was -- they called it a "hybrid"

    16    or a "band aid" loan, cause that's where we

    17    qualified at, because I was present with


    18    Countrywide but they put us in full spectrum,

    19    cause they said they had programs, they could

    20    help us.

    21                So we get a loan officer that


    22    works with us and I was "up front" of what I







                                                                        290


     1    needed.  I told him I wanted a loan that I

     2    could get out of within 24 months, which means

     3    I didn't want any penalties, if I want to pay


     4    early.  I thought I made that very clear with

     5    him.

     6                He told me that the loan that we


     7    were acquiring was a loan that was for credit,

     8    mainly credit only.  He said you keep your

     9    credit up good, he said Ms. Guillory, you will

    10    be able to refinance in 24 months.  He did not


    11    base this credit on the mortgage crisis or

    12    anything with the housing, and I just kind of

    13    threw a lot of "What ifs" with him.  Well,

    14    what if this happens?  What if this happens? 


    15    Would I be able to still refinance?

    16                He said you should concentrate on

    17    paying your bills on time.  Keep your credit


    18    up.  He said this, what this loan is about,

    19    it's about a credit situation and not about a

    20    housing situation.

    21                So I took that into consideration. 


    22    We went ahead, we closed, and also the notary







                                                                        291


     1    public that came to my house as well, she was

     2    really "up in arms" about it too.  She says

     3    don't worry about it.  She says just pay your


     4    bills on time, she says keep your bills

     5    current, she says we'll be able to refinance

     6    you in 24 months, which February 9th will be


     7    24 months.

     8                So in 2007, I received a letter

     9    from Countrywide stating that they no longer

    10    offered these subprime or "band aid" or RM


    11    loans, and that I should call in to refinance,

    12    and that I may qualify for a half percent off

    13    my interest rate.

    14                So I do such a thing, I called,


    15    come to find out that I still have a little

    16    low thing, but -- little low credit, but I'll

    17    be able to refinance.  Call us back in


    18    October.

    19                So I called back in October and

    20    credit was great, but then it became a loan to

    21    value, which then I knew I was sucking the


    22    water right then.  So I called back to the







                                                                        292


     1    Emoryville office, and I said, hey, I said,

     2    when I talked to this gentleman, I said I

     3    asked him specifically that I did not want a


     4    loan that would hinder me from refinancing

     5    early, and I says why didn't he tell me that,

     6    up front?  And she told me, she says, well, he


     7    probably didn't tell you that because the

     8    loan, it drops off in 24 months.

     9                I'm like, well, that's not a good

    10    thing, I says, because I would have not taken


    11    this loan if I knew, we would a stopped it

    12    right then.  And I'm sure there was some

    13    oversights, probably on my part.

    14                But the thing that I'm trying to


    15    go back to, that this gentleman was never

    16    honest with me about the loan.  He

    17    specifically told me that this loan was a


    18    thing of credit.  He says repair your credit,

    19    we will refinance you, without fail.  And I

    20    did repair my credit.  I was not able to get

    21    refinanced.  I'm noticing now, that around the


    22    neighborhoods, that we have a lot of homes







                                                                        293


     1    that are empty, and that it calls a -- for

     2    your neighborhood.  The neighborhoods are

     3    going down, cause when you have vacant homes,


     4    you have people that are crowding around those

     5    homes.  So I'm kind a concerned there, because

     6    we don't, we don't have the value that we use


     7    to have on our homes.

     8                So if I'm to refinance, and my

     9    neighborhood's going down, that's never going

    10    to bring the value of my house back to the way


    11    it is for me even to refinance.

    12                So I have been in contact with

    13    Countrywide ever since.  I called them,

    14    actually, I call them monthly cause I like to


    15    know what's going on, if they're helping

    16    people.

    17                I did go through the Retention


    18    Department because I was told about five or

    19    six different things.  I was told you start in

    20    six months, you could -- the Retention

    21    Department.  Then another rep told me, no, you


    22    start in four months.  Then I had another rep,







                                                                        294


     1    from India, and that's what kind a raised my

     2    question.  She says, no, you could do it now. 

     3    So on February 22nd, I started that procedure.


     4                But on February 27th, I received a

     5    letter from Countrywide telling me that I was

     6    too early and that I would have to wait.


     7                So I get on the phone with them

     8    and I call, I said okay, what is -- cause the

     9    letter didn't really say what it's about.  I

    10    said what does this letter mean?


    11                They says, well, you're not -- I

    12    haven't defaulted yet.  I says, so what are

    13    you telling me?  I have to default on my home

    14    before you would help me?


    15                I says I don't want to default on

    16    my home.  I don't want to be put outta my

    17    home.  This is our first home, for me and my


    18    husband.  I said I don't want to do that.

    19                So we hung up and I called back

    20    again, cause I'm hoping to get another person

    21    that's going to tell me some good information,


    22    because it seems like everyone who I speak to







                                                                        295


     1    at Countrywide also had a different story of

     2    what you can do, when you can do this, and how

     3    you can be helped.


     4                So finally I did get an individual

     5    that I thought was a little knowledgeable, and

     6    they told me that in October of this year,


     7    October 17th, that Countrywide would be

     8    recalculating my interest rate, and that I

     9    should wait till then, because then you

    10    probably can get your interest frozen and at


    11    a better rate, which in return would drop my

    12    house note.

    13                But then as I hear stories that

    14    Countrywide is not even really doing that,


    15    they're not helping people, they're not

    16    actually returning phone calls to individuals. 

    17    So I'm saying back here, thinking okay, now


    18    what to do?  So really to make a long story

    19    short, I don't feel that Countrywide was "up

    20    front" with me.  I did ask all the questions

    21    that I thought I should ask of this company,


    22    being that I was a home owner and wanted to







                                                                        296


     1    keep my home, but all the answers that I got

     2    would be, you know, you're okay, that you'll

     3    be okay, you'll be able to refinance, that


     4    you'll be okay, just keep your credit up,

     5    you'll be able to refinance.

     6                But now that is actually not the


     7    case.  I could go on forever about my story

     8    but I'm going to end it right here.  But I

     9    would like to say if there's anything that can

    10    be done, I'm ready to do something today,


    11    because I am in a situation where comes

    12    February 9th, my loan is going to reset and I

    13    won't be able to afford it.

    14                Right now I'm fine, we're fine,


    15    but August 09, we're not going to be fine.  So

    16    I'd like for some quick answers, I'd like some

    17    real answers from Countrywide, and Bank of


    18    America, who is going to acquire Countrywide,

    19    on what they're going to do for people like

    20    myself that are in this situation, that have

    21    been -- and I'm going to say "lied to" about


    22    what they can do, and this is not the







                                                                        297


     1    situation.

     2                DIRECTOR BRAUNSTEIN:  Thank you,

     3    Ms. Guillory.  We'll try to get somebody to


     4    talk to you.

     5                Ms. Clark.

     6                MS. CLARK:  Hello, everyone. My


     7    name is Yolanda Clark and I'm president of

     8    Multicultural Real Estate Alliance for Urban

     9    Change, and I'm also president of Golden Path

    10    Real Estate and Home Loans.  The following


    11    concerns me regarding the merger between

    12    Countrywide and Bank of America.

    13                The mortgage meltdown has created

    14    a large redistribution of wealth.  Minorities


    15    and senior citizens were targeted at

    16    disproportional rates for subprime loans, and

    17    this has caused an even larger gap between


    18    home owners and the home owner rate.  Since

    19    Countrywide has had such a large proportion of

    20    these loans, we want to know -- what concerns

    21    us is what will be their new policy, if the


    22    merger goes through?







                                                                        298


     1                What will be the policy to handle

     2    the people such as Ms. Guillory and the

     3    Knowles, that were here earlier.  How will


     4    these people be affected, as well as what

     5    procedures will be put in place.  We think

     6    that there should be a written policy, that


     7    should have consequences, if not followed,

     8    after the merger goes through, if it is

     9    approved, for people to have workout programs

    10    that are actually workout programs that make


    11    sense.

    12                As a housing counselor, we get a

    13    lotta people from Countrywide who program --

    14    who have come up with loss mitigation programs


    15    that are actually worse than what they were

    16    when they started.  An example.  If they have

    17    an interest rate that is high, they take the


    18    amount that was more and add that on to the

    19    loan.

    20                So if you have a loan payment of

    21    $3,000, you're now looking at a payment to


    22    repay back at 3500.  So if you couldn't afford







                                                                        299


     1    3000, how can you afford 3500?  So we're very

     2    concerned about having a written policy.

     3                The second thing is the rebuilding


     4    of wealth for those individuals who have

     5    already lost their homes, and in the

     6    communities that they live in.  As Ms.


     7    Guillory said earlier, you have so many people

     8    that have blocks or communities that have

     9    blocks of properties that are now vacant.

    10                So what's going to be done for


    11    those areas, to rebuild that area, so that the

    12    home equity that's in those properties, or

    13    that was in those properties are not further

    14    deteriorating and further lost.


    15                A second concern is the

    16    individuals that are in that area, that are

    17    working and living in that area.  You have a


    18    lot of people that are related to home -- to

    19    the real estate industry, that have been laid

    20    off, that have been, their jobs have been

    21    outsourced, which again we've heard that a lot


    22    of the mitigation has been outsourced to







                                                                        300


     1    India.

     2                So what are we doing, or what will

     3    be done with the merger to prevent the


     4    outsourcing?  I feel that a certain amount, or

     5    a percentage need a cap on the percentage of

     6    outsourcing, if we allow any of that to go


     7    through, as far as how many, how much of the

     8    business that is now Bank of America and

     9    Countrywide should be allowed to be

    10    outsourced. 


    11                That's very important to keep

    12    these communities stable and finding work. 

    13    The people that are working in those

    14    industries, in those areas now, also, as i


    15    said earlier, have been taken out of job

    16    security.

    17                So we're losing a lot of jobs in


    18    that area.  We're losing a lot of homes.  So

    19    with the merger, I think oversight and

    20    regulation should be made to prevent further

    21    deterioration and further loss of equity in


    22    those areas.







                                                                        301


     1                I'm in a very unique position to

     2    be able to see both sides from a nonprofit,

     3    because I hear people coming in with


     4    counseling, and I also see the effect of the

     5    businesses that are in the area, on how

     6    they're leaving.  So now it's not only a


     7    situation with mortgage, people not being able

     8    to pay their mortgages.  It's all because of

     9    the rates adjusting, but it's also because of

    10    so much job loss in the area as well.


    11                So we definitely need to see a

    12    stabilization in the area in regards to Bank

    13    of America/Countrywide merger, to make it a

    14    stronger community for all those that are


    15    involved in foreclosing, who actually have the

    16    actual foreclosures, for those that are losing

    17    work in that area.  So realtors should be able


    18    to see those properties in their area that

    19    have been lost and it should not be

    20    outsourced.

    21                So those are a lot of the concerns


    22    that we have in this area.  Thank you.







                                                                        302


     1                DIRECTOR BRAUNSTEIN:  Thank you

     2    very much. 

     3                Ms. Heard.


     4                MS. HEARD:  Thank you.  Thank you

     5    for inviting us to speak today.

     6                I am Donette Heard.  I am also


     7    with the Multicultural Real Estate Alliance

     8    for Urban Change.  I am a housing counselor,

     9    loss mitigation, and I also own my own

    10    company, which is High Performance Realty. 


    11    I'm the broker.

    12                I'm the type of person that gets

    13    the phone calls.  I'm the counselor, one of

    14    the counselors, I get those phone calls, and


    15    when we first started off getting the phone

    16    calls, it was very few.

    17                But what we found out, because


    18    Multicultural has been around a long time, and

    19    we are connected also with CRC, a member,

    20    we've gone through a lot of fights, a lot of

    21    negotiations, and dealing with the redlining


    22    for insurance in our areas.







                                                                        303


     1                Also, we work with Don't Borrow

     2    Trouble, and you remember all the

     3    advertisements, and made a lotta people aware


     4    to watch out before you jump into something.

     5                We also did a survey on the

     6    predatory lenders that were really tapping in


     7    on individuals, which kind a slowed that down

     8    for a while till we forgot about it, but it

     9    was still around.

    10                We also had challenges after the


    11    civil unrest.  In our neighborhoods, the

    12    appraisal values were kind a brought down on

    13    our side, raised up on the other side.  So

    14    I've been in this fight a long time.  When we


    15    saw the idea of coming up, that you had -- you

    16    didn't have to quality for a loan, or you

    17    could get a 100 percent loan, I said, oh-oh,


    18    something's getting ready to pop.

    19                But I didn't see any

    20    advertisements out there saying, "Hey, don't

    21    borrow trouble."  Now the ones that was really


    22    getting off pretty good was the home owners,







                                                                        304


     1    the first-time home buyers, because, see, we

     2    had them in our classes, and we're telling

     3    them what to watch out for.  But we forgot to


     4    tell the people that already had their houses

     5    20 and 40 years, that don't borrow trouble,

     6    because it wasn't advertised anymore.


     7                So this is what's happening to

     8    people that are 84 years young, living in

     9    their places for 40 years.  People that been

    10    living in their places, like the Knowles, for


    11    20 years, 15 years, finding out that they're

    12    going to be on the street because we got

    13    ambitious people that are out there, telling

    14    them that oh, yes, you can get this loan,


    15    market's going good, don't worry about it, we

    16    can refinance you.  And they're believing them

    17    because they are the professionals.


    18                I think the regulations and

    19    everything else "went down the tube," because

    20    everything was moving so far, and people

    21    getting homes and making their dreams come


    22    true, that we forgot to really regulate and







                                                                        305


     1    see what was going on.

     2                So where we're standing right now

     3    is we're getting people that are losing their


     4    places and trying to figure out now what are

     5    we going to do with these people that are out

     6    there on the street, that they have no place


     7    to go?  So what about if the solution is if

     8    they can't afford to pay the house but they

     9    can't afford to pay a lease, maybe we better

    10    think about leasing back to them until we


    11    figure out what we're going to do with all

    12    these empty houses.  That's one thing.

    13                And if we merge with Bank of

    14    America, are they going to kick us to the


    15    curb, or are they going to give us a situation

    16    to let us know -- when they call us, what is

    17    Bank of America going to do?  We can at least


    18    tell them something.

    19                So today I stand before you, I

    20    guess I'm just kind of off on the run of

    21    things, but we do have a challenge ahead of us


    22    because there's renters calling on the phone,







                                                                        306


     1    and they're saying to me, I've got my children

     2    with me, I'm on the corner, where do I go? 

     3    You're the counselor in my area.  And if I


     4    tell them go call Housing Authority, they say

     5    they don't have any rooms.  So they have to go

     6    to the shelter.


     7                It's ugly out here, and it's going

     8    to get uglier, unless we come up with a

     9    solution to help these people.  Thank you very

    10    much. 


    11                DIRECTOR BRAUNSTEIN:  Thank you

    12    very much.  Thanks to the panel.

    13                Okay.  All right.  Welcome to the

    14    panel and just a few housekeeping measures. 


    15    We have a timekeeper that will signal you when

    16    you have two minutes left, and then, when your

    17    time is up.  You have five minutes for your


    18    statements and we would ask that you begin

    19    your statements by stating your name and your

    20    organization, so we can get it on the record.

    21                Okay.  We'll start with Ms.


    22    Reynolds.







                                                                        307


     1                MS. REYNOLDS:  Good afternoon.  I

     2    am Sue Reynolds.  I'm the president and chief

     3    executive officer of Community Housing Works. 


     4    We're San Diego County's most comprehensive

     5    nonprofit housing organization.  We've

     6    developed 30 affordable renting housing


     7    complexes.  We help hundreds of home owners

     8    every year get into their first home, and we

     9    provide all these residents with the kind of

    10    training and support that lets them use this


    11    housing to bust the cycle of poverty and

    12    racism, and actually build assets.

    13                As a HUD-certified housing

    14    counseling agency and a member of


    15    NeighborhoodWorks, we've also been a key

    16    leader of the foreclosure prevention and

    17    counseling efforts in San Diego.  So we sit on


    18    a lot of sides of this story.

    19                We're tickled that the "mortgage

    20    might" of Countrywide could be brought back

    21    inside the bank regulatory structure that


    22    produced stable home ownership for over 60







                                                                        308


     1    years, and we believe as a purchaser, Bank of

     2    America has some key community strengths. 

     3    Community HousingWorks has seen some of the


     4    best that Bank of America does as an

     5    affirmative community partner, and we'll talk

     6    about that first.  But we're also clear that


     7    approval of this acquisition has to be linked

     8    to some key commitments by the bank, because

     9    of the challenges that are faced in our

    10    current mortgage environment.


    11                The community strengths we've

    12    witnessed in Bank of America, over time,

    13    include an extremely strong commitment to

    14    first-time home buyer programs.  They've been


    15    a standout leader in working with our

    16    organization and our down payment loans, to

    17    serve first-time home buyers who otherwise


    18    wouldn't be served, mostly people of color,

    19    and their grant support has been substantive

    20    and consistent over many years.  It's helped

    21    our homeless parents recover their kids, our


    22    kids overcome their schools and get to







                                                                        309


     1    college, our community leaders do rebuilding

     2    projects in their neighborhoods, and there's

     3    strategic grant and pathbreaking philanthropic


     4    effort, Neighborhood Excellence, which we're

     5    a proud participant in, really invest

     6    significant dollars and training in a way that


     7    can change organizations.  Those are all very

     8    proud accomplishments over a good many years.

     9                But the acquisition of Countrywide

    10    still presents some key challenges that really


    11    need focus by both the bank and the

    12    regulators, and we organize our concerns about

    13    that into a couple of key principles, one of

    14    which is the old doctor's maxim, first, do no


    15    harm. 

    16                The delinquent Countrywide

    17    borrowers need, and we, in the community, need


    18    a clear, specific plan of how the bank is

    19    going to address their needs with measurable

    20    results before the purchase of this

    21    institution is completed, and those standards


    22    are those that we talk about in foreclosure







                                                                        310


     1    prevention, and all the way up and down the

     2    line.  Maximizing feasible loan modifications

     3    with the fixed rate mortgages that the


     4    borrower can actually afford.

     5                Protecting consumer credit is a

     6    second principle, where foreclosure appears to


     7    be the only necessary option, look for short

     8    sale, and deed-in-lieu options, so that

     9    consumers have their credit protected and

    10    aren't made homeless by the credit assault of


    11    a foreclosure.

    12                More generally, don't increase

    13    homelessness.  We need standard practices for

    14    notice and protections for the tenants and the


    15    owners in homes that do become foreclosed.

    16                And finally, just procedurally,

    17    and I know the bank's focused on this, but we


    18    need everyone to set standards for it -- don't

    19    drop the ball. In our foreclosure prevention

    20    work, Countrywide has been at least

    21    accessible, and more likely to respond


    22    positively after we persist, than many other







                                                                        311


     1    servicers.

     2                In other recent acquisitions we

     3    have seen feasible loan modifications lost in


     4    the chaos.  At the scale of Countrywide's

     5    holdings, that would certainly be a disaster

     6    and needs to be protected against in a very


     7    affirmative fashion.

     8                The second general area is using

     9    Bank of America's key position as a leader in

    10    mortgage-backed securities, and soon to be the


    11    largest mortgage lender, to use this unique

    12    combination to uniquely lead, to set higher

    13    standards for the kinds of loans it will

    14    securitize, and higher standards for the way


    15    it authorizes loan modifications on the loans

    16    within its existing securities.

    17                And finally, speaking to our


    18    multifamily affordable housing developer side,

    19    we miss Bank of America.  Under the prior bank

    20    structure, they were actually key lenders in

    21    some of our hardest projects.  They took good,


    22    considered risks that made award-winning







                                                                        312


     1    projects that served our Somali refugee

     2    community, our farm worker communities.  Their

     3    products have not been competitive in that


     4    market for a number of years and we'd like

     5    them back.

     6                In closing, this is a unique


     7    opportunity.  The bank's acquisition can be a

     8    historic accomplishment.  If our regulatory

     9    structure and the bank focus us on these key

    10    principles, we think mortgages within the


    11    banking system have been more sound, precisely

    12    because of regulatory leadership that the Fed

    13    holds, and we urge you all to use that power

    14    well.  Thank you.


    15                DIRECTOR BRAUNSTEIN:  Thank you

    16    very much. 

    17                Ms. Watson.


    18                MS. WATSON:  My name is Lisa

    19    Watson.  I'm the executive director of the

    20    Downtown Women's Center, and I'm here to speak


    21    in favor of Bank of America's purchase of


    22    Countrywide.







                                                                        313


     1                The Downtown Women's Center is a

     2    nonprofit agency serving about 2000 homeless

     3    women a year, just down the street, here, in


     4    Los Angeles, in the area that's referred to as

     5    "skid row."

     6                DWC offers direct services such as


     7    meals, showers, preemployment training, and

     8    permanent support of housing to homeless women

     9    that are elderly and suffer from mental or

    10    physical illness.


    11                Bank of America has been a

    12    community partner of Downtown Women's Center

    13    over the last seven years, and they have been

    14    active in our community, not only in our


    15    community but in the community of "skid row."

    16                Not only are they offering

    17    construction loans at a lower rate than other


    18    traditional funders, but have provided

    19    volunteers who offer their expertise on our

    20    board of directors and directly in our

    21    programs.


    22                Bank of America has donated over







                                                                        314


     1    $500,000 over the last seven years, and this

     2    last year with its Neighborhood Excellence

     3    Award, Downtown Women's Center was not only


     4    offered professional training but $200,000

     5    that was key in helping us to increase our

     6    services by developing a new site that will


     7    allow us to double our services and nearly

     8    double our housing capacity.

     9                We are honored to have most of the

    10    major banks in downtown LA, as well as many


    11    corporations represented on our board of

    12    directors, and they have all been major

    13    supporters for a long time for our agency.

    14                But no corporation has donated and


    15    shared their expertise to the same level as

    16    Bank of America.

    17                We are hoping that with this, the


    18    acquisition of Countrywide, that Bank of

    19    America, this merger will help in homeless

    20    prevention, as especially with women and

    21    children being our fastest-growing segment of


    22    the homeless population.  We would like this







                                                                        315


     1    to continue, to increase, and we believe that

     2    the good work that Bank of America is

     3    currently doing will truly assist individuals


     4    that have been victims of predatory lenders. 

     5    Thank you so much.

     6                DIRECTOR BRAUNSTEIN:  Thank you


     7    very much. 

     8                Ms. Lee.

     9                MS. LEE:  Good afternoon.  My name

    10    is Sandra Korison Lee and I'm here


    11    representing Aim High.  We are an educational

    12    nonprofit based out of San Francisco.  I'm

    13    here to read remarks prepared by Alec Lee, our

    14    executive director of the nonprofit.


    15                Aim High is in support of Bank of

    16    America's application recently filed with the

    17    Federal Reserve to acquire Countrywide


    18    Financial.

    19                As a California 1-0 -- 1-0, 501.3

    20    nonprofit organization and the recent

    21    recipient of a Bank of America neighborhood


    22    excellence award, we feel we are well-







                                                                        316


     1    positioned to provide insight and a unique

     2    perspective on the bank relationships with our


     3    community.  Bank of America has been a long-


     4    standing and trusted partner, providing

     5    funding and guidance for the Aim High

     6    organization in our multicampus Bay Area


     7    summer program.

     8                Due to the ongoing support Aim

     9    High has received from Bank of America, our

    10    summer program has grown from seven campuses


    11    to twelve, and the number of students has

    12    doubled from 500 to one thousand.  They have

    13    been leaders in the industry for several years

    14    in regards to nonprofit community development,


    15    quality growth and sustainability.

    16                Their work in the nonprofit

    17    community is unique and inspiring.  Four years


    18    ago, Bank of America launched its neighborhood

    19    excellence initiative, a national nonprofit

    20    support and development program that is truly

    21    one of a kind.


    22                Each year, eighty nonprofits are







                                                                        317


     1    chosen from thousands of applications to

     2    receive the neighborhood builder's award.  The

     3    award consists of a $200,000 grant and


     4    extensive professional development workshops

     5    for the two senior staff of the recipients.

     6                Aim High received the award in


     7    2007 and the executive director and associate

     8    director of Aim High participated in a series

     9    of workshops for senior leadership.

    10                This was a remarkable and highly-


    11    valuable experience, and the impact on our

    12    organization has been substantial.

    13                There is no other institution in

    14    the country that is doing what Bank of America


    15    is doing to sustain and develop the nonprofit

    16    community.  We are hopeful that the Federal

    17    Reserve will see the benefit of this


    18    acquisition and will allow a smooth transition

    19    that all consumers can benefit from.  Thank

    20    you for your time.

    21                DIRECTOR BRAUNSTEIN:  Thank you


    22    very much. 







                                                                        318


     1                Ms. Mount.

     2                MS. MOUNT:  Jeanne Mount.  I'm not

     3    going to use polite euphemisms like these


     4    other people have been doing.  Since the

     5    subprime mess, I've learned exactly at what

     6    point the Federal Reserve will wake up and


     7    start thinking that something may be quite

     8    awry out there in the vast reaches of the

     9    financial system.  It's when one of the Wall

    10    Street brokerages loses a minimum of $3


    11    billion.

    12                It's quite amazing to me, that all

    13    the regulators can watch the four top

    14    management persons at Countrywide, in


    15    apparently concerted action, sell three or 400

    16    million of their company's stock, and not

    17    realize that something, some kind of "hanky-


    18    panky" was going on.  

    19                It makes one wonder exactly how

    20    that three or 400 million was being divvied

    21    up.


    22                Countrywide had a former Federal







                                                                        319


     1    Reserve bank president on its board.  What was

     2    he doing when their employees were forging

     3    people's signatures on fake loan documents as


     4    they did with mine?  I'm not opposed to Bank

     5    of America's acquisition but I am opposed to

     6    their taking any of Countrywide's management


     7    with them in it.

     8                Countrywide had a sleazy,

     9    predatory business model in place, and that

    10    model could only have been put in place by


    11    sleazy predatory management.

    12                If any members of the existing

    13    Countrywide management go to Bank of America,

    14    their attitudes will spread like a virus


    15    through Bank of America.  Bank of America will

    16    not be able to lift them up.  They will drag

    17    Bank of America down.


    18                I have personally experienced the

    19    attitudes and business practices that brought

    20    Countrywide down, and I know whereof I speak. 

    21    I can't even hear their name without wanting


    22    to throw up.







                                                                        320


     1                I would suggest to the Federal

     2    Reserve, and all the other regulators, that

     3    they force banks and all other lending


     4    institutions to adopt a Google's model, which

     5    is "Do no evil."  Everybody who works at any

     6    lending institution should have a copy of it


     7    on their desk.  Google has done very well

     8    using such a model, and the lending

     9    institutions desperately need some kind of

    10    decent talisman by which to do business other


    11    than their own inclinations.

    12                DIRECTOR BRAUNSTEIN:  Thank you

    13    very much, and thank you to the panel.

    14                Okay.  Welcome to the panel and


    15    just a few housekeeping notes.  We have 

    16    timekeeper right there who will flash you

    17    signs.  You have five minutes for your


    18    statement, flash a sign when you have two

    19    minutes left, and then when your time is up. 

    20    And we would ask that you begin each statement

    21    by stating your name and your organization so


    22    that we can get it on the record.







                                                                        321


     1                And we'll start with you, Ms.

     2    Bliesner.

     3                MR. BLIESNER:  My name is Jim


     4    Bliesner.  I'm the director of the San Diego

     5    City County Readjustment Task Force, and we're

     6    directed by the city council and the county


     7    board to monitor lending practices and develop

     8    strategies for reinvestment in the San Diego

     9    region.

    10                We've fulfilled this function


    11    since 1977, and has an excellent record of

    12    success in creating and maintaining a solid

    13    reinvestment infrastructure.

    14                Its greatest success has been the


    15    long and open communication that's maintained

    16    between the community government and the

    17    lending community.


    18                In interest of full disclosure,

    19    the Bank of America sits on the reinvestment

    20    task force and does not agree with the

    21    statements I'm going to make.


    22                No funds from the bank are used







                                                                        322


     1    for RTF funding or its primary functions.

     2                The RTF has raised concerns to the

     3    Federal Reserve Bank regarding the subprime


     4    lending by Countrywide over the past five

     5    years.  We've monitored the locations of the

     6    loans and the resultant foreclosures.


     7                Countrywide is a major lender of

     8    ARMs throughout the region, about 20 percent. 

     9    In addition, we've analyzed the lending of

    10    Bank of America using home mortgage disclosure


    11    data.

    12                In many instances, where the bank

    13    does not lend, is where the ARMs are.

    14    Particularly in middle income areas there's a


    15    significant overlap.  We have raised the

    16    concern that the volume of lending between the

    17    two institutions represents a significant


    18    market presence in these communities, which in

    19    our opinion should be mitigated.

    20                We're concerned that the combined

    21    bank will monopolize and make the market in


    22    these neighborhoods, with possible negative







                                                                        323


     1    environmental impacts -- economic impacts.

     2                We ask the Federal Reserve Bank to

     3    be aware that the foreclosure environment in


     4    San Diego is having a significant impact on

     5    the economy as well as the quality of life in

     6    some neighborhoods.  Vacant properties cause


     7    blight.  The city attorney's vacant properties

     8    division has provided me with some images of

     9    properties that they have ticketed and asked

    10    that they be boarded up.


    11                As you can see, they require a

    12    response from the owners.  In recent months,

    13    these owners are banks, and in many instances

    14    it's Countrywide.  It's the experience of the


    15    city attorney's office that the responses of

    16    the lender to request to board vacant

    17    properties or repair them, are prolonged and


    18    problematic, and have increased crime, in some

    19    cases these homes becoming sites of -- in

    20    three cases, of rape and significant drug

    21    infestation.


    22                In addition, the bank is absent







                                                                        324


     1    from loss mitigation efforts which are

     2    provided on a regular basis throughout the

     3    region.  Of course an institution which


     4    behaves like this needs to be bought and

     5    reengineered to respond to consumer needs. 

     6    Hence, the B of A acquisition should remedy


     7    this situation.

     8                We're seeking assurances that that

     9    will be the case.  Countrywide is in court in

    10    many states, and with many accusers of


    11    misrepresentation and potential fraud.

    12                I sit on grant-making committees

    13    at United Way, the San Diego Foundation, who

    14    have made significant grants for foreclosure


    15    prevention.  Reports from these foreclosure

    16    assistance programs indicate that high numbers

    17    of Countrywide customers need legal


    18    assistance, not mitigation.

    19                I want to acknowledge all the

    20    wonderful agencies participating in these

    21    hearings.  The nonprofits do great work.  They


    22    are the front line against this becoming a







                                                                        325


     1    scourge in our urban environments.  They're

     2    "stopping the wolf" at the door and doing

     3    amazing work with the leftovers of this


     4    calamity.

     5                Bank of America has provided many

     6    grants.  They're valuable.  But providing


     7    grants doesn't pay attention to the scale of

     8    the problem.  The remedies are related to loan

     9    policies and practices.  The remedies are

    10    related to new products and new delivery


    11    systems.  We're not confident that the Bank of

    12    America has the culture or the capacity or the

    13    orientation to solving this problem in a

    14    responsible way, without being told by the


    15    Federal Reserve Board to do it, with very,

    16    very clear delineation of the mitigation

    17    options that are going to be required.


    18                The bank has had an opportunity to

    19    lend in our low-income communities for many,

    20    many years.  For some reason, the products and

    21    their approach, or the location of the


    22    branches, or the delivery system, or the







                                                                        326


     1    culture of the back doesn't allow them to "hit

     2    the ground" in addressing this need.

     3                For example, 26 percent of the


     4    population in San Diego are Latinos.  Most of

     5    the borrowers for subprime loans were Latinos. 

     6    The Bank of America, at the height of the


     7    lending crisis, made 187 home loans to

     8    Hispanic borrowers in the whole San Diego

     9    County.

    10                They haven't exhibited a record of


    11    understanding what the need is, and without

    12    direction from the Federal Reserve Bank in

    13    this crisis, we don't think that they will do

    14    it.  We need you to make the bank provide a


    15    specific plan prior to granting the merger.

    16                We appreciate very, very much the

    17    gesture by the Federal Reserve Bank in holding


    18    this hearing and we anxiously await your

    19    conclusions.

    20                DIRECTOR BRAUNSTEIN:  Thank you

    21    very much. 


    22                Ms. Berkland.







                                                                        327


     1                MS. BERKLAND:  Hi.  I'm Schahrzad

     2    Berkland.  I'm a real estate analyst with the

     3    Berkland Group and a realtor.  We got here


     4    because the Fed ignored its mandate under the

     5    Home Ownership Equity Protection Act, and

     6    Congress allowed it.  At this point a taxpayer


     7    bailout is inevitable, so thus regulation is

     8    definitely required.

     9                Under this merger, the Fed must

    10    require transparency, responsibility, and


    11    leadership from Bank of America and from all

    12    lenders.

    13                House prices in California are

    14    still in a bubble, and they are too high in


    15    relation to income.  This has lowered the

    16    demand for housing which is leading to lower

    17    prices and foreclosures.  Foreclosures are a


    18    result of falling prices.  Falling prices are

    19    inevitable but foreclosures don't have to be. 

    20     Yet banks seem to prefer foreclosures over

    21    doing short sales or loan workouts.


    22                We had a lot of people up here







                                                                        328


     1    talking about how banks don't want to do loan

     2    workouts.  Well, if you're trying to sell your

     3    home to get out of a bad loan, and you have


     4    negative equity, don't look for relief there

     5    because banks are not approving short sales.

     6                Out of 19,000 homes for sale on


     7    the MLS in San Diego, 4500 are short sales and

     8    only 2000 are bank-owned.  However, 25 percent

     9    of bank-owned homes sell each month.  Less

    10    than one percent of short sales sell.


    11                This has to do with the pooling

    12    and servicing agreements.  But this is

    13    something that must be changed.  Banks prefer

    14    foreclosures over short sales.  This is a


    15    problem that needs to be addressed.

    16                This is not just a subprime

    17    problem.  We have multimillion dollar homes in


    18    foreclosure but they're not making headlines

    19    yet because they have seven and ten year

    20    interest only and ARM rates.

    21                So we're going to be seeing a


    22    panel of people, rich people up here in







                                                                        329


     1    another two years. 

     2                The bank merger must include a

     3    plan.  Countrywide management should return


     4    their excessive compensation and put the money

     5    into doing true servicing, and Bank of America

     6    has an opportunity to transform this sloppy


     7    lending and predatory lending and servicing,

     8    and doing fair, responsible lending.


     9                Specifically, this is what I think

    10    they should do.  We need transparency. 


    11    Lenders must talk to borrowers.  No more games

    12    and running around.  Banks need to stop hiding

    13    their losses.  No more off balance sheet

    14    investment accounts.  Let's get rid of Level


    15    3 assets.

    16                Give data on workouts, loan

    17    modifications and refis.  Explain to people


    18    why the PSAs prevent short sales and loan

    19    modifications, and why foreclosures are

    20    preferable to short sales.

    21                We have 6000 bank-owned homes in


    22    San Diego according to property tax records







                                                                        330


     1    but only two thousand for sale on the MLS. 

     2    Where are the other 4000 homes?  Transparency.

     3                Second.  We need responsibility. 


     4    Banks need to be responsive to borrowers. 

     5    They need to do more short sales, workouts,

     6    loan modifications, and enforce responsible


     7    lending guidelines.

     8                Third.  We need leadership.  We

     9    need to replace payday lending with bank

    10    branches in low- and moderate-income


    11    communities.  Bank of America has a $250

    12    million credit line to payday lenders.

    13                Instead, they should use this

    14    money to open bank branches.  Every loan


    15    should be modified, regardless of loan to

    16    value, into a 30 year fixed-rate loan.

    17                Banks should follow NACA and CLL's


    18    model for how to do subprime right.  They have

    19    less than a 5 percent default rate and they

    20    have been doing the subprime lending for

    21    decades.


    22                You don't have to take advantage







                                                                        331


     1    of people to make money.  They need to work

     2    with community action groups to get foreclosed

     3    homes into the hands of appropriate buyers,


     4    and Bank of America needs to do a better job

     5    in its direct lending program, because just as

     6    hard as it is to get them to modify a loan at


     7    Countrywide, it's very difficult, if you're a

     8    buyer, to get a loan at Bank of America, and

     9    I have a client about to lose his deposit

    10    because Bank of America won't even return


    11    phone calls. 

    12                So I'm very concerned about the

    13    loss of competition with how they're handling

    14    their direct lending.  They're very


    15    unresponsive.  Thank you.

    16                DIRECTOR BRAUNSTEIN:  Thank you.

    17                Mr. Jones.


    18                MR. JONES:  Thank you.  My name is

    19    Dean Jones.  I'm the CEO of the Southland

    20    Partnership Corporation.  We're based in

    21    Compton, California.  I'm also representing


    22    here today the National Black Business







                                                                        332


     1    Council.  I'm a board member.

     2                And basically our position is that

     3    the Bank of America acquisition should be


     4    declined.  It should be denied.  I think the

     5    Federal Reserve Board has an opportunity here

     6    to put a stop to something that is considered


     7    a growing oligopoly.  We have seen it in so

     8    many industries, and it's past time for us to

     9    stand up and stop the madness of corporations

    10    taking money straight from depositors, saving


    11    that money, laying off employees to buy other

    12    companies.

    13                Bank of America has lost jobs

    14    intentionally, 20,000 over the last ten years,


    15    with all of their acquisitions -- LaSalle,

    16    MBNA, and Fleet Boston.  20,000 jobs were

    17    eliminated from their labor force in order for


    18    them to have enough money to buy these

    19    corporations.

    20                Now what I am seeing in this

    21    situation, particularly, is more of a


    22    situation for them to clean up the reputation







                                                                        333


     1    of the banking industry.

     2                The financial industry, as it

     3    stands, could have easily, in a good bank --


     4    Bank of America, America's Bank of America

     5    could have easily said these adjusted rate

     6    mortgages are wrong.  Now I have a degree in


     7    accounting, it's old now, San Jose State,

     8    1975, but when we went through accounting

     9    classes, the adjusted rate mortgage definition

    10    was this is an onerous commitment,


    11    troublesome, burdensome.  This is the worst

    12    risky loan you could use.

    13                So how could a good bank stand

    14    idly by and not wave an American flag, and


    15    say, Why is my industry allowing this

    16    negligent lending to take place?  I'm part of

    17    the club, financial lending, so this is why


    18    you have an opportunity to say "declined,

    19    denied."  Let's reverse the role because it

    20    happens to us.

    21                I'll give you a clear example.  I


    22    spoke to Kenneth Lewis two years ago, right







                                                                        334


     1    here in Bunker Hill, and I gave him a specific

     2    example.  I'm located in Compton.  There's a

     3    branch in Compton.  Prostitutes walk in front


     4    of their bank, for years, years, and not one

     5    manager of that bank decided that this does

     6    not look good upon our bank.  This is "the


     7    tail wagging the dog," when you have a company

     8    that is allowing this kind a decay in their

     9    community.  They say, well, I'm in Compton. 

    10    I guess this can happen.


    11                This is not acceptable for any

    12    sort of institution to think they could go

    13    forward and buy another bank.  Then I'll give

    14    you another story that just happened this


    15    week, and my grandmother, who lived to 103

    16    years old, passed away in March.

    17                I went and got her death


    18    certificate to clean up her checking account

    19    at a Bank of America branch that she had for

    20    40 years, right there on Sierra Avenue.  I'd

    21    go into the bank.  They'd say you have to come


    22    in 40 days.  That's when we'll take care of







                                                                        335


     1    that situation for your grandmother's account. 

     2    You have to wait 40 days.  I said fine.

     3                So I go back at 40 days, and


     4    checks have been written on her account. 

     5    Well, the lady's gone.  The lady has gone.  So

     6    I said, well, let me see the copies of the


     7    checks that have been written, and the bank

     8    officer says this doesn't match the signature

     9    card.  Well, it was obvious.  It wasn't even

    10    an attempted forgery.


    11                So he says if you want to do

    12    something about it, you have to go to our

    13    Fraud Department.  I'm saying why should I go

    14    to a Fraud Department?  I should be going to


    15    an Incompetency Department.  Your bank can see

    16    right here that the checks don't match the

    17    signature card.  That's incompetency.  That's


    18    not fraud.

    19                Why would you have a bank with a

    20    40 year member and not be able to entertain --

    21    and it was an irregular amount of money on it.


    22                Now while we're in the bank the







                                                                        336


     1    first time, they should have said look, if

     2    your grandmother's gone and this account

     3    doesn't have someone that's active with it,


     4    that's when they should have alerted the bank

     5    to not have any activity on it.  Why do they

     6    wait like that?


     7                And now I have more work to do, to

     8    go through their Fraud Department, and they

     9    even indicated if the phone asks for some

    10    certain numbers just wait for the operator to


    11    come on so you can get served.  But I have to

    12    do the -- I have to do my due diligence to

    13    take care of the situation.

    14                So with the lost jobs as -- the


    15    National Black Business Council -- we want to

    16    see a more responsive organization take care

    17    of the communities that they're in.  Mainly


    18    jobs here, and you've heard that a lot of

    19    things have been outsourced out of the

    20    country, and contracting.

    21                We don't have to worry about


    22    funding mortgages.  If people have sustainable







                                                                        337


     1    jobs and small business owners have access to

     2    corporate contracts, the retail activity takes

     3    care of itself.  But some of these


     4    corporations are not opening their doors for

     5    access to contracts, and this is what the

     6    National Black Business Council's all about.


     7                So in closing, I'll leave you with

     8    someone, one of your alumni.  Andrew Bremer,

     9    in the mid '80s, was on the board for Bank of

    10    America, when Bank of America was in trouble. 


    11    Bank of America was on the verge of

    12    bankruptcy.

    13                Andrew Bremer, from the Federal

    14    Reserve Board, took his well-deserved


    15    information, a bank that he had created, the

    16    Bank of Sudan, and he gave information to the

    17    B of A people and turned that bank around. 


    18    And now they're taking advantage of some of

    19    that Federal Reserve information from one of

    20    your alumni, and now they're taking advantage

    21    of all of these doleful acquisitions, and I


    22    think the B of A tagline is going more from







                                                                        338


     1    Bank of America to Bank of Arrogance.  I see

     2    the A standing for more than just America.

     3                So I'll close with that.  Again I


     4    thank you for your time.  If there's any

     5    questions, I'll send my written information

     6    before I make it.  Thank you.


     7                DIRECTOR BRAUNSTEIN:  Thank you

     8    very much. 

     9                Mr. Sokhom.

    10                MR. SOKHOM:  Thank you and good


    11    afternoon.  Thank you for the opportunity to

    12    come, be -- for everyone to make this

    13    testimony.  My name is Nomoch Sokhom.  I'm the

    14    direct of asset building for Pacific Asian


    15    Consulting and Employment, otherwise known as

    16    PACE.

    17                We are a private nonprofit company


    18    that helps people to improve their lives

    19    through service such as getting training,

    20    better job, housing, start up small business,

    21    providing free schools.  PACE started 31 years


    22    ago and helps 30,000 families a year.







                                                                        339


     1                We come here with one purpose, is

     2    to bring to attention, to both the Federal

     3    Reserve and Bank of America the need for


     4    specific targeted program to address the

     5    special impacts that mortgage foreclosure

     6    crisis is having among the Asia Pacific


     7    Islander community in the United States.

     8                We know from the past experience

     9    that API community is often overlooked.  To

    10    assure that the resource being directed at


    11    this problem reach the API community, we are

    12    requesting that specific commitment be made to

    13    assure that outreach foreclosure assistance

    14    and access to credit to Asian Pacific Islander


    15    home owner and business owner.

    16                It is only with such public and

    17    on-the-record pledge that we can be assured


    18    that API community is deliberately included in

    19    receiving foreclosure assistance, and to

    20    ensure that they will be able to continue to

    21    be part of American Dream as home and business


    22    owner.







                                                                        340


     1                The Center For Responsible Lending

     2    estimate that 20 percent of the high-cost

     3    loan, $6.4 billion, is going into default, at


     4    risk.  These are going -- owned by the API

     5    community, making it 22,000 API family that

     6    are at risk.  27.2 billion or 18.9 percent in


     7    high-cost loan are made to API, and since

     8    Countrywide is one of the largest provider of

     9    subprime and high costs, make Countrywide as

    10    one of the provider to API community in


    11    mortgage.

    12                Now there are many report that API

    13    is a model community or model family, but this

    14    crisis is different.  The Los Angeles Business


    15    Journal, during the last few weeks, reported

    16    eight out of 19 business bankruptcy belong to

    17    the API community.  That's 42 percent of


    18    bankruptcy in Los Angeles.

    19                In my role as a director of asset

    20    building, I'm helping both promoting home

    21    ownerships and also business ownerships.


    22                We have experienced that 18







                                                                        341


     1    percent of the API home owner use their home

     2    as collateral for small business.  Maybe this

     3    is not new but it is very substantial.  Due to


     4    the facts that because their business had no

     5    credit, therefore they used their home, and

     6    not able to build the business credit.


     7                Now when the price of the home

     8    getting reduced, they lose their line of

     9    credit.  I would want to also say that this is

    10    not just a crisis.  It should be considered as


    11    a disaster.

    12                After September 11, 2001, when LAX

    13    was closed, federal building and street around

    14    them also blockade, businesses that have the


    15    revenue go down 30 percent qualify for a

    16    disaster loan at the interest rate of 4

    17    percent.


    18                We have clients with Burger Chef

    19    that have their revenue down by 50 percent. 

    20    Truck delivery owner choose to pack their

    21    truck because every time they roll their truck


    22    to deliver something, they would lose money.







                                                                        342


     1                The home improvement contractor

     2    having, laying off the handymen, two or three

     3    of them.  If this is not a disaster, what


     4    would be a disaster?  The founding father of

     5    Bank of America, A.P. Gianni, was a banker of

     6    the "little guy."  Facing disaster, he pledged


     7    his Bank of Italy, later became Bank of

     8    America, as a savior of the community. 

     9                When the powerful 28 second

    10    earthquake hit San Francisco downtown in 1906,


    11    while other banks were closed amidst the ruins

    12    of building collapse and on fire, Gianni was

    13    the first to reopen his bank, lending so

    14    people could rebuild.


    15                We are now facing a disaster,

    16    possibly greater than death of earthquake,

    17    greatly ruining family home, business and


    18    livelihood.

    19                I wish to say that helping

    20    community is the tradition of Bank of America,

    21    a pioneer in community development, through


    22    its neighbor, put excellent initiative,







                                                                        343


     1    reaching 80 community annually in Los Angeles

     2    and around the nation, with the most

     3    unrestricted funding, and through America,


     4    block by block, in Los Angeles and other city.

     5                We appeal for a public commitment

     6    by the Bank of America to reach a new height,


     7    and take this crisis on as the opportunity to

     8    save our community as the bank acquire and

     9    intricate Countrywide Corporation.

    10                DIRECTOR BRAUNSTEIN:  Thank you


    11    very much.  Thank you to the panel.

    12                Hi.  Welcome, and just a few

    13    housekeeping notes.  We have a timekeeper that

    14    will let you know when you have two minutes


    15    left, and when your time is up.  You have five

    16    minutes for your statement and please begin

    17    your statement by stating your name and your


    18    organization, so we can get it on the record.

    19                We'll start with Ms. White.

    20                MS. WHITE:  Thank you.  My name is

    21    Michelle White.  I am the executive director


    22    of Affordable Housing Services in Pasadena







                                                                        344


     1    where Countrywide used to have its

     2    headquarters.  We are a development company

     3    that does housing development for low- and no-


     4    income individuals, and do both advocacy

     5    around affordable and fair housing issues for

     6    the same group.


     7                We, like many of the speakers

     8    today, are very happy at the prospect of

     9    Countrywide being brought under the regulatory

    10    cloak as a result of the merger, but we


    11    believe that it should be conditioned upon a

    12    number of things, and I will speak primarily

    13    to a fair housing plan that I believe ought to

    14    be put into effect to address the effects of


    15    past discrimination.

    16                While Bank of America's HMDA data

    17    is about average, the Countrywide subprime


    18    lending practices have had very devastating

    19    effects on the basis of fair housing and fair

    20    lending.  They are individual community and

    21    vendor oriented.  There are a number of


    22    ramifications, and we believe that a plan







                                                                        345


     1    needs to be put into place before the merger

     2    is agreed to, that will address all of those.

     3                The statistics have been


     4    forthcoming and we will submit written

     5    documentation with regard to additional

     6    statistics, but clearly, it is commonly known


     7    that African American are twice as likely to

     8    be included in the subprime lending mortgage

     9    market for Countrywide's loans as white

    10    purchasers.  So the impacts are there, as well


    11    as in the Asian American, as well as the

    12    Latino communities, and the studies are also

    13    available to show that many of those persons

    14    who were included in subprime loans should


    15    have been able to receive conventional prime

    16    and fixed rate mortgages.

    17                We do not have access to the


    18    demographics, to show what the foreclosure

    19    rate are, and whether there is a disparate

    20    impact.  But I consult with a number of fair

    21    housing groups, and I can tell from the number


    22    of people coming in, seeking counseling, that







                                                                        346


     1    the anecdotal information is clearly that

     2    there is a disparate impact on the basis of

     3    race and ethnicity among those persons whose


     4    houses are being foreclosed upon, or who were

     5    in jeopardy of such.

     6                I believe that it's equally true


     7    with regard to those who've had prepayments

     8    included as part of their terms and

     9    conditions.

    10                We believe also that the impacts


    11    in communities have been well-documented. 

    12    There is a recent study by Jesus Hernandez, a

    13    doctoral student in Sacramento, that depicts

    14    exactly the correlation between the subprime


    15    lending and the previous redlining and deep

    16    restrictions, and other kinds of prohibited

    17    practices under the Fair Housing Act.


    18                This direct correlation also is

    19    clear when we looked at the predatory lending

    20    that was going on, and the targeted lending in

    21    South Central of elderly African American and


    22    Latino families.







                                                                        347


     1                So we believe that any merger

     2    ought to be conditioned on looking at a

     3    stabilization of these communities, so that we


     4    don't have empty houses with grocery carts and

     5    other kinds of things in newly opened

     6    communities.  If you look at the Hernandez


     7    study, he's got depictions of that.

     8                We also are aware that in the

     9    past, that African American vendors have not

    10    had the same kind of access to the REO


    11    listings, and that there needs to be an

    12    addressing of that.  If there is going to be

    13    listings, that equal access needs to be given

    14    to those persons who actually are working now


    15    in those communities. 

    16                The Multicultural Alliance has

    17    specific information with regard to that.


    18                And then finally, with regard to

    19    developers who rely so heavily upon tax

    20    credits, as does our agency, this was a very,

    21    very safe investment.  Bank of America made


    22    all kinds of investments in tax credits and







                                                                        348


     1    now they are pulling out of that market, and

     2    this is something that is going to

     3    dramatically affect the ability of nonprofit


     4    affordable housing developers do to their

     5    work.

     6                My time is up.  Thank you.


     7                DIRECTOR BRAUNSTEIN:  Thank you

     8    very much.

     9                Mr. Fernandez.

    10                MR. FERNANDEZ:  Good afternoon. 


    11    Thank you for allowing me to speak today.  I

    12    am here on behalf of Alliance For Home Buyers

    13    as well as my community in Buckeye, Arizona.

    14    As a result of my community involvement as


    15    president of our association, I felt this an

    16    excellent opportunity to come and share with

    17    the board just how devastating this is in


    18    communities around the nation.

    19                In 2006, Countrywide KB gave loans

    20    to 96 home owners in my community, of which 64

    21    of these loans had adjustable interest rates.


    22                Of that, 53 of those loans had







                                                                        349


     1    second mortgages as well, and we're finding

     2    that they're now in a position where they are

     3    facing foreclosure, and they're coming forward


     4    every day.

     5                The Maricopa County assessor's

     6    office has reported that the value of these


     7    homes have gone down, just in the last year,

     8    $50,000, and some of them, over $100,000.

     9                There are 311 homes in my

    10    community and the average loss in value of


    11    equity, according to county assessor's office,

    12    is $78,000 per home.  This means our community

    13    has lost $24.3 million in equity over the last

    14    12 months.


    15                We're finding that this also

    16    affects our community.  As foreclosures are

    17    taking place, the community also loses


    18    revenue, i.e., assessments at $53 a month, and

    19    maintaining the properties, because so far

    20    what we're seeing is REOs, the properties

    21    aren't being maintained.


    22                Thus it gives us an undesirable







                                                                        350


     1    neighborhood effect.  That results in $123 a

     2    month times the potential 80 possible

     3    foreclosures that our home owners are facing. 


     4    It's $11,000 a month.  That would put the

     5    association out of business.

     6                We are presently in support of the


     7    Bank of America acquisition.  However, myself,

     8    the Alliance For Home Buyers, and the

     9    community home owners, must be assured that

    10    there's going to be a remedy to help these


    11    people keep their homes.

    12                I'm a 35 year businessman.  I've

    13    looked at this every way I could.  The only

    14    thing that I could think that makes perfect


    15    sense is whoever, if this acquisition takes

    16    place, Bank of America or Countrywide, prior

    17    to the execution of this acquisition we would


    18    like to hear possible solutions, i.e.,

    19    modifications, or converting these loans to

    20    fixed interest rate loans, either 30 or 40 

    21    year, using the FICA scores when they


    22    originally bought these subprime loans.







                                                                        351


     1                I would further like to add that I

     2    would request that the board here to watch

     3    this closely, don't let this happen again. 


     4    This is devastation across the nation.  I

     5    would also state that the problems that I've

     6    described here today are not limited to my


     7    town in Buckeye, nor just limited to

     8    Countrywide KB, or KB Homes.

     9                What I'm finding here is that

    10    Countrywide has relationships with other large


    11    builders, such as Toll Brothers, NVR, Ryland

    12    Homes, Beazer Homes.  There's a clear conflict

    13    of interest when the same builder that is

    14    selling the home is also giving the home owner


    15    the mortgage.

    16                Bank of America should sever the

    17    relationships that Countrywide has with the


    18    home builders, if they're going to proceed

    19    with this acquisition.  Thank you.

    20                DIRECTOR BRAUNSTEIN:  Thank you

    21    very much. 


    22                Mr. Evans.







                                                                        352


     1                Mr. EVANS:  My name is Charles

     2    Evans.  I'm from the Legal Aid Foundation of

     3    Los Angeles.  We're here because we believe


     4    that the merger of Countrywide and Bank of

     5    America should not be allowed to go through

     6    unless there are certain precautions put in


     7    place for the large number of borrowers that

     8    are at risk of foreclosure.

     9                As of March 31st, 2008, roughly

    10    one in every 500 some odd households is in


    11    some state of foreclosure across this country.

    12                Foreclosures in 2007 were up 75

    13    percent from 2006, and those numbers

    14    themselves were increased over 50 percent from


    15    the foreclosures the year before.

    16                This epidemic of foreclosures is

    17    highly relevant to this merger, because


    18    Countrywide, as holder as one in five subprime

    19    loans, and because subprime loans consist of

    20    50 percent or more of the foreclosures that

    21    happen every year, is a key factor in this


    22    epidemic.







                                                                        353


     1                You've heard, over the course of

     2    the day, and you'll probably continue to hear

     3    tomorrow, of Countrywide's practices.  The


     4    deceitful practices.  The misrepresentations. 

     5    Sometimes just looking the other way and

     6    allowing these loans to go through.


     7                These practices have not only

     8    allowed the subprime loans that are in their

     9    control to reach the foreclosure state that

    10    they're in.  They're also set the incredibly


    11    low standard that permeates the subprime loan

    12    industry, in general.  Now Bank of America

    13    wants to merge with Countrywide and gain

    14    control of over one trillion dollars in loan


    15    product.

    16                If Bank of America wants to assume

    17    this sort of position in the loan industry, it


    18    needs to be prepared to accept the

    19    responsibility that Countrywide has in this

    20    current epidemic.

    21                Unfortunately, Bank of America has


    22    done little to inspire confidence in conduct







                                                                        354


     1    of its own business affairs to allow us to

     2    trust it to do this without some sort of

     3    outside obligation.  This is the same Bank of


     4    America that has leveraged its strong presence

     5    in our communities to increase the costs of

     6    banking with them, despite the attempts at


     7    competition by other banks.

     8                This is the same Bank of America

     9    that has consistently empowered the subprime

    10    loan market by being one of the biggest


    11    packagers of subprime mortgage-based

    12    securities, and doing so without questioning

    13    the lending practices behind those loans.

    14                When Bank of America acquires


    15    Countrywide, if this merger is allowed to go

    16    through, its own loan presence in the market,

    17    combined with Countrywide's presence in both


    18    the prime and subprime markets, will give it

    19    an enormous edge over its competitors.  It'll

    20    have no real competition in the market.

    21                When you combine that lack of


    22    competition with its own business practices in







                                                                        355


     1    other banking areas, there's no reason to

     2    believe that Bank of America will not maximize

     3    its returns on its loans that it acquires


     4    through its merger with Countrywide.

     5                That mitigation is important

     6    because as has already been mentioned,


     7    foreclosures have far-reaching impacts in our

     8    community.  It's not simply a matter of

     9    families being displaced from their homes.

    10                These are families that have


    11    difficulty working because of their

    12    dislocation from their home.  These are homes

    13    that when vacant drive down property values

    14    around them, attract crime to the


    15    neighborhoods and cause blight.

    16                What we need is a public and

    17    enforceable commitment imposed on Bank of


    18    America that will prevent these kinds of

    19    unnecessary harms.  These steps should

    20    include, at the very least, three things.

    21                First, Bank of America should


    22    declare a temporary moratorium on all







                                                                        356


     1    foreclosures, so those households caught in

     2    bad loans under Countrywide's policies can get

     3    one last opportunity to work out their loans


     4    before facing foreclosure.

     5                Second.  All adjustable rate loans

     6    that it acquires from the merger should be


     7    modified to fixed interest loans at reasonable

     8    interest rates.  Loan holders should receive

     9    interest for the loans that they back but not

    10    in any degree that prevents families from


    11    repaying their loans without having to

    12    refinance.

    13                Finally, those households which

    14    cannot afford their homes should be guaranteed


    15    an opportunity to avoid foreclosure through

    16    short sale or deeds-in-lieu of foreclosure,

    17    without additional negative impact on the


    18    borrower's credit.

    19                These are the kinds of commitments

    20    that we need from Bank of America. 

    21    Commitments which minimize the harm to


    22    everyone involved and not simply those backing







                                                                        357


     1    the loans.  We are in the midst of a

     2    foreclosure crisis that afflicts not only

     3    financial institutions but families and whole


     4    communities nationwide.

     5                If Countrywide merges with Bank of

     6    America, Bank of America will be in a market


     7    position sufficiently uncompetitive, that it

     8    will not need to mitigate the harms caused by

     9    the growing number of foreclosures.

    10                We need a commitment from Bank of


    11    America before this merger is final, that Bank

    12    of America will take the steps necessary to

    13    minimize the dislocation of families and the

    14    increasing degradation of our neighborhoods. 


    15    Thank you.

    16                DIRECTOR BRAUNSTEIN:  Thank you

    17    very much. 


    18                Ms. Gay.

    19                MS. GAY:  Thank you.  Lori Gay,

    20    Los Angeles Neighborhood Housing Services.  I

    21    want to say ditto to all of my panelists'


    22    comments and I'll try not to be repetitive.







                                                                        358


     1                I'm intrigued that we're the day

     2    before the civil unrest from 1992, and that

     3    some of us view what's going on in this


     4    country as just that.  It's not only a civil

     5    unrest but a disaster of economic proportions.

     6                So I'm interested in kind of three


     7    categories.  Help and hope, people and

     8    property, marketing and money.

     9                Starting with the end, I think the

    10    marketing and money got us to the crisis we're


    11    in now, that B of A and both Countrywide have

    12    to deal with.

    13                We also represent the LA County

    14    Center for Foreclosure Solutions, which is a


    15    broad-based coalition of a number of

    16    nonprofits, regulators, and others, who feel

    17    that together, maybe we can make a difference.


    18                I'm curious about how we get to

    19    every 30 to 35 minutes in LA County, someone's

    20    losing their home.  When we started tracking

    21    it, Ms. Braunstein, four years ago, you know,


    22    it was very other day or so, there might be a







                                                                        359


     1    foreclosure.

     2                So everything sped up.  What can B

     3    of A and Countrywide do if they come together? 


     4    I don't need to spend my time, frankly,

     5    talking about supporting or not supporting. 

     6    I think a lot of these deals are made before


     7    I get here to talk to you, frankly.

     8                But what is of note is what the

     9    bank can do as a new entity.  Counseling

    10    efforts that are happening nationwide to


    11    prevent foreclosures were also happening to

    12    encourage a bunch of families to get into

    13    homes.

    14                First-time buyers are down. 


    15    Losers are up.  Six out of ten of the families

    16    we counsel, both nationwide and in LA County,

    17    are a no, can't help you cause we either don't


    18    see modifications happening fast enough to

    19    stop the inevitable, or people borrowed so

    20    badly, that the gap is too big, two, 300,000

    21    dollars, and we can't surpass that.


    22                We held an event in conjunction







                                                                        360


     1    with the governor's office and the FDIC on

     2    Saturday.  Nearly 400 families showed up to

     3    get their loans modified.  Most had two or


     4    three loans, and so they had to get in line

     5    three times to see their servicer.  There were

     6    16 servicers on site that day, and I think it


     7    was great.  Some of the partnerships are

     8    starting to happen.

     9                But the transparency is difficult,

    10    and I know that the servicing industry, the



    11    investor industry has not been in this

    12    position before.  What plans does B of A have

    13    as a new entity to figure this stuff out?

    14                We've heard we weren't in it as


    15    the front-runner.  Well, Countrywide was, and

    16    whether it was anyone's intent or not, those

    17    of us who've met the Countrywide team, I don't


    18    generally have anything negative to say about

    19    anybody.  I think they've been stellar in

    20    terms of their willingness to sit down.  But

    21    what more can be done?


    22                And I think that's where most of







                                                                        361


     1    us are arrested right now.  What's the impact

     2    on tenants who are displaced?  I believe B of

     3    A needs to set up an REO program that's very


     4    aggressive.  If we're saying no to six out of

     5    ten, and so the numbers get better, now it's

     6    four or five out of ten, how do they put in


     7    patient capital that can be utilized by

     8    nonprofits and others to make deals happen?

     9                A relocation assistance fund would

    10    be really nice out of somebody's check that's


    11    going to be made on this merger.  Families

    12    need help and hope.  So if they're going to

    13    relocate anyway, how do we help them have

    14    first and last, and security deposit? 


    15    Properties at discounts to nonprofits.  Runs

    16    about $100,000 a unit for a municipality to

    17    deal with an abandoned property.  So nobody


    18    wins with that.

    19                First-time buyers.  What's the

    20    product?  B of A was an A paper lender. 

    21    Countrywide didn't mind lending to C paper and


    22    D paper.  Is it a B paper product?  We gotta







                                                                        362


     1    figure that out.  What are the subsidies?  And

     2    will the products include rehab.  "Never

     3    again" needs to be the language we use, not


     4    only for preventing foreclosures but saying

     5    that this merger'll be different than a bunch

     6    of others we've seen in the past.  I would


     7    make sure this one is tight, beforehand and

     8    after.

     9                Regional sales managers of color. 

    10    I've heard from a bunch of folks at


    11    Countrywide that there's already layoff talks,

    12    not unusual.  But looking at the platform of

    13    where branches will be closed will be

    14    critical.  If there's overlap, so what?  How


    15    much does that really cost?  Can we find out? 

    16    And will families of color have an opportunity

    17    to stay?


    18                Giving more money to communities

    19    that surround those branches is critical.  I

    20    got a bunch of calls last week -- I'm not mad, 

    21    everyone was trying to make a pledge before


    22    today, and I said to them, don't use our name







                                                                        363


     1    until the hearings are over.  If I could get

     2    approved that quickly by any lender in America

     3    again, I tell you, it would be a great day.


     4                And so we're looking at that, not

     5    only for the families but our little

     6    businesses that have to be run.


     7                April 29th, 1992 was a significant

     8    day in the history of Los Angeles and many

     9    cities across the country.  I believe we can

    10    avoid it.  Fail to plan; plan to fail.


    11                I'd love to see us get the

    12    planning done so we don't fail again.  Thank

    13    you.

    14                DIRECTOR BRAUNSTEIN:  Thank you


    15    very much.  Thank you to the entire plane.

    16                Mr. Dial, it looks like you're all

    17    alone.


    18                MR. DIAL:  I am alone.

    19                DIRECTOR BRAUNSTEIN:  Okay.  I

    20    don't know how long you've been here but you

    21    know we have a timekeeper here.  You have five


    22    minutes.  They will signal you, and please







                                                                        364


     1    start your statement with your name and

     2    organization so we can get it on the record,

     3    and with that, please begin.


     4                MR. DIAL:  Thank you very much. 

     5    My name is Taylor Dial.  I'm the executive

     6    director of the Housing Trust of Santa Clara


     7    County, and since I'm the only panel member,

     8    I thought I should have 20 minutes to speak.

     9                DIRECTOR BRAUNSTEIN: 

    10    Unfortunately, it doesn't work that way.


    11                MR. DIAL:  The Housing Trust is a

    12    501(c)(3) nonprofit organization whose mission

    13    is to serve as a catalyst to develop

    14    desperately-needed housing in Santa Clara


    15    County, California.  In that effort, one of

    16    our programs is to provide zero and low

    17    interest loans to first-time home buyers.


    18                We do this through working with a

    19    preapproved list of lenders in our community

    20    who provide subordinate financing as part of

    21    a lending package to low and moderate income


    22    families.  Bank of America is one of the banks







                                                                        365


     1    that we've worked with.

     2                Our lending experience with Bank

     3    of America has been positive.  The local


     4    branches with whom we have worked have shown

     5    a concern for providing lending packages that

     6    are straightforward and affordable to the low-


     7    and moderate-income home buyer.

     8                We have not seen the use of

     9    deceptive lending practices or the use of,

    10    quote, subprime loan packages when these


    11    lending agents have incorporated our product

    12    into their loan packages.

    13                We've also had positive

    14    experiences in working with specific Bank of


    15    America lending agents who promote below

    16    market rate housing programs that are publicly

    17    subsidized by our local jurisdictions.


    18                We consider Bank of America to be

    19    one of our most successful lending

    20    partnerships when serving the low and moderate

    21    income home buying community.


    22                Regarding Bank of America's







                                                                        366


     1    community development programs, the Housing

     2    Trust is a recipient of Bank of America's

     3    neighborhood excellence award, which


     4    recognizes those community development

     5    organizations that provide leadership in and

     6    a significant impact on their community.


     7                A panel of peer organizations that

     8    also includes Bank of America representatives

     9    chooses the recipients for that award.

    10                That award consists of a $200,000


    11    unrestricted grant to the winning

    12    organization, us, and relatively extensive

    13    executive level training program for the

    14    leadership of the winning organizations.


    15                My understanding is the bank's

    16    invested over $60 million in that program over

    17    the past three years.



    18                As a recipient of this award, and

    19    later as a member of a judging panel for

    20    future recipients, I can attest to both the

    21    high community value of such a program and to


    22    the sincerity and high level of commitment by







                                                                        367


     1    the bank to objectively contribute to the

     2    community in a meaningful way.

     3                By any measure, the dollars


     4    invested in this program are meaningful and

     5    those unrestricted dollars donated to

     6    nonprofits are very meaningful.


     7                However, the effort invested in

     8    the executive training program is what

     9    indicates how committed the bank is to

    10    improving our community.  I've yet to see


    11    another giving program that positively impacts

    12    a community benefit organization as well as

    13    neighborhood excellence award program.

    14                While the Housing Trust is not


    15    qualified to submit an opinion on the efficacy

    16    of the proposed acquisition of Countrywide

    17    Financial Corporation by Bank of America, our


    18    experience with the bank, and lending

    19    practices, would indicate the likelihood of a

    20    positive outcome would be high.  Thank you.

    21                DIRECTOR BRAUNSTEIN:  Thank you


    22    very much.  With this, we have an open mike







                                                                        368


     1    session.  I don't know if anybody signed up. 

     2    Okay.  And they can feel free to come forward. 

     3    Also, I would ask if -- I don't know if


     4    there's anybody in the audience that is

     5    scheduled to speak tomorrow but would like to

     6    speak today.  They can also feel free to do


     7    so.

     8                Could you please state your name

     9    very clearly, so that we can get it on the

    10    record when you begin your statement


    11                MS. HALLEY:  My name is Lucinda

    12    Halley.  H-a-l-l-e-y.  I'm a private citizen. 

    13    I live in Whittier, California.

    14                The purpose of these hearings is


    15    to assess the record of performance of

    16    Countrywide and Bank of America.  We have

    17    heard testimony supporting Bank of America's


    18    charitable giving.  We've also heard

    19    disturbing testimony about its lending

    20    practices.

    21                We've heard that it took subprime


    22    loans from lenders such as Ameriquest, and







                                                                        369


     1    packaged those loans into securities, and sold

     2    those securities around the world.  We've

     3    heard disgusting testimony about Countrywide's


     4    lending practices, and that consumer support -

     5    - I use that word ironically -- consumer

     6    support after lending.  It is certain, in my


     7    mind, that Countrywide was a major player in

     8    creating the current collapsed real estate

     9    market through fraudulent loan practices that

    10    I, as a private individual, can testify to.


    11                Therefore, it is beyond my

    12    understanding why Bank of America would take

    13    the fox under its cloak by allowing David

    14    Sambol to head the new mortgage business.  I


    15    would request that the Fed stipulate that no

    16    executive from Countrywide be involved in the

    17    ongoing Bank of America mortgage business.


    18                Now as to the point that

    19    Countrywide and Bank of America, among other

    20    banks, I am certain, created the environment


    21    that led to the real estate market collapse we


    22    are facing today, I would like to expand just







                                                                        370


     1    a little.

     2                People who otherwise would not

     3    have qualified to be in the market became


     4    owners and investors over the past five or six

     5    years.  They did this through, A, artificially

     6    low interest rates which I put at the Fed's


     7    door; B, 100 percent lending practices, 80

     8    percent conventional loan, 20 percent second

     9    trustee.

    10                Option ARMS with their attendant


    11    negative amortization, and fraudulent loan

    12    applications encouraged by the mortgage

    13    brokers.

    14                With so many people and so much


    15    money chasing so few homes, the prices of

    16    homes began to escalate.  I, in my capacity as

    17    a real estate broker, studied price increases


    18    and the artificial escalation seems to have

    19    begun in 2002.

    20                Legitimate home owners purchased

    21    in the meantime, not knowing that they were


    22    buying into a rigged market.  That rigged







                                                                        371


     1    market has now entered the dump phase of a

     2    huge "pump and dump" scheme.  Home owners who

     3    have continued to make payments and are


     4    current on their loans suffer in this scheme,

     5    because their homes have lost value and they

     6    are upside-down in their equity, and they


     7    cannot be refinanced due to loan-to-value

     8    ratios.

     9                In recognition of this fact, the

    10    LA County tax assessor has begun to reassess


    11    homes purchased in 2005 and 2006 for property

    12    tax reductions, and I would suggest that Bank

    13    of America do no less.  I think that the

    14    principal of all outstanding mortgages should


    15    be reduced to the aforementioned 2002 levels. 

    16    I also think that fixed interest rates, when

    17    they are beneficial to the consumer, they


    18    should be offered to the consumer.

    19                I also like the idea of a board of

    20    consumer advocates, advising Bank of America,

    21    and watching them, to make certain that they


    22    fulfill the promises that they have made here







                                                                        372


     1    today.

     2                In conclusion, I would challenge

     3    all Americans to begin to do a work-around the


     4    banking and finance industry, and become

     5    direct lenders to microentrepreneurs and other

     6    creditworthy individuals, by way of nonprofits


     7    with proven track records.  I would also call

     8    on the Fed to begin your own dissolution

     9    because you have failed in your mandate to

    10    provide economic stabilization.  Thank you.


    11                DIRECTOR BRAUNSTEIN:  Thank you

    12    very much. 

    13                Sir.

    14                MR. KERRIGAN:  Hello.  I'm John


    15    Cash.  Sorry.  I just had to say that.  I even

    16    "walked the line" with this speech as Johnny

    17    would.  I am with People's Self-Help Housing


    18    and it's a nonprofit.

    19                DIRECTOR BRAUNSTEIN:  Sir, did you

    20    actually state your name for the record.

    21                MR. KERRIGAN:  Sorry.  My name is


    22    Brian Kerrigan.  My real name.  I'm with







                                                                        373


     1    People's Self-Help Housing, which is a

     2    nonprofit counseling agency for people in

     3    foreclosure, and first-time buyers, based in


     4    San Luis Obispo.  Okay.  I drove down here. 

     5    I'm still trying to figure out the street

     6    numbers.  Am I right?  But anyways, I wanted


     7    to -- you know, I am actually forbidden from

     8    giving you my company, an opinion or anything

     9    like that, about the proposed merger.

    10                So what I'm going to do in lieu of


    11    that is just give you what I think is some

    12    reasonable solutions to the kind of crisis

    13    we've got going on right now.  I've been in --

    14    I've seen both sides.  I was in the mortgage


    15    industry for a couple years, so I was on the

    16    sales side.  Now I'm on the nonprofit,

    17    thankfully, and I'm very happy about that. 


    18    It's working out a lot better for me.

    19                So anyways, one of the things -- I

    20    mean, one of the things I see as being the big

    21    culprit is the option ARM, option adjustable


    22    loans.  I feel it's a niche loan that's not







                                                                        374


     1    necessarily meant for everybody.  It has a

     2    minimum payment where you can be paying less

     3    than the interest, and it becomes confused


     4    somewheres along the process because it

     5    doesn't get explained in full, is what I've

     6    noticed. 


     7                So, you know, I was thinking, you

     8    know, maybe empower the title companies to

     9    explain it.  Loan officers -- make more

    10    regulation on loan officers and their managers


    11    to explain the terms to customers, cause

    12    really what we want is a customer that

    13    understands all the terms of their mortgage,

    14    and I think that, unfortunately, that's, you


    15    know, sometimes what we don't see.

    16                But, yeah, you know, just as a

    17    general rule of thumb, I think that, you know,


    18    loan officers could be regulated more, and

    19    also, you know, the banks they work for.

    20                I know that -- I worked for Chase

    21    Home Finance, and they didn't really do many


    22    option ARMs and they actually brokered out







                                                                        375


     1    just a handful of them.  As far as big banks

     2    go, i believe they're probably the least

     3    number of them, and they actually -- it ended


     4    up meaning that they had less foreclosures

     5    than the big banks.

     6                So, you know, when you take loans


     7    that are overly complicated, and you try to

     8    "Mickey Mouse" people through the process, I

     9    think that becomes a problem.  So that's

    10    pretty much all I have to say.


    11                DIRECTOR BRAUNSTEIN:  Thank you

    12    both very much.  Anyone else?

    13                [No response] 

    14                DIRECTOR BRAUNSTEIN:  If not, this


    15    hearing is adjourned until tomorrow morning at

    16    8:30.

    17                (Whereupon, at 3:50 o'clock p.m.,


    18    the hearing was adjourned, to reconvene the

    19    following day at 8:30 o'clock a.m.)

    20

    21


    22

	
	
	
Last update: December 3, 2010