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Public Meeting Transcripts

Public Meeting Bank of America Corporation and Countrywide Financial Corporation

Held on Tuesday, April 29, 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

          + + + + +

          Tuesday
          April 29, 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
          PAT 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







                                                                          2


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

     2                                         (8:35 a.m.)

     3                MS. BRAUNSTEIN:  Good morning,


     4    everyone.  We're going to get started.  I'd

     5    like to welcome you all to the public meeting

     6    on the application by Bank of America


     7    Corporation to acquire Countrywide Financial

     8    Corporation.  And I just will make a few

     9    housekeeping notes about this application, and

    10    so some introductions for those of you who


    11    weren't here yesterday.

    12                My name is Sandra Braunstein, and

    13    I am chairing this public meeting.  And my

    14    fellow panelists are to the right of me; Pat


    15    Robinson, who is an Assistant General Counsel

    16    at the Federal Reserve Board's Legal Division,

    17    and next to her is Mac Alfriend, who's a


    18    Senior Vice President in the Department of

    19    Supervision and Regulation from the Federal

    20    Reserve Bank of Richmond.  And on my left is

    21    Scott Turner, who's the Community Affairs


    22    Officer from the Federal Reserve Bank of San







                                                                          3


     1    Francisco.  

     2                We're here today to hear comments

     3    on the application of BofA and Countrywide. 


     4    Procedurally, this is an informal public

     5    meeting, and members who are testifying, we

     6    may ask them some questions, but this is not


     7    a formal administrative hearing, so we're not

     8    bound by the rules regarding evidence, and

     9    cross examination, and some of the other

    10    trappings of a formal process of that kind.  


    11                We are going to move ahead and try

    12    to keep to the time table, because we have a

    13    number of people testifying today, so people

    14    will have five minutes for their comments.  We


    15    have a timekeeper right here, raised his hand,

    16    and he will have signs to hold up when there's

    17    two minutes left, and then when your time is


    18    up.  We would also ask that you begin your

    19    statements by stating your name, and the

    20    organization that you represent, if you

    21    represent an organization, because we want to


    22    make sure to get it on the record.  







                                                                          4


     1                There is a transcript of this

     2    hearing that is being made, and that will be

     3    available at the Federal Reserve Bank of San


     4    Francisco, and the Board, and also on our

     5    Board's website sometime next week.  And

     6    people are welcome to get a copy of that.  


     7                And those who are testifying, if

     8    you have additional written material that you

     9    want to submit, the deadline for that is

    10    Tuesday, May 6th at 5 p.m. Eastern time.  And


    11    you can submit that to the Federal Reserve

    12    Board.  And if you need the address, the

    13    people at the registration table  can help

    14    you.


    15                We also ask if you have a written

    16    copy of your statement that you're making

    17    today that you're able to leave with us, if


    18    you could leave that at the registration

    19    table, that would be helpful.  And with that,

    20    we will begin the testimony.  Dr. Duvall.

    21                DR. DUVALL:  Thank you.  And thank


    22    you for inviting me to testify today on the







                                                                          5


     1    matter of Bank of America Corporation

     2    acquiring Countrywide Financial Corporation. 

     3    I am Robert Duvall, the President and Chief


     4    Executive of the National Council on Economic

     5    Education, where I have served for 12 years. 

     6     Prior to that, I was President of Pacific


     7    University in Oregon for 14 years, so my

     8    contacts with Bank of America go long and

     9    deep.

    10                In January of this year, I was


    11    appointed by President George W. Bush to the

    12    16-member President's Advisory Council on

    13    Financial Literacy that he created by

    14    Executive Order, and which is chaired by


    15    Charles Schwab.  

    16                On Tuesday, April 15 of this year,

    17    I testified before the 70-member House


    18    Financial Services Committee at the urging of

    19    members, Judy Bigert of Illinois, and Ruben

    20    Hinojosa of Texas, co-chairs of the

    21    Congressional Caucus on Financial and Economic


    22    Literacy.  The House Financial Services







                                                                          6


     1    Committee Chairman, Barney Frank, called this

     2    hearing so that the committee could examine

     3    the effectiveness of private sector financial


     4    education initiatives, as well as government

     5    initiatives, and helping to better educate

     6    people to make good decisions financially, the


     7    kind of problems that we're wrestling with

     8    now.

     9                My organization, the National

    10    Council on Economic Education, the NCEE, is a


    11    champion of financial literacy and a leader in

    12    the field.  The NCEE is a unique non-profit,

    13    non-partisan independent organization directed

    14    by an outstanding governing board of national


    15    volunteer leaders from education and business,

    16    with a clear and compelling mission, vision,

    17    and purpose of helping you people learn to


    18    think, and choose responsibly, and

    19    successfully. For 60 years, the NCEE has been

    20    leading the charge to improve economical and

    21    financial education in the nation's schools. 


    22                Bank of America and the NCEE share







                                                                          7


     1    a vision for improving economic and financial

     2    literacy at all levels of society.  Bank of

     3    America has been tremendously supportive of


     4    our efforts to get into the nation's schools,

     5    particularly in under-served areas. 

     6                I understand that one of the


     7    questions that you are considering is whether

     8    Bank of America can be counted on to be a

     9    responsible corporate citizen in giving back

    10    in the areas that they serve.  In my


    11    experience, I can say an unqualified yes to

    12    that question.

    13                They are particularly interested

    14    with us in reaching and teaching young people


    15    the basics of practical and applied economics,

    16    and personal financial decision making skills,

    17    so when people come to apply for a mortgage,


    18    or come to buy a home, or come to start a new

    19    job, they will have the skill set to be able

    20    to make good decisions.

    21                We are especially pleased to have


    22    the signature and strategic partnership with







                                                                          8


     1    Bank of America to produce then nation's

     2    leading program in personal finance for the

     3    nation's school, "Financial Fitness for Life",


     4    a premier comprehensive K-12 curriculum in

     5    personal finance.  We began this endeavor

     6    before financial literacy, or illiteracy was


     7    a front page issue.

     8    Funding from Bank of America has enabled the

     9    NCEE to develop an assessment instrument to

    10    make sure we're doing some good.


    11                So, in sum, I am impressed by and

    12    grateful for the Bank of America's commitment

    13    to service.  Many of our state affiliates have

    14    local Bank of America officials serving as


    15    volunteers on their advisory boards, and in

    16    the outreach to schools.  I'm impressed by and

    17    grateful for the Bank of America's commitment


    18    to reach under-served communities and groups. 

    19    And I'm proud to say that Bank of America has

    20    been at the forefront of the national campaign

    21    for economic and financial literacy, which the


    22    NCEE launched in 1999. So as a parent, an







                                                                          9


     1    educator, and a citizen, I am pleased in this

     2    testimony to vouch for what I see as Bank of

     3    America's corporate integrity.  


     4                Thank you again for inviting me

     5    here to testify, and I'd be glad to answer

     6    questions.


     7                MS. BRAUNSTEIN:  Thank you very

     8    much.  Ms. Bethune.

     9                MS. BETHUNE:  Yes.  Thank you for

    10    inviting me.  My name is Zina Bethune.  I'm


    11    the Artistic Director and Executive Director

    12    of Bethune Theater Dance, which is a

    13    multimedia dance theater.  I'm not an expert

    14    in economics, but I certainly can speak to the


    15    impact of an unstable economy on an

    16    organization such as our's.

    17                We are 28 years old, and have


    18    struggled like most art companies, which is a

    19    very mercurial life.  We have a program that

    20    we began in America.  We were the first

    21    professional dance theater to create a program


    22    for disabled children to learn to perform







                                                                         10


     1    dance and drama with the goal towards self-

     2    sufficiency.  And through these 28 years of

     3    this program, we are -- have always been and


     4    still are close to 90 percent dependent upon

     5    dealers.  We don't buy and sell widgets, don't

     6    expect to.  


     7                And what that means in a very full

     8    circle for us is -- where we look at it is if

     9    an organization like Bank of America can help

    10    stabilize an economy that is mercurial very


    11    often, then that makes an immense difference

    12    to us, just as when it becomes unstable.  It's

    13    sort of in logarithms for us because as an

    14    arts organization, a non-profit organization,


    15    we're the first hit by a lack of donors.  And

    16    what that means for our children is -- we have

    17    over 7,000 graduates, and most of our kids,


    18    fortunately, because of the programs we

    19    provide are a part of our society, are part of

    20    the workforce.  They get to finally self-

    21    sufficient at a level in which they can be


    22    part of our society, so what happens in a very







                                                                         11


     1    full circle is, because the program -- many

     2    people might think well, it's just dance and

     3    drama, but what this gives a person with a


     4    disability is a sense of themselves, a sense

     5    of accomplishment, a sense of empowerment, so

     6    that when they get to that place and thinking


     7    about gee, could I hold a job, they are not so

     8    distant from that possibility.  And I think

     9    that that has a very large impact in a long-

    10    range view, because if those children are part


    11    of our society, part of the workforce instead

    12    of on the welfare system, which does affect

    13    our economy, then we've made an impact

    14    socially, economically, and culturally.


    15                And the reason I think Bank of

    16    America asked me here is because I'm not an

    17    economics expert, and I can only speak to what


    18    I feel is an important investment, which is

    19    our children, and especially the disabled

    20    children.  There are -- most people aren't

    21    aware of this, but one-fifth of our population


    22    in America is disabled.  That is a large







                                                                         12


     1    number.  If you think of one-fifth or close to

     2    it being on the welfare system, that's too

     3    large a number for our economy, so we use


     4    arts, we use dance, we use drama to try to

     5    incorporate in these children a sense of

     6    themselves, a sense of belonging to society. 


     7    And we're a member of the Bank of America

     8    family.  We're very thrilled with BOA support

     9    of us now, and looking towards the future with

    10    us.  And I very definitely view their ability


    11    to keep this economy a little more stable as

    12    terribly important to what we can accomplish,

    13    and what our children can accomplish, so I'm

    14    very much in favor of whatever I can do to


    15    help them create a more stable economy by this

    16    acquirement.  Are there any questions in terms

    17    of what we do, and how that is affected?


    18                MS. ROBINSON:  No, I don't think

    19    so.

    20                MS. BETHUNE:  Thank you very

    21    much. 


    22                MR. DOWNEY:  Good morning.  My







                                                                         13


     1    name is Paul Downey.  I'm the President and

     2    CEO of Senior Community Centers.  We're based

     3    in downtown San Diego.  We're a charitable


     4    organization that provides permanent

     5    supportive housing, transitional housing for

     6    homeless seniors, nutrition healthcare, mental


     7    healthcare and activities for seniors that are

     8    primarily living at or below the poverty

     9    level.

    10                We see about 10,000 unduplicated


    11    individuals annually, and 90 percent of them

    12    live at or below the federal poverty level. 

    13    The other 10 percent are within 100 percent of

    14    the poverty level.


    15                I'm pleased to be here this

    16    morning in support of Bank of America, who has

    17    partnered with us to help seniors struggling


    18    to survive.  Both Senior Community Centers and

    19    Bank of America  are leaders in the San Diego

    20    community in making an impact that change and

    21    save the lives of seniors in need.


    22                One of the key ways that this







                                                                         14


     1    partnership has flourished over the last 20

     2    years has been the consistent representation

     3    on my Board of Directors by senior-level bank


     4    executives.  Their business expertise and the

     5    community contacts of these individuals has

     6    enormously benefitted Senior Community


     7    Centers, and has helped us dramatically expand

     8    our ability to serve the seniors.

     9                We've also been fortunate to have

    10    top-level bank officers on three occasions to


    11    chair our annual fund raising luncheon.  In

    12    fact, this year Joy Blount, the Senior V.P. of

    13    Bank of America Private Wealth Management is

    14    chairing the event, and we're anticipating


    15    about 800 people a week from Friday, and we'll

    16    raise over $300,000 largely due to Joy's hard

    17    work.  I'd add, tickets and tables are still


    18    available.

    19                       (Laughter.)

    20                MR. DOWNEY:  All totaled, these

    21    three fund raisers chaired by bank executives


    22    have raised over $750,000 for Senior Community







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     1    Centers.

     2                Philanthropically, the bank has

     3    also been a tremendous investment partner. 


     4    Over the years, we've received over $400,000

     5    in grants from the bank, and another $300,000

     6    from the settlement funds that they helped


     7    direct to us.  Senior Community Centers was

     8    honored to have been selected as one of the

     9    San Diego area recipients of the Neighborhood

    10    Builders Initiative in 2006.  The bank


    11    provided $200,000 in core operating support

    12    and leadership training for two members of my

    13    senior management team.

    14                They also provide sweat equity. 


    15    Many of their associates regularly come over

    16    and help serve lunch to our seniors, and have

    17    done a whole array of different projects, from


    18    painting, to cleaning, to building for us on

    19    weekends, but the most important things that

    20    I have seen them do is really interact with

    21    these seniors.


    22                Senior Community Centers was also







                                                                         16


     1    fortunate to have Bank of America when we

     2    built Podiker Family Senior Residence in 2003. 

     3    Podiker is a 200-unit supportive housing


     4    complex for very low income seniors, and it's

     5    received numerous national awards.  Most

     6    recently, it was selected as the National Best


     7    Practice by Shelter Partnership here in Los

     8    Angeles.  The bank provided all of the pre-

     9    development funding, and the construction loan

    10    for the project.  And I deeply appreciate all


    11    of the hard work that went into bringing this

    12    project to fruition.  It was our first foray

    13    into the housing world.  It was a very

    14    complicated and difficult project, and not


    15    only did the bank provide the dollars to make

    16    it happen, but they also provided the

    17    expertise to assist me and my board in making


    18    the decisions that we needed to, to make sure

    19    that the project got built. Simply put, I'm

    20    convinced that Podiker would not have happened

    21    without the bank and its support.


    22                Bank of America is making profound







                                                                         17


     1    positive impact in San Diego, and I know

     2    around the country.  Therefore, I'm pleased to

     3    be here this morning to support the bank, and


     4    to provide an unqualified endorsement of their

     5    acquisition of Countrywide.  Thank you.

     6                MS. BRAUNSTEIN:  Thank you very


     7    much.  Ms. Hanson.

     8                MS. HANSON:  Good morning.  I'm

     9    Nancy Hanson, and I'm the Director for Lower

    10    Valley Housing Corporation, a non-profit


    11    affordable housing provider in far west Texas

    12    in El Paso County.  We are the largest

    13    producer of mutual self-help housing in the

    14    United States, as a grantee of both TDH, VA,


    15    the Texas Department of Housing and Community

    16    Affairs, and more importantly, the U.S.

    17    Department of Agriculture, known as USDA Rural


    18    Development. With that in mind, we've got a

    19    lot of really good banking friends, most

    20    especially Bank of America.  

    21                I have a prepared statement here,


    22    but I wanted to tell you, several years ago







                                                                         18


     1    one of the bankers, when we were dedicating

     2    one of our 350 lot subdivisions stood up and

     3    said this, and I paraphrase.  "Here came this


     4    little old lady and sat in my office, and she

     5    had a little presentation, and she wanted me

     6    to put up 100 percent of the money to buy and


     7    develop the land into residential lots out in

     8    the county where there are no zoning codes. 

     9    Then she wanted me to provide 100 percent of

    10    the financing to build the houses.  And then


    11    she wanted us to participate in the mortgages,

    12    and then to top it off, the people were going

    13    to build their own friggin houses". 

    14                       (Laughter.)


    15                MS. HANSON:  "After she'd been

    16    there two and a half hours, I decided she

    17    wasn't going away, and after 10 years here we


    18    are, her partner."  So I thought it spoke a

    19    thousand words. 

    20                Bank of America has been a true

    21    partner of affordable housing in our area. 


    22    They have provided the money to develop two







                                                                         19


     1    large subdivisions, 240 lots, over $2 million. 

     2    They have provided almost $18 million for the

     3    interim financing for about 380 houses.  


     4                Most importantly, though, they

     5    have been a partner in mortgage financing for

     6    190 families, over $5 million.  They always


     7    hold the first lien position.  They are very

     8    careful in scrutinizing the loans, and they

     9    really do want these people to succeed.  

    10                We service all of the loans for


    11    the bank, and for TDHDA, although we do not

    12    service for USDA.  We have about 750 loans in

    13    our portfolio, and since 1994, we have only

    14    found it necessary to buy seven loans, to


    15    foreclose seven houses.  That's an enviable

    16    record, and that shows how carefully Bank of

    17    America has made sure the very, very low


    18    income people, like our families, are able to

    19    maintain their property, and able to pay for

    20    their mortgages.

    21                Our average family is man and a


    22    wife, two and a half kids, making $13,000 a







                                                                         20


     1    year, which is actually very, very low income,

     2    at or below 30 percent of the area median

     3    income.  We have provided you all with


     4    pictures, and a sample of what Rancho Los

     5    Mesquitas, one of our 100-lot subdivisions,

     6    the houses appraised at $78,000.  The total


     7    loan was $38,500.  The average monthly payment

     8    is $410 a month for principal, interest, taxes

     9    and insurance.  They're being taxed at $1,000

    10    a year, and all of these houses belong to


    11    very, very low income people.

    12                We believe that Bank of America,

    13    with its caring attitude towards the

    14    community, provides very good partnership for


    15    an organization like us.  And they help people

    16    to get into homes, they don't want them to

    17    lose them.  We believe that with their banking


    18    experience under the Federal Regulations for

    19    banks, would be a wonderful, wonderful asset

    20    to any community that has had a Countrywide

    21    presence.  Thank you very much.


    22                MS. ROBINSON:  Thank you.







                                                                         21


     1                MS. BRAUNSTEIN:  Thank you very

     2    much.  Will the next panel come forward.  Good

     3    morning and welcome, and just a few


     4    housekeeping matters.  We have a timekeeper

     5    right there who will hold up time when you

     6    have two minutes left, and when your time is


     7    up.  You have five minutes for your testimony. 

     8    And please begin your statement by stating

     9    your name and organization so we can get it on

    10    the record.  And we'll start with Mr. Smith.


    11                MR. SMITH:  Yes.  Good morning. 

    12    Frederick D. Smith, Operation Hope, Inc.  Mrs.

    13    Chairwoman, Regulators, and Participants, I am

    14    pleased to represent Operation Hope, a Los


    15    Angeles headquartered financial literacy and

    16    empowerment organization.  And our chairman,

    17    John Bryant, who, along with Dr. Duvall served


    18    on the President's Council, and is Vice Chair

    19    with Charles Schwab being the chair.

    20                My financial career includes the

    21    private sector, the government agencies, the


    22    State of California, owning a small business,







                                                                         22


     1    and Operation Hope.  I am not here, and I have

     2    never supported activities that are not in the

     3    best interest of customers, stockholders,


     4    investors, and the general public.  

     5                The two financial institutions

     6    that are the subject of the discussions today


     7    have long corporate histories, and their

     8    current financial positions and public images

     9    are well-known.  These institutions are like

    10    a Tale of Two Cities; one rich and reasonably


    11    responsible, a democracy will all votes rise;

    12    the other rich, and seemingly irresponsible,

    13    at most, an economic democracy where

    14    capitalism has become a win-lose situation, us


    15    against them in a place where only yachts

    16    rise.  

    17                We support Bank of America as we


    18    have had a long multi-factored history with

    19    their employees as volunteers teaching

    20    financial literacy in schools across

    21    California and Atlanta, New York.  Currently,


    22    we have over 200 Bank of America Hope core







                                                                         23


     1    volunteers, 29 of them are active in financial

     2    literacy for school-age students in classes of

     3    20-25 individuals.  And, in fact, they have


     4    taught over 1,000 students just this year. 

     5    Other volunteers from Bank of America  assist

     6    us in providing mortgage assistance to


     7    homeowners.  

     8                Bank of America has a multi-year

     9    financial commitment to support Operation Hope

    10    since 2003, and they currently have a two-year


    11    commitment to support the Mortgage Crisis

    12    Hotline.  This hotline was established in

    13    February of last year to provide free

    14    financial information and guidance to


    15    homeowners facing challenges making mortgage

    16    payments, or those who anticipate facing

    17    challenges.


    18                Through April of this year, with

    19    the help of Bank of America and others, we

    20    have received requests for assistance from

    21    over 17,000 individuals.  We are currently


    22    assisting 4,626 homeowners, and our services







                                                                         24


     1    include examples, negotiating a 4.7, 5

     2    percent, 30-year fixed loan for one client,

     3    stopping a foreclosure and negotiating a


     4    payment plan which has reduced the interest

     5    rate from 8.5 percent to 7 percent fixed;

     6    assisting a single mother of two children who


     7    was $30,000 past due principal and interest in

     8    negotiating a $20,000 past due principal and

     9    interest to be paid when the loan matures,

    10    and, of course, writing off the balance, and


    11    reducing the rate from 8.9 percent to

    12    approximately 7.5.

    13    They've also converted several clients from

    14    adjustable loans to fixed rate current rate


    15    loans.  

    16                Our experience so far has been

    17    that very few Bank of America clients come to


    18    us with horror stories, yet far too many come

    19    to us from Countrywide.  We have little

    20    corporate experience with Countrywide.  They

    21    have never expressed an interest in supporting


    22    or getting involved in our work through our







                                                                         25


     1    partnership to improve communities.  We

     2    regularly meet with Bank of America, and have

     3    never done so with Countrywide. 


     4                At Hope, we have asked ourselves

     5    with respect to this proposed acquisition, if

     6    not Bank of America, then what?  In my view,


     7    the relevant issue is how this acquisition

     8    will affect homeowners with loans originated,

     9    purchased, or serviced by Countrywide.  Who

    10    will hold the existing deposits?  Who will


    11    collect loan payments, and who will set

    12    policies and negotiate requests for loan

    13    modification?  

    14                Bank of America has requested


    15    approval for this acquisition, and I can't

    16    think of a better organization to be

    17    responsible for this portfolio.  Thank you.  


    18                MS. BRAUNSTEIN:  Thank you very

    19    much.  Ms. Dunn.

    20                MS. DUNN:  Good morning, Madam

    21    Chair and Panel.  Thank you so much for asking


    22    us to join you this morning.  I'm pleased to







                                                                         26


     1    speak in support of the transaction for Bank

     2    of America.  My name is Lucy Dunn.  I am the

     3    immediate past Director of Housing and


     4    Community Development for the State of

     5    California, having worked under Governor

     6    Schwarzenegger.  Today, however, I represent


     7    as President and CEO of the Orange County

     8    Business Council, which advocates good public

     9    policy on behalf of the major business

    10    community, and economic development in Orange


    11    County.

    12                Most folks don't know Orange

    13    County, little Orange County, is the fifth

    14    largest county in America.  We have more


    15    population there than 21 states in the union,

    16    in our business community, housing tends to be

    17    the linchpin issue.  It is a major issue that


    18    is affecting every one of our businesses to

    19    attract and retain the best workers.  And,

    20    yet, in the last five years, we've lost almost

    21    13 percent of our 25-34 year olds who are


    22    tending to leave Orange County because the







                                                                         27


     1    housing market is highly constrained there,

     2    and one of the most expensive in the nation.

     3                Bank of America has been a major


     4    supporter of the Orange County Business

     5    Council's top strategic initiative to increase

     6    housing supply, affordability, and choices for


     7    Orange County, and, frankly, for the entire

     8    region.  To that end, they were our major

     9    partner and sponsor in an innovative approach

    10    to look at housing in a different way in


    11    Orange County, when in our research department

    12    we came up with what's called the Inaugural

    13    Workforce Housing Score Card.  

    14                No matter what you say at the


    15    state level, at the regional level with regard

    16    to housing production, the first step is when

    17    the city council actually presses the button


    18    to say yes, and approve housing at the local

    19    level. And yet, sometimes our city council

    20    members or cities don't understand the

    21    importance with creating jobs and matching


    22    housing with those jobs.  So our housing score







                                                                         28


     1    card with major support and funding by Bank of

     2    America enabled us to analyze all cities data,

     3    each city's data within Orange County and show


     4    the correlation between jobs creation and

     5    housing production.

     6                For example, the gold standard in


     7    housing production is it's really one house

     8    for every one and a half job, pretty much land

     9    planners say that's the best.  But in some

    10    areas in Orange County, we've determined using


    11    the city's own data that they have produced

    12    one house for every 4.79 jobs projected to go

    13    to one house for every 9 jobs.  This is very

    14    important planning data for cities to


    15    understand as they take that look at where

    16    their community is growing, because, clearly,

    17    without housing they're not going away.  Our


    18    people are doubling and tripling up, or our

    19    commutes are getting longer, and our freeway

    20    congestion gets worse.  So I just can't thank

    21    Bank of America enough for this major


    22    initiative.  It has been so powerful with the







                                                                         29


     1    34 cities in Orange County as a tool for

     2    looking at housing that our friends in San

     3    Diego, God love them, actually stole the idea


     4    from us, which we love.  And Los Angeles

     5    County actually, we're now doing L.A. County's

     6    Housing Scorecard, analyzing I think there are


     7    88 cities, to look at housing and jobs

     8    creation in a very straightforward,

     9    repeatable, good methodology way.  This is a

    10    wonderful partnership with Bank of America to


    11    help with that.

    12                In addition, they have

    13    demonstrated an unmatched commitment to our

    14    under-served communities with charitable


    15    contributions topping $26 million, and 47,000

    16    hours of volunteer service by bank employees

    17    in 2007.  


    18                As the State's former Housing

    19    Director, I can attest to the fact that they

    20    were the first, as our organization was, but

    21    one of the first organizations to stand up and


    22    support the Statewide Ballot Initiative, Prop







                                                                         30


     1    1C, that actually helped create a funding

     2    mechanism to leverage more affordable housing

     3    in the state.  And, in fact, Bank of America


     4    has directly assisted the creation of over

     5    110,000 units of low and moderate income

     6    housing in California in the last three years.


     7                Think about that for a minute,

     8    when you know that our population in

     9    California since 1950 grows by a half a

    10    million people every single year, every single


    11    year it's a straight line.  And to meet that

    12    population growth, we need 220,000 units of

    13    new housing every single year.  Bank of

    14    America has directly participated in 110,000


    15    units in three years time, a remarkable track

    16    record, and a wonderful asset for our

    17    community.


    18                Their work in this regard, of

    19    course, ultimately will help stabilize our

    20    mortgage market.  And they presented amazing

    21    plans to offer a broad array of responsible


    22    lending products, and employ sound







                                                                         31


     1    underwriting criteria to insure that buyers

     2    can get in and stay in their homes.  

     3                We know we've got a blip here.  We


     4    also know that the market is tight, but at the

     5    end of the day, California will continue to be

     6    a major economic engine for all of the nation. 


     7                The last point I want to share is,

     8    we're really thrilled to hear about their

     9    announcement that they're newly remade

    10    mortgage business will be headquartered in the


    11    City of Calabassas, right here in southern

    12    California, phenomenal economic engine for

    13    southern California, and exactly the right

    14    place for their excellent standards of


    15    housing, when our home ownership rates in

    16    California are 10 percent below the national

    17    average.  


    18                So, again, thank you for the

    19    opportunity to testify, and strong support

    20    from the Orange County Business Council for

    21    the application.


    22                MS. BRAUNSTEIN:  Thank you.  Ms.







                                                                         32


     1    Kong.

     2                MS. KONG:  Good morning.  My name

     3    is Maria Kong.  I am President, CEO of the


     4    National Association of Real Estate Brokers. 

     5    It's the oldest minority trade organization in

     6    the United States.  As you know, we could not


     7    be realtors before the `68 Fair Housing Act

     8    was passed, and so we have been here, the only

     9    organization advocating fair housing from long

    10    before fair housing existed.  And so I don't


    11    take lightly my position in representing the

    12    housing section in African American community

    13    where we're responsible for originating and

    14    selling billions and billions of dollars of


    15    homes in the housing market throughout the

    16    United States.

    17                To get the opportunity for my five


    18    minutes here is very important, and I don't

    19    take it lightly.  I don't testify lightly.  It

    20    has to be something I believe in, and I do

    21    believe in the corporate culture of Bank of


    22    America, because of the culture they have







                                                                         33


     1    exhibited to us, the concern, the caring,

     2    their responsible lending, and their great

     3    corporate culture, not just in embracing


     4    diversity for diversity in words, but mainly

     5    in action.  And I'm going to tell you, Bank of

     6    America has funded our affiliate, which is HUD


     7    approved housing, and made it possible for

     8    millions of first-time home buyers in African

     9    segments to obtain home ownership.  And that's

    10    very important, because our segment is under-


    11    served population in the United States, and

    12    all people lot of time needs that counseling,

    13    and the  accountability to get through the

    14    home ownership process.  Bank of America have


    15    made that possible.

    16                They have also enveloped our theme

    17    and mission of democrasing housing.  They have


    18    been there as one of our top partners, and

    19    this is not a testimony because of the

    20    partner, but a testimony of the caring they

    21    have exhibited for them to be in our


    22    communities doing their work, not just in the







                                                                         34


     1    communities, in their organization or making

     2    a diverse job employment market in the

     3    organization.  It reflects people from all


     4    culture and races that they represent in their

     5    bank, that they serve.

     6                Years ago, Bank of America had


     7    revamped the housing products, and the

     8    products that they have.  They realized that

     9    the products that they were giving was not

    10    reflective of the members that were their


    11    customers, and they realized they had to do

    12    something.  And they revamped the whole

    13    lending process, and their products that they

    14    provided so it would reflect more than 60


    15    percent of the segment of the population that

    16    they serve, that they will have opportunity

    17    for democrasing houses, which is what our


    18    mission, and what we support from back in the

    19    40s.

    20                And I embrace them on their work,

    21    and the work that they have done.  And, also,


    22    as you know, in the housing landscape today,







                                                                         35


     1    that minorities has been the ones that have

     2    been affected the most, and so they have made

     3    their products sustainable products that


     4    people that going in can maintain that

     5    product, because right now, the African

     6    American segment is looking to reverse their


     7    numbers in getting home ownership.  I embrace

     8    Bank of America for their corporate culture,

     9    their responsible lending, their true mission

    10    and vision, and their diversity in housing. 


    11    They are one of the best -- this is the best

    12    thing that could happen with Countrywide, and

    13    I do support that they will be the person who

    14    would be there continuing this work, and this


    15    corporate culture that is so important in the

    16    African American communities that I sit over

    17    in housing. 


    18                Thank you, and I hope you

    19    understand my passion in stating that I fully

    20    support Bank of America in this merger.

    21                MS. BRAUNSTEIN:  Thank you very


    22    much.  Mr. Barrales.







                                                                         36


     1                MR. BARRALES:  Thank you, Madam

     2    Chair.  Good morning, members of the Federal

     3    Reserve.  It's an honor to be here with this


     4    panel, and thank you for your service.

     5                I just want to make a few points,

     6    the most important of which is, I'm here along


     7    with the panelists agreeing that this merger

     8    makes sense. But, most importantly, that the

     9    Federal Reserve make a decision quickly.  The

    10    urgency of this is important, given the state


    11    of the economy, and the crisis in the housing

    12    market.

    13                I am the President and CEO of the

    14    San Diego Regional Chamber of Commerce, and I


    15    think that Bank of America is the best option

    16    to revise, if you will, Countrywide.  Bank of

    17    America knows California.  Bank of America


    18    understands San Diego markets, certainly, and

    19    the rest of California.  As you know,

    20    California has the most markets with the

    21    highest rate of foreclosures in the country


    22    today, and Bank of America has, as you've







                                                                         37


     1    heard, and you will continue to hear, an

     2    outstanding Rating for Community Investment

     3    Act, Re-Investment, and the like.  It is the


     4    best brand, if you will, in terms of the

     5    particular crisis that we're facing with

     6    Countrywide.


     7                Also, urgency I think is important

     8    because of the commitments that Bank of

     9    America  has made regarding its new mortgage

    10    lending guidelines, and its commitment to


    11    modify or work out troubled mortgages that

    12    could help over 250,000 families facing that

    13    potential crisis, or facing a crisis now.  And

    14    I think the issue is important, and urgency,


    15    I think, is the most important message that I

    16    want to relate to you all.  Thank you.

    17                MS. BRAUNSTEIN:  Thank you very


    18    much.  Thank you to the panel, and we'll bring

    19    the next panel forward.  

    20                Welcome.  Welcome back, Mr.

    21    Fisher. 


    22                MR. FISHER:  Actually, I'm -- 







                                                                         38


     1                MS. BRAUNSTEIN:  I know. 

     2     Supporting somebody else today?

     3                MR. FISHER:  I am.


     4                       (Laughter.)

     5                MS. BRAUNSTEIN:  The rules are the

     6    timekeeper will show you when there's two


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

     8    And you have five minutes for your statement. 

     9    And I would ask that you start your statement

    10    by stating your name and your organization so


    11    we can make sure and get it on the record.

    12                MS. BOWDLER:  Good morning.  My

    13    name is Janice Bowdler.  I'm the Associate

    14    Director of Wealth Building Policy Project at


    15    the National Council of LaRaza.  NCLR is the

    16    nation's largest Hispanic civil rights

    17    organization.  We've been working in Latino


    18    communities for the last four years.  For the

    19    last ten years, we've been primarily focused

    20    on wealth building and how can we help Latino

    21    families gain access to assets that are going


    22    to create long-term financial security.







                                                                         39


     1                Like you guys heard from a lot of

     2    folks already here, equally concerned as

     3    everybody else at the rising rates of


     4    foreclosures, not to mention rising credit

     5    card delinquencies, rising health that really

     6    threaten to erode all of the work that we've


     7    been doing for the last 10 years.  

     8                I got a chance to stop in

     9    yesterday, if you will, on the previous day of

    10    the hearing and so I know that most of what I


    11    have to say to you today is actually not going

    12    to be a surprise.  I know you've heard a lot

    13    of the same comments over and over, so I'm

    14    just going to summarize why this merger is of


    15    interest to NCLR, in particular, and

    16    underscore a couple of areas of concern.

    17                As I mentioned, we've been in the


    18    business of building wealth with Latino

    19    communities for the last 10 years.  We do

    20    research, we do policy analysis, and perhaps

    21    most importantly we also provide housing


    22    counseling.  We see 30,000 families a year. 







                                                                         40


     1    In the last 10 years, we've created over

     2    30,000 new homeowners, first-time home buyers

     3    in Latino communities.  Yet, despite all of


     4    the depth of the work that we do, we don't

     5    regularly comment on mergers.  And we only do

     6    so when we see a clear and significant  impact


     7    on the Latino community.  And this merger,

     8    this acquisition clearly rises to that level. 

     9    Let me just give you three quick reasons why

    10    that is.


    11                Countrywide was the number one

    12    lender to Latinos in terms of number of

    13    originations.  They were consistently in the

    14    top three or four for the last few years. 


    15    Also, one of the number one lenders of Option

    16    Arms, which I know has been a topic of

    17    conversation over the last few days, so that


    18    is -- and Option Arms were one of the most

    19    popular products pushed in Latino communities

    20    over the last few years, which is directly

    21    linked to my second point, which is that


    22    foreclosure rates in the Latino community we







                                                                         41


     1    expect to peak in 2009, and 2010, which is

     2    when most of the Option Arms are expected to

     3    reset.


     4                By Countrywide's own numbers, 70

     5    percent of their Option Arm borrowers are

     6    paying at that minimum below interest rate


     7    payment, which leads into my third point,

     8    which is that the market really still

     9    continues to struggle.  These folks are going

    10    to come out owing 120 percent loan to value on


    11    a house in a declining market.  And given the

    12    fact that we're in California, I don't have to

    13    tell you guys exactly the kind of impact that

    14    that's going to continue to have on


    15    neighborhoods.

    16                In the interest of full

    17    disclosure, NCLR has had a very robust


    18    partnership with Bank of America.  We've also

    19    worked closely with Countrywide.  They have

    20    been a greater supporter of our housing

    21    counseling network, and of our institution, as


    22    a whole.  We've seen them put out great







                                                                         42


     1    community lending products.  They have also

     2    been real innovators of terms of banking

     3    immigrants and reaching immigrant communities. 


     4    However, that positive experience

     5    notwithstanding, we also have three

     6    substantive concerns with the merger.


     7                One, I already mentioned,

     8    Countrywide portfolio is in trouble.  I won't

     9    go over that again.  But one that I do want to

    10    take some time to walk through a little bit is


    11    the fact that industry efforts to modify

    12    mortgages are still falling short.  And I know

    13    a lot of people talked about this yesterday,

    14    but I just want to stress that it's not a


    15    California or Chicago-specific phenomenon. 

    16    This is going on across the country.  Three to

    17    six months to get an answer on a loan


    18    modification, can't get a hold of staff, the

    19    numbers are backed up.  You can't get

    20    approvals for even the most classic of loss

    21    mitigation and loan modification techniques. 


    22                In fact, we just had a case in







                                                                         43


     1    north Georgia in Dalton, classic, classic loan

     2    modification that should have been approved in

     3    any circumstances.  What the counselors didn't


     4    know, while it took them six months to

     5    negotiate the modification, is that the loan

     6    was simultaneously sent over to legal.  The


     7    modification was approved on the same day that

     8    the house went to auction.  They called the

     9    counselor at 9:00 in the morning and told him

    10    that the family had until noon to get $2,000


    11    to cover the legal expenses, or else they

    12    couldn't save the home.  They lost their home

    13    to auction that day.  

    14                There's no reason why it should be


    15    taking that long.  And, unfortunately, we

    16    think it's only going to get worse.  So my

    17    third point is just that minus intervention,


    18    foreclosures are going to continue to rise.

    19                What's most troubling about this

    20    is that we have yet to hear a real plan, and

    21    I'll wrap up by saying that NCLR really hopes


    22    that as part of a condition of the approval of







                                                                         44


     1    this merger, that the Fed will require Bank of

     2    America  and Countrywide to submit a plan for

     3    addressing these issues.  Thank you.


     4                MS. BRAUNSTEIN:  Thank you very

     5    much.  Mr. Zahradka.

     6                MR. ZAHRADKA:  Good morning. 


     7    James Zahradka. I'm a senior trained with a

     8    public interest law firm which is a product of

     9    the Law Foundation of Silicon Valley.  We're

    10    a non-profit legal services provider over


    11    three decades, and we used to be called Santa

    12    Clara Valley.  And I'm also a member of the

    13    Board of CRC.

    14                So I think that I'd just like to


    15    make five points briefly here.  And, again, I

    16    don't want to be too repetitive with what

    17    you've heard the last two days, why we can't


    18    support the merger as it's currently couched. 

    19    We urge you to look into these and make sure

    20    that they're addressed.

    21                One is the fair lending point that


    22    Ken Stein made yesterday, which is very







                                                                         45


     1    important.  The clients that we see in our

     2    fair lending practice are almost all Latino,

     3    and Countrywide is one of the lenders that we


     4    see most often, as you just heard.  That's

     5    also not surprising.  Back when times were

     6    good, Countrywide touted themselves as trying


     7    to become the Home Depot of mortgage lending,

     8    ubiquitous in every channel, I think maybe

     9    Wal-Mart is a better parallel, but anyway,

    10    they used Home Depot as their model, and so


    11    they're everywhere, and they're in every

    12    community.  And as Kevin also mentioned

    13    yesterday, the New York Attorney General had

    14    at least prima facie evidence of some


    15    discriminatory lending on Countrywide's part

    16    in that state.  And, of course, the obvious

    17    question is is that happening here?  Shouldn't


    18    it be investigated on the front end?  And if

    19    it is happening, or did happen, shouldn't Bank

    20    of America be required to have a plan to

    21    address it?


    22                So another issue that comes to







                                                                         46


     1    mind is that the wholesale channel is -- those

     2    types of loans that came through the wholesale

     3    channel are the ones that seem to be the most


     4    abusive, by far.  And even Angelo Moxilo

     5    during a meeting we had with him in 2006

     6    admitted that the brokers were causing him a


     7    lot of problems.  I think that was -- that's

     8    paraphrasing, maybe an effort to deflect blame

     9    a little bit, but in any event, he certainly

    10    seemed to see that as an issue.  


    11                Many other lenders, as you know,

    12    have abandoned the wholesale channel all

    13    together, and now purely retail obviously gets

    14    the more control over the types of loans they


    15    issue, and is a way for them to make sure that

    16    they live up to their commitments.  You've

    17    heard Bank of America say over and over again


    18    that they have the highest standards of

    19    integrity, and this is a way for them to make

    20    sure that those are met, is to not go through

    21    the intermediaries where we've seen so many


    22    abuses take place.  And I wonder if since







                                                                         47


     1    Countrywide is one of the largest, I think the

     2    largest now wholesale lender out there, will

     3    Bank of America just abandon that platform, or


     4    will it go back to doing wholesale lending

     5    with all the problems that seem to come out of

     6    it?


     7                I'd also like to mention that --

     8     and this is a broader point, but it was

     9    mentioned yesterday by the Rainbow Coalition

    10    speaker, that the Countrywide President, David


    11    Sambol, is being hired, has been hired already

    12    by Bank of America  to run its consumer

    13    mortgage business.  In fact, last month they

    14    announced they're paying him $28 million to


    15    stay with Countrywide after the acquisition. 

    16                Senator Shumer stated that it's

    17    perverse for Bank of America to reward the


    18    principal architect for the bad business

    19    practices that caused this housing crisis. 

    20    That's what Senator Shumer said about that. 

    21    And one has to think that Bank of America's


    22    declaration of its intent to apply more







                                                                         48


     1    stringent standards rings a bit hollow when

     2    they're bringing over one of the architects of

     3    this mess in the first place.


     4                Also in that context, you recall

     5    Mr. McGee's, I would call it somewhat non-

     6    responsive response to your question about


     7    having adequate staff for workouts after the

     8    acquisition.  The $28 million that they are

     9    paying Mr. Sambol on the front end as sort of

    10    a signing bonus would certainly enable them to


    11    keep on a lot of those folks, but that money

    12    has now been spent to keep this gentleman

    13    employed.

    14                Another aspect of this is that


    15    they're headquartering their operations in

    16    Calabassas, which is where Countrywide is

    17    currently headquartered, of course.  And I


    18    don't know if they're going to be in the same

    19    building, same offices, but it's just another

    20    indicia to me of the real danger that the

    21    corporate culture, the practices that caused


    22    Countrywide to have so many issues, so many







                                                                         49


     1    problematic loans, and engage in some really

     2    questionable practices are going to be carried

     3    over, despite Bank of America's express


     4    intentions otherwise.

     5                Another issue that we see a lot

     6    of, and this also relates to fair lending


     7    issues is that we have many clients who are

     8    non-English proficient, or limited English

     9    proficient.  Almost all of the clients that we

    10    serve in our fair lending cases are.  And one


    11    case that we're litigating right now, and I

    12    think that the litigation really brings out

    13    kind of the true colors of a lot of these

    14    actors.  Countrywide has taken the stance that


    15    it has no obligation under the Truth In

    16    Lending Act, or under California's specific

    17    law regarding translation of contracts


    18    negotiated in a non-English language. 

    19    Countrywide's position is it has no obligation

    20    to provide disclosures or translations of

    21    contracts to those borrowers in a non-English


    22    language, none.  And I wonder if Bank of







                                                                         50


     1    America's stance will be similar or not.  

     2                It's entirely inappropriate for

     3    what looks to be a diverse state and nation to


     4    have that stance.  It's illegal under the

     5    Truth In Lending Act and California law, but

     6    that's Countrywide's position, and I hope that


     7    Bank of America will refute that, but we'll

     8    see.  I don't know if -- it's something that

     9    should be looked into, certainly.

    10                A final issue I'd like to mention


    11    is the I'd say false dichotomy that Mr. McGee

    12    set out between owner occupiers and

    13    speculators.  There's no bright line division

    14    between these types of people.  As we've seen


    15    -- I'll wrap up real quickly here.  We've seen

    16    many of our clients who were hoodwinked into

    17    purchasing their home that they were planning


    18    to live in be then hoodwinked again, usually

    19    by unscrupulous brokers, into pooling the

    20    "equity" they had in that home, and buying

    21    another house as an investment property.  Of


    22    course, the first house wasn't affordable, but







                                                                         51


     1    when the housing prices were going up, and up,

     2    and up, they quickly acquired some equity. 

     3    The mortgage broker comes back to them, oh,


     4    buy another house.  You can now make an income

     5    doing this.  And so these folks are now losing

     6    both of their houses because of the misconduct


     7    that took place, and the utter failure of the

     8    lenders to properly underwrite those loans. 

     9    And, also, of course, they were sometimes

    10    encouraging this broker conduct by giving


    11    kickbacks to them when they got these loans

    12    issued to folks.  So I think it needs to be

    13    much more nuance determination of who is

    14    worthy, not a great term to use, but who's


    15    worthy of being helped.  It's not just the

    16    folks who are purely owner occupiers, by some

    17    of these investors, as well.  So thank you


    18    very much for holding these hearings, I

    19    appreciate it, and thanks for your time.

    20                MS. BRAUNSTEIN:  Thank you.  Mr.

    21    Strong.


    22                MR. STRONG:  Good morning, panel







                                                                         52


     1    members.  My name is Howard Strong.  I'm a

     2    lawyer out in the San Fernando Valley, and why

     3    am I here today?  Well, I had the misfortune


     4    of taking out a loan from Countrywide some

     5    seven years ago.  I didn't know at the time it

     6    was a misfortune.  It was only when the class


     7    action notices started to arrive that I

     8    realized there was a problem.

     9                Initially, I received a notice in

    10    the case Gonzalez v. Countrywide here in Los


    11    Angeles County, a statewide class action.  And

    12    I looked over the notice, being a, at the

    13    time, somewhat retired class action pro

    14    consumer attorney who spent many years


    15    teaching consumer protection classes and

    16    published some books in the consumer

    17    protection area, most recently, "What Every


    18    Credit Card User Needs To Know", by Henry Holt

    19    and Company.  

    20                I looked at it with a

    21    knowledgeable eye, and I said this is a rip-


    22    off, a scam.  The class gets nothing, the







                                                                         53


     1    lawyers get a couple of hundred thousand

     2    bucks, and Countrywide walks away with a lot

     3    of fees that they stole from people.  This


     4    particular case, the Gonzalez case, involved

     5    overcharges on credit reports, or what

     6    Countrywide called up-charges, which as far as


     7    I could tell is another word for stealing.

     8                Well, that was bad enough.  I

     9    opposed that class action on behalf of some of

    10    my neighbors without much result, as the panel


    11    may know.  It's darned near impossible for

    12    objectors to come in and overturn a class

    13    action approval.  Nonetheless, I gave it a

    14    shot, and one of the things that came out in


    15    that particular case was that Countrywide did

    16    not give Spanish notice, although it has a

    17    Spanish website, and it had negotiated many,


    18    many of the loans in Spanish.  It has Spanish-

    19    speaking offices, and that was their position

    20    in the other three class actions I'm going to

    21    tell you about.  So they moved forward, no


    22    Spanish class action, no Spanish notice.







                                                                         54


     1                The next notice I got in the

     2    mailbox was Juden v. Countrywide Home Loans,

     3    again in L.A. County, statewide class action. 


     4    This involved improper reconveyance fees. 

     5    And, as an aside, I paid off my Countrywide

     6    loan after a while.  I got tired of these


     7    class action notices.  I told them I wasn't

     8    going to pay a reconveyance fee, because I

     9    believed they were improper, and I got my

    10    property reconveyed with no problem.  But


    11    other people who didn't have the knowledge

    12    that I did, were ripped off again.  Again, no

    13    Spanish notice.

    14                Then there was a statewide, or a


    15    countrywide class action in Cook County,

    16    Chicago, Illinois, Flaxman v. Countrywide,

    17    overcharges for appraisals, and another class


    18    action up in Alameda County, Nobles v.

    19    Countrywide, and that was unlawful charges for

    20    document preparation, particularly charging

    21    for document preparation for compliance with


    22    the Truth In Lending Act.  







                                                                         55


     1                So what's my point here?  I don't

     2    believe this merger should be approved, or

     3    takeover should be approved, and the reason


     4    is, Countrywide is a corrupt, and I think some

     5    would say criminal organization.  It presents

     6    a tremendous danger to the Bank of America,


     7    and to the public fisc.  I don't want to see

     8    the Fed having to come in and bail out the

     9    Bank of America because of the hidden

    10    liabilities that Countrywide has.  


    11                And as my closing point, I'll just

    12    say there are many other class actions I

    13    believe which Countrywide has hidden.  They

    14    had a variety of tactics to keep these class


    15    actions secret, and not open to public view. 

    16    I asked many times for them to disclose other

    17    class actions.  They refused to do so, and


    18    some of their tactics to keep things quiet

    19    were, one, no published notice, as the panel

    20    may know.  It's customary and generally

    21    legally required for a published notice to


    22    appear in USA Today, or the L.A. Times, or the







                                                                         56


     1    Wall Street Journal, so that the public at

     2    least has some notice of these matters, and

     3    the class members who do not receive the mail


     4    notices.

     5                The mail notices that Countrywide

     6    did send out, again in English only, were


     7    carefully designed, in my view, to look like

     8    junk mail so people would throw them away. 

     9    And here's maybe the crucial point. 

    10    Countrywide, basically, as far as I can tell,


    11    lied, claiming they did not know who the class

    12    members were.  This was their tool to require

    13    an application so that anyone would get a

    14    coupon or the minimal compensation that was


    15    provided to the class members.  And over and

    16    over they argued they couldn't tell who had

    17    been ripped off, so this required the mailing


    18    out a notice, and then the people had to mail

    19    back an application, which means that a very

    20    small percentage of the class members receive

    21    any compensation.  


    22                And it's my view that the legal







                                                                         57


     1    requirements for Countrywide would be that it

     2    keep its records in an accurate fashion, and

     3    that it's a regulated entity, and these


     4    stories about how it doesn't know what was

     5    going on in this branch office, and that

     6    branch office, and its records are no good, is


     7    really just either a lot of hooey, or it

     8    indicates a screaming red signal rocket that

     9    Countrywide does not have decent records, that

    10    Bank of America can't know what's going on,


    11    and the public fisc is at tremendous risk if

    12    this merger is approved.  Thank you.

    13                MS. BRAUNSTEIN:  Thank you.  Mr.

    14    Fisher.


    15                MR. FISHER:  Yes.  Although it may

    16    not look like it, I am Saaru Nafici from the

    17    Neighborhood Economic Development Advocacy


    18    Project.  Thank you for holding today's

    19    hearings, and for giving the public the

    20    opportunity to raise material issues regarding

    21    Bank of America's proposed acquisition of


    22    Countrywide.







                                                                         58


     1                The Neighborhood Economic

     2    Development Advocacy, NEDAP, strenuously urges

     3    the Federal Reserve Board to deny the


     4    application.  NEDAP is a resource and advocacy

     5    center in New York City that provides

     6    community groups with legal, technical, and


     7    policy support on economic justice and

     8    community reinvestment issues.  NEDAP has led

     9    efforts to combat predatory lending in New

    10    York City and State, and seen first-hand the


    11    devastating effects of Countrywide's abusive

    12    and discriminatory lending, and servicing

    13    practices on New York homeowners and

    14    communities.


    15                Our comments concern both

    16    Countrywide and Bank of America, and focus on

    17    four main points.  First, the Federal Reserve


    18    should not approve the proposed acquisition

    19    unless Bank of America provides a detailed

    20    concrete plan in writing for modifying or

    21    otherwise remedying Countrywide's abusive


    22    loans.  Countrywide's abysmal record as a







                                                                         59


     1    servicer is notorious among New York

     2    homeowners and advocates.  Countrywide is

     3    widely unresponsive both to delinquent


     4    borrowers and non-profit advocates who call on

     5    their behalf, and routinely gouges customers

     6    with late fees and other costs that make loss


     7    mitigation more difficult.

     8                Countrywide systematically refuses

     9    to enter into affordable loan modifications

    10    with borrowers, instead, pushing forbearance


    11    agreements that are not affordable over the

    12    long term.  Specifically, the Federal Reserve

    13    must require Bank of America to initiate an

    14    immediate foreclosure moratorium on all


    15    Countrywide loans, and make a detailed

    16    assessment of each of the distressed loans,

    17    including the borrower's ability to pay an


    18    affordable modification where there were

    19    abusive practices at origination, enter into

    20    an affordable loan modification with all

    21    distressed borrowers who can afford a fairly


    22    priced loan.  These modifications must be







                                                                         60


     1    based on realistic assessments of

     2    affordability, and include both principal

     3    reduction and interest rate reduction,


     4    wherever necessary.  Bank of America must

     5    insure adequate staffing and other resources

     6    to accomplish this.


     7                Thirdly, drastically revamp and

     8    retool Countrywide's servicing operations, and

     9    provide monthly statistics to the public on

    10    all defaults and actions taken by the


    11    servicer, i.e., loan modification, short sale,

    12    foreclosure actions.  Two, it is absolutely

    13    critical that Bank of America repudiate

    14    Countrywide's abhorrent lending practices and


    15    set an example for the industry going forward. 

    16    Bank of America must adhere to sound lending

    17    practices, including, at a minimum, making


    18    only affordable loans that are appropriately

    19    priced for risk, and that provide borrowers

    20    with a tangible net benefit. It should also

    21    commit to making no loans with prepayment


    22    penalties or mandatory arbitration clauses.







                                                                         61


     1                Third, groups working with

     2    immigrants have reported a spate of recent

     3    foreclosures on especially egregious loans


     4    Countrywide has made to low-income immigrant

     5    New Yorkers.  The loans shock the conscience,

     6    not only because of the terms, but also


     7    because many of the borrowers had good credit

     8    and were steered to high-cost loans.  The

     9    Federal Reserve Board should require Bank of

    10    America to work with local organizations and


    11    immigrant communities where Countrywide's

    12    lending practices have been the most harmful,

    13    to help borrowers exploited by Countrywide

    14    based on language and other barriers.


    15                Four, the Federal Reserve must

    16    also examine abusive consumer lending

    17    practices by Bank of America.  A case recently


    18    came to NEDAP's attention that raises serious

    19    concerns regarding Bank of America's potential

    20    targeting of low-income borrowers for abusive,

    21    deceptively marketed consumer loan products. 


    22    Here's the example.







                                                                         62


     1                Mr. H., 85-year old retired

     2    African American resident of Brooklyn, living

     3    on his Social Security and pension, last year


     4    Bank of America sent Mr. H. a solicitation for

     5    a personal loan up to $25,000, offering him a

     6    menu of rate and payment options.  He chose


     7    the option to borrow $20,000 payable in

     8    monthly installments of $530 for four years. 

     9    The money was electronically deposited into

    10    his bank account.  He used it to pay off


    11    several outstanding credit cards.

    12                He realized after a year of making

    13    his full monthly payments that his balance did

    14    not seem to be going down, and contacted NEDAP


    15    for assistance.  Unbeknownst to him, Bank of

    16    America had not approved him for a personal

    17    loan at the interest rate indicated, but had


    18    issued him a line of credit on which the

    19    interest compounded daily at a rate of nearly

    20    20 percent.  Of the almost $6,000 that Mr. H.

    21    paid toward his loan in the first year, only


    22    $635 went to pay off principal.







                                                                         63


     1                Bank of America took advantage of

     2    an 85-year old's age and lack of financial

     3    sophistication to trick him into an


     4    exorbitantly priced loan product he did not

     5    need, and could not afford.  The Federal

     6    Reserve should require Bank of America to (a)


     7    provide detailed pricing and race data on its

     8    consumer lending program, and (b) make a firm

     9    commitment that its consumer loans provide

    10    tangible net benefit to borrowers.  Bank of


    11    America must not be allowed to violate the

    12    public trust and engage in lending practices

    13    that harm borrowers and communities.  Thank

    14    you for your consideration.


    15                MS. BRAUNSTEIN:  Thank you very

    16    much.  Thanks to this panel, and can the next

    17    panel please come forward.


    18                Good morning and welcome.  We have

    19    a few notes.  We have a timekeeper who will

    20    signal you when you have two minutes left, and

    21    when your time is up.  You have five minutes


    22    for your statements, and please begin your







                                                                         64


     1    statements by stating your name and

     2    organization so we can hear it on the record. 

     3    Mr. Taylor.


     4                MR. TAYLOR:  Good morning.  My

     5    name is Blair Taylor.  I am the President and

     6    the CEO of the Los Angeles Urban League. 


     7    Pleasure to be here this morning.  As some of

     8    you know, Los Angeles Urban League is one of

     9    100 urban league affiliates throughout

    10    America.  We are the largest urban league in


    11    the United States, with an 87-year track

    12    record of serving African American and other

    13    minorities in disenfranchised communities.  

    14                I've been at the helm of the urban


    15    league for about the last three years, and

    16    during that time I've had the distinction of

    17    working on some of the city's largest


    18    challenges.  And, clearly, we face a myriad of

    19    issues, high unemployment rates, significant

    20    high school dropout rates, inadequate access

    21    to healthcare, and the list goes on and on.


    22                Certainly, there are many







                                                                         65


     1    challenges, but one of the things that we have

     2    been very focused on at the urban league is a

     3    solution orientation and trying to drive 21st


     4    century solutions.  And I am pleased to say

     5    this morning that a partner in that forward-

     6    thinking solutions orientation of the Los


     7    Angeles Urban League has been the Bank of

     8    America.  And I am here this morning to

     9    testify in support of Bank of America's

    10    transaction.


    11                I place Bank of America in the

    12    highest regard as a corporate partner, as a

    13    displayer of corporate philanthropy and

    14    goodwill toward the communities of this city. 


    15    They have provided resources that have helped

    16    rebuild our urban neighborhoods, and they've

    17    not only put themselves in the mix


    18    consistently, but they've shown a passion to

    19    help solve the problems that plague our

    20    community.

    21                When I first assumed the helm of


    22    the urban league several years ago, one of the







                                                                         66


     1    first meetings that I had was with then

     2    President of Bank of America, Lynn Pike, and

     3    she was one of the first commitments to my


     4    early tenure, committing more than $200,000 in

     5    resources to support the Los Angeles Urban

     6    League, all of which goes to supporting our


     7    communities and the programs that we provide,

     8    spanning from daycare all the way through

     9    secondary education, on into college,

    10    university, workforce development, and the


    11    like.

    12                During my tenure and for the past

    13    several decades, Bank of America has served

    14    tirelessly on our Board of Directors, most


    15    recently being taken over by a woman named

    16    Gail Lenoi at the Bank of America, who has

    17    been very, very active in resolving problems,


    18    and solutions orientation for the Los Angeles

    19    Urban League.

    20                As an example of the Bank of

    21    America's commitment to social sector


    22    innovation, they're now considering a large







                                                                         67


     1    grant for a systemic change model called

     2    "Neighborhoods at Work", which around

     3    transforming inner city neighborhoods one at


     4    a time, and is a model that has received

     5    national accolades, and the Bank of America is

     6    now getting involved in this holistic model


     7    which is designed to scale neighborhood by

     8    neighborhood, addressing educational

     9    disparities, employment disparities, health

    10    disparities across a number of different


    11    disciplines simultaneously.

    12                With the support of Bank of

    13    America for innovative holistic initiatives

    14    like Neighborhoods At Work, the bank is once


    15    again revealing its commitment to building

    16    21st century solutions, so whether it's

    17    through the facilitation of these types of


    18    solutions, or their commitment to the

    19    development of winning strategies with boards

    20    of directors and community-based

    21    organizations, like the Los Angeles Urban


    22    League, this bank's unwavering commitments,







                                                                         68


     1    financial and otherwise, have been the

     2    embodiment of corporate responsibility.

     3                I cannot be more pleased to have


     4    their energy and their talents focused against

     5    the issues that matter in our community, and

     6    their service to our organization has been a


     7    vital element in the success that we've had in

     8    addressing many of the issues with which my

     9    community, particularly the African American

    10    community, is faced.  I am here to testify


    11    about the reality and the importance of Bank

    12    of America's commitment to that community,

    13    and, obviously, we must all proceed with

    14    caution when the largest anything from any


    15    industry seeks to expand further.  But what I

    16    can attest to this morning is this

    17    institution's commitment to social justice,


    18    and the well-being of the residents of this

    19    city.  I've seen it first-hand.  I've seen it

    20    displayed through their efforts with the Los

    21    Angeles Urban League and other community-based


    22    organizations for many decades.  And what I







                                                                         69


     1    can do is support the expansion of this

     2    institution.  I do this without hesitation,

     3    because in spite of being the nation's largest


     4    bank, they've proven as they've grown that

     5    their commitment is not only to making money,

     6    but it's also to changing lives for the


     7    better.  You have my thanks for your allowing

     8    me to testify this morning.  Thank you.

     9                MS. BRAUNSTEIN:  Thank you.  Mr.

    10    Kwoh.


    11                MR. KWOH:  Good morning.  My name

    12    is Stewart Kwoh.  I'm President and Executive

    13    Director of the Asian Pacific American Legal

    14    Center of Southern California.  We are the


    15    largest legal public interest group for Asian

    16    Americans in the United States.

    17                I want to thank the Federal


    18    Reserve Bank for this opportunity to express

    19    my support of Bank of America's proposed

    20    acquisition of Countrywide Financial

    21    Corporation.  I would like to thank Bank of


    22    America and their leadership at a critical







                                                                         70


     1    time in our history with the need for market

     2    stability in the area of mortgage banking.

     3                It is my long-term relationship


     4    with Bank of America that leads me to support

     5    this merger. I was estimating that I've had

     6    some work relationship with Bank of America


     7    for at least 20 years.  I am highly confident

     8    because of that, that Bank of America will

     9    provide expanded assistance for distressed

    10    mortgage holders, greater community


    11    development efforts, and increased support of

    12    community-based organizations.  Bank of

    13    America, in our community, has an excellent

    14    reputation as a community bank that acts


    15    locally, even though it is one of our

    16    country's largest banks.  

    17                I wanted to share with you that


    18    I've seen this commitment from a number of

    19    different vantage points.  Currently, I serve

    20    on the Bank of America's National Community

    21    Advisory Council, where I've seen their


    22    innovative approaches to revitalizing







                                                                         71


     1    communities, and much of that is by listening

     2    to advisors from the community. They have

     3    listened to our ideas, and have acted on those


     4    ideas.  

     5                Secondly, I've served on the Bank

     6    of America's Selection Committee for the


     7    Neighborhood Excellence Initiative here in Los

     8    Angeles.  Beginning four years ago, this has

     9    become a model for corporate foundations in

    10    which it provides general support for


    11    community development organizations that have

    12    genuinely made a difference in neighborhoods. 

    13    That general support comes in the form of

    14    $200,000 grants, or $25,000 grants, but that


    15    type of support really enables community

    16    groups to do its work in a flexible way.

    17                The Bank of America also has


    18    strongly supported the Asian American Justice

    19    Center, and the Asian Pacific American Legal

    20    Center in its dissemination of census-based

    21    demographic information on Asian Americans and


    22    Pacific Islanders throughout the United







                                                                         72


     1    States.  These demographic profiles have been

     2    used by literally thousands of community

     3    leaders throughout the United States on


     4    crucial information.  

     5                I have also seen BofA provide

     6    large investments in organizations that have


     7    provided workforce development opportunities,

     8    and these grants, especially in this period of

     9    time, have really improved the vitality of

    10    communities, and strengthened job


    11    opportunities for many residents of the

    12    community.

    13                Finally, I've witnessed BofA

    14    consistently uphold values of community


    15    revitalization.  Beginning, it was probably 15

    16    years ago, I served on the Bank of America's

    17    Social Policy Advisory Committee, and to the


    18    present day, I have been continually impressed

    19    with BofA's leadership locally and nationally. 

    20    In particular BofA not only provides financial

    21    support through partnerships and investments,


    22    but it also actively builds relationships with







                                                                         73


     1    communities.

     2                In 2001, I received a call from

     3    Liam McGee, who was then the President of Bank


     4    of America in the Los Angeles region, who then

     5    encouraged me to join the United Way Board to

     6    insure that the United Way became more


     7    responsive to community needs and community

     8    institutions.  Liam was the Board Chair from

     9    2001 to 2003, and exhibited impressive

    10    leadership.  He successfully strengthened the


    11    United Way by becoming more responsive to

    12    pressing community problems, especially in

    13    challenging poverty.  Indeed, this kind of

    14    partnership and leadership symbolizes BofA's


    15    approach to the community.  

    16                I thank the Federal Reserve Bank

    17    for the opportunity to provide my testimony


    18    this morning, and I appreciate the time to

    19    give my insights into why I believe BofA will

    20    be a very responsible partner if this

    21    acquisition is approved.  Thank you very much.


    22                MS. BRAUNSTEIN:  Thank you very







                                                                         74


     1    much.  Ms. Hogan-Rowles.

     2                MS. HOGAN-ROWLES:  Good morning. 

     3    How are you?  I have to say a personal hello


     4    to Sandy.  How are you doing?  Nice to see

     5    you.  Welcome to Los Angeles.  We're glad we

     6    have good weather for you.  I hope that didn't


     7    take any of my five minutes.  Okay.  Very

     8    good.

     9                Okay.  My name is Forescee Hogan-

    10    Rowles, and I'm President and CEO of Community


    11    Financial Resource Center here in Los Angeles. 

    12    I also serve as a commissioner for the

    13    Department of Water and Power here in the

    14    city, and I also serve as a commissioner for


    15    the California Commission for Economic

    16    Development here in the State of California. 

    17    I also serve as a board member to the National


    18    Board of the Opportunity Finance Network as a

    19    CDFI, Community Development Financial

    20    Institution, but I just said that to

    21    acknowledge those roles, but I'm really here


    22    representing Community Financial Resource







                                                                         75


     1    Center, my day job.  The other jobs I serve as

     2    a public servant, and we all do that in our

     3    respective roles.


     4                So I'm here to address you in

     5    support of the merger between Bank of America

     6    and Countrywide.  And, first of all, who is


     7    CFRC?  Community Financial Resource Center

     8    really wouldn't be here without the advocacy

     9    of some of our local and statewide advocacy

    10    groups, as well as we were led in our


    11    formation with Bank of America, along with a

    12    number of banks to start CFRC over 50 years

    13    ago.  

    14                The idea was that we would


    15    identify a community development organization

    16    that would meet the needs and unmet credit

    17    needs of low-income consumers starting in


    18    south Los Angeles, at that time we called it

    19    South Central.  We've grown from that now, we

    20    call it South L.A., and then to expand on to

    21    low-income residents and business owners


    22    throughout Los Angeles County, and we've







                                                                         76


     1    continued to do that.

     2                Bank of America was a lead partner

     3    with us.  They continue to be a partner with


     4    us, and it's not just a partnership that we

     5    just say it in name.  We've had board

     6    leadership through their employees within the


     7    bank, and when you get board leadership on a

     8    growing non-profit, it becomes really critical

     9    because you learn, and it helps to grow the

    10    organization in a much more sound way.


    11                We've also received grants from

    12    Bank of America, but strategic grants, one to

    13    establish what we call the BISTK, Business

    14    Innovation Technology Center, when we


    15    recognized that the information highway was

    16    sailing right by our community.  We went to

    17    Bank of America and they did give us the


    18    initial grant to start the BIZTK, which is an

    19    opportunity for low-income residents and

    20    business owners to come into the CFRC and do

    21    online banking.  They learn internet access. 


    22    They learn how to automate their businesses,







                                                                         77


     1    they can learn how to surf the web for homes,

     2    and that becomes real important, so innovative

     3    products that we come up with.


     4                The other thing that I think is

     5    really important about our innovative

     6    partnership with Bank of America is they


     7    actually helped us start LATMAP, which is, I

     8    think, really focused right here with this

     9    conversation.  Los Angeles Teachers Mortgage

    10    Assistance Program.  It's very, very unique. 


    11    We've actually just been awarded -- - our

    12    Board Member, Al Arguello from Bank of America

    13    doesn't even know this - we were notified a

    14    day and a half ago that our program was


    15    awarded for innovation.  We're going to

    16    present to a conference in New Jersey next

    17    month for our Los Angeles Teachers Mortgage


    18    Assistance Program.  It's an official

    19    partnership with the L.A. Unified School

    20    District, and it allows us to assist teachers

    21    and district employees in becoming home


    22    owners.  And for many of them, they locate in







                                                                         78


     1    and around low-performing schools, which our

     2    goal is to help stabilize local communities,

     3    particularly with wealth creation through home


     4    ownership.  So I think their reputation is

     5    there, with what we've done so far.

     6                In addition, we are recipients of


     7    the Neighborhood Excellence Award that was

     8    awarded to us two years ago through Bank of

     9    America.  And so I say enough about that,

    10    because I think they're a stellar institution


    11    that continues to demonstrate leadership and

    12    creative, and innovative products with CFRC,

    13    but I also need to acknowledge Countrywide. 

    14    And, you know, when they came forward, I


    15    recognize they did not invest with us.  They

    16    did come to us and try to do loans, and so

    17    what I expect to see if this goes forward,


    18    assuming - not assuming - asking you to

    19    support the merger, that Bank of America will

    20    continue its innovative leadership and

    21    supporting non-profit organizations to


    22    continue home ownership education, to expand







                                                                         79


     1    financial literacy.  

     2                In our LATMAP program, L.A.

     3    Teachers Mortgage Assistance program, we


     4    started that in 2000, and when I went to my

     5    staff and said how many foreclosures have we

     6    had, it was zero out of 1,494 families that we


     7    have helped get into homes.  Since 2000, not

     8    one foreclosure.  We did three years beef - I

     9    asked our staff why - we beefed up our home

    10    ownership education, the section on


    11    foreclosures.  We also beefed up our section

    12    on lending and types of loan products, and we

    13    chose not to assist borrowers that were

    14    looking for sub-prime, prime-prime loans, and


    15    just said we're just not going to do it.  So

    16    we had some people walk away that were upset,

    17    but at the end of the day, now three years


    18    later, we're seeing the evidence of what good

    19    sound home ownership education and home

    20    ownership counseling and financial literacy

    21    really does do.  So I will just encourage that


    22    you support the merger with the understanding







                                                                         80


     1    that we get the support across the country of

     2    non-profit institutions that will assist in a

     3    continuation and an increase in home ownership


     4    education and financial literacy.  Thank you

     5    very much.

     6                MS. BRAUNSTEIN:  Thank you very


     7    much.  Mr. Garcia.

     8                MR. GARCIA:  Thank you, ladies and

     9    gentlemen.  I appreciate your time.  It's an

    10    enjoyable time here in California, and I


    11    thought New Mexico was hot.  And yesterday I

    12    think I should have been back in New Mexico. 

    13                Having said that, my name is

    14    Robert Garcia.  I'm the Executive Director for


    15    Southwest Neighborhood Housing Services.  We

    16    are a non-profit organization that's been

    17    around for about 31 years.  Our primary


    18    mission is actually home ownership, financial

    19    literacy, and I'm just here in support of Bank

    20    of America.  And I'd like to read a quick

    21    statement, and I've got some statistics here


    22    that I'd like to leave, if at all possible.







                                                                         81


     1                Southwest Neighborhood Housing

     2    Services' Board of Directors, and Robert

     3    Garcia, Executive Director, all strongly


     4    support Bank of America's acquisition of

     5    Countrywide Mortgage.  This statement is based

     6    on the success shared by Bank of America and


     7    Southwest Neighborhood Housing Services in

     8    collaborating to meet the needs of low-income

     9    individuals in our communities.  

    10                Southwest Neighborhood Housing


    11    Services has successfully worked with Bank of

    12    America in facilitating home ownership

    13    opportunities for low to moderate income

    14    families striving to obtain the American dream


    15    of home ownership, especially for minorities. 

    16                The mortgage statistics show that

    17    Bank of America's program has been partially


    18    successful in addressing the needs of the

    19    Hispanic market.  A total of 1,539 loans

    20    closed in 2005 through 2007, reflect about

    21    $200 million worth of mortgage money.  Now


    22    having said that, that's not my -- not be very







                                                                         82



     1    much for larger cities, like in California, or

     2    Chicago, or New York, but in New Mexico when

     3    we have an average price home of 125 to 150,


     4    that's quite a bit of success here. Of course,

     5    this would be 70 percent of them would

     6    actually be closed to Hispanics, additional 10


     7    percent to other minorities, Asians and Native

     8    Americans, and the remaining 20 percent for

     9    whites.   

    10                In New Mexico, housing market Bank


    11    of America initiatives have actively assisted

    12    the Hispanic market to avoid falling victims

    13    to predatory lending.  We know that's a major

    14    problem, and that's one of the reasons that


    15    we've had all these foreclosures, and

    16    delinquencies.  Additional collaborations

    17    displayed by Bank of America's requirement for


    18    home buyers education training.  The course

    19    teaches first time buyers the basic of home

    20    ownership, home buying process,

    21    responsibilities of home ownership.  The


    22    course also includes financial literacy,







                                                                         83


     1    budget, as well as post purchase information. 

     2    The curriculum is based to assist the new home

     3    owners in how to best meet the needs in a


     4    reasonable approach that they can afford and

     5    successfully a long-term relationship with

     6    them.  


     7                Statistics have shown that home

     8    buyers education completing -- home buyers

     9    completing their workshops have historically

    10    had low defaults and foreclosure rates.  Class


    11    attendance have increased ten-fold.  At

    12    Southwest Neighborhood Services from 99

    13    graduates in 2001, to 1,023 in 2007.  The

    14    attached charts, and this is just as I show,


    15    outlining the full class attendance relating

    16    mortgage totals, and the success, program

    17    informations that are part of the basis for


    18    Southwest Neighborhood Housing's position in

    19    supporting Bank of America's acquisition of

    20    Countrywide Mortgage.

    21                In summary, although there are


    22    many capable lenders throughout the housing







                                                                         84


     1    market, Southwest Neighborhood Housing

     2    Services' position to support the acquisition

     3    of Countrywide Mortgage by Bank of America is


     4    because of a continued strong commitment,

     5    collaboration and partnerships with non-profit

     6    organizations with the mission of housing


     7    opportunities for low to moderate income,

     8    which Southwest Neighborhood Housing Services

     9    successfully done for well over 31 years. 

    10    Therefore, I would like to go on record on


    11    behalf of myself and the Board of Directors in

    12    support of Bank of America in acquiring

    13    Countrywide Mortgage.  Thank you.

    14                MS. BRAUNSTEIN:  Thank you very


    15    much.  Thanks to the panel, and we'll bring

    16    the next panel forward. 

    17                Good morning.  Just a couple of


    18    housekeeping notes.  We have a timekeeper that

    19    will let you know when you have two minutes

    20    left, and when your time is up.  And you have

    21    five minutes for your statement.  Also, we


    22    would ask that you begin your statements by







                                                                         85


     1    saying your name and organization, so we make

     2    sure I get it on the record.  Okay.  And we'll

     3    start with Ms. Gordon.


     4                MS. GORDON:  Thank you. My name is

     5    Thyonne Gordon, and I'm with A Place Called

     6    Home Youth Center in south Los Angeles.  


     7                In south Los Angeles, we often

     8    reach out for help, and no one is there.  And

     9    it's not because people don't want to help. I

    10    think people really do want to help in the


    11    city.  We have more initiatives to fight

    12    crime, more schools being built, and more

    13    programs to bring people together than ever

    14    before; yet, the demand and the toll that


    15    poverty takes on this community increasingly

    16    exceeds the supply.  

    17                Gang activity, high school


    18    dropouts, and graffiti laden communities are

    19    growing at an almost unstoppable rate.  It's

    20    hard to see the good when there's so much

    21    negativity that is popularized, but I'm lucky. 


    22    As the Executive Director of A Place Called







                                                                         86


     1    Home, I have a chance to see good every day. 

     2    We provide youth a safe haven where they're

     3    inspired to grow into productive lifestyles. 


     4    We do this by asking people who have good

     5    fortune to share with those that are less

     6    fortunate, providing knowledge, time, and


     7    financial resources.

     8                We actually ask them to become a

     9    part of our familia.  It's hard to ask for

    10    help, even from families.  Sometimes we just


    11    wish a magic genie would come down and just do

    12    everything that the community needs.  And

    13    believe it or not, that wish came true for us

    14    when we had an encounter with Bank of America. 


    15                In 2005, a Bank of America partner

    16    visited A Place Called Home unsolicited, and

    17    asked that we join other organizations in


    18    sharing ideas about bettering the community. 

    19    In sessions we agreed that one way would be in

    20    parent education.  It was critical to help our

    21    youth.  


    22                Bank of America provided funding







                                                                         87


     1    for us to do ESL and computer classes in the

     2    Vernon Central Block.  This Vernon Central

     3    Block initiative graduated in its first


     4    semester 38 parents.  Since then, we have a

     5    minimum of 25 parents that graduate every

     6    semester.  


     7                Bank of America also seeded into

     8    the community by bringing people together in

     9    a positive setting.  The adage, "It takes a

    10    village to raise a child", rang true as the


    11    Bank of America hosted Vernon Central block

    12    party in 2006, which included live

    13    performances, clothing and food distributions,

    14    free health screening, and, of course, banking


    15    basics from Team Bank of America.  The event

    16    uplifted our community, and Bank of America

    17    positioned themselves as part of our community


    18    familia.  

    19                As part of the family, Bank of

    20    America shares their family of employees with

    21    us.  We are privileged to enjoy the volunteer


    22    efforts from their downtown Los Angeles







                                                                         88


     1    banking team, and this past Saturday, a Bank

     2    of America employee, Susie Oh, was honored

     3    with the President's Volunteer Service award


     4    for the time she spent tutoring youths.  

     5                All of this makes A Place Called

     6    Home's experience with Bank of America very


     7    magical, but the magic didn't stop there.  In

     8    2007, A Place Called Home was awarded with the

     9    Bank of America Neighborhood Excellence award

    10    granting the organization a $200,000


    11    unrestricted gift, and the most phenomenal

    12    year long management training program.  The

    13    funding helped keep our doors open.  

    14                The Neighborhood Excellence


    15    Initiative is Bank of America's signature

    16    philanthropic piece, as well it should be. 

    17    This program distinguishes Bank of America


    18    from being a good corporate citizen to being

    19    a great community-oriented family-focused

    20    corporation.

    21                Stop for a second and understand


    22    the significance that Bank of America's family







                                                                         89


     1    connection has.  Imagine 35 high school

     2    dropouts, now imagine them walking across a

     3    high school stage, 85 percent of them are


     4    first generation high school graduates, all

     5    received career and college counseling, 15

     6    received scholarships to go to college, 4 work


     7    in our internship program, 8 participate in

     8    our 48 track recording studio, and 3 dance on

     9    our dance team, 35 high school dropouts.  They

    10    didn't end up in gangs, no criminal activity,


    11    and by most statistics, they should be dead. 

    12    That's the difference between good and great

    13    corporate citizens.  That's the difference

    14    between giving a fish, and teaching how to


    15    fish.  That's the difference in having

    16    familia.  

    17                Bank of America fosters familia. 


    18    And we're proud to endorse support, and in our

    19    neighborhood stand up for anybody that's a

    20    part of our family.  We're proud that Bank of

    21    America is part of our family, and support


    22    their initiative.  Thank you.







                                                                         90


     1                MS. BRAUNSTEIN:  Thank you.  Mr.

     2    Park.

     3                MR. PARK:  Good morning.  My name


     4    is Jim Park.  I'm the President and CEO of

     5    Asian Real Estate Association of America.  I

     6    want to thank you for this opportunity to


     7    present the views of the Association related

     8    to this historic merger of these two important

     9    financial institutions.

    10                AREAA is a national business trade


    11    organization focused on expanding housing

    12    opportunities for Asian American and immigrant

    13    communities throughout the country, with more

    14    than 14,000 members nationwide, with the bulk


    15    of our members here in California.  Our

    16    members are real estate and mortgage

    17    professionals that have worked tirelessly to


    18    serve the expanding and growing Asian American

    19    immigrant communities.

    20                Clearly, many factors, as you all

    21    know well, have led to the greatest housing


    22    crisis and mortgage credit withdrawal in







                                                                         91


     1    recent history.  The home prices we're seeing

     2    here in California are running up.  Wall

     3    Street's engagement, a lot of people getting


     4    into the real estate business with very little

     5    experience, people's unrealistic assumptions

     6    about borrower's capability to repay these


     7    loans.  A lot of factors, and we've seen them

     8    over and over again in the papers and other

     9    analyses that have been done.  And clearly the

    10    problems that started in the sub-prime segment


    11    have really tainted the whole entire industry. 

    12    And one of the most influential and biggest

    13    lender in the country clearly was not immune

    14    to this mortgage crisis.


    15                So now what's the solution?   How

    16    do we move forward, how do we rebuild the

    17    trust in the communities that we care so much


    18    about?  And I believe that Bank of America's

    19    acquisition of Countrywide Financial

    20    Corporation is really one of the critical

    21    linchpin solutions to rebuilding that trust


    22    and confidence.







                                                                         92


     1                I believe Bank of America's

     2    actions helped to stabilize the market when it

     3    needed it the most by giving one of the


     4    largest lenders in the country the liquidity,

     5    and really the solid footing it needed to

     6    continue.  And we talk about all the great


     7    work that they do, but at the end of the day,

     8    they are a lender, and we want them to lend. 

     9    And that's what's most important to all of us,

    10    and I am sure Bank of America made this


    11    decision, had a clear financial analysis and

    12    decision they engaged in to acquire

    13    Countrywide, but its action had a broader

    14    market implication, and really, I think, a


    15    tangible benefit for all of us who believe in

    16    increasing housing opportunities for under-

    17    served communities, and the growing multi-


    18    cultural home buyers that is represented not

    19    only here in California, but throughout the

    20    country.

    21                Bank of America and Countrywide


    22    combined will become the largest lender to







                                                                         93


     1    minority and immigrant communities in the

     2    country.  While that honor of being the

     3    largest clearly comes with some


     4    responsibilities and obligations, I'm certain

     5    that the management of those two institutions

     6    will take that new position in the marketplace


     7    very, very seriously.  I hold this view

     8    because I've seen the leadership of these two

     9    organizations in action, and I have had a

    10    chance to get to know them.  And, indeed, the


    11    management of these organizations have

    12    consistently supported the needs of the

    13    diverse community that we represent.  Bank of

    14    America had a long history of serving the


    15    Asian American community with deep banking

    16    roots right here in California, and more than

    17    15 years ago, Countrywide was the first major


    18    lender in this country who voluntarily

    19    committed to meeting a national minority

    20    lending goal.  

    21                So, at the end of the day, my view


    22    is that these organizations will continue down







                                                                         94


     1    that track, and we have done a lot of great

     2    things together, AREAA, Bank of America, and

     3    Countrywide, in terms of education, supporting


     4    communities, rolling out products that create

     5    opportunities for a diverse set of population,

     6    immigrant communities, and I expect that to


     7    continue in the years ahead.  And we believe

     8    strongly that the acquisition will increase

     9    the flow of capital over the long haul to

    10    minority and immigrant communities, and I


    11    think we need to stand behind them, and

    12    support this merger, because I think our

    13    community needs it, our future of the state,

    14    as well as the country's, require a


    15    respectable fine institution, and so I'm

    16    pleased to be here to support the acquisition

    17    and the merger of the two fine organizations.


    18                MS. BRAUNSTEIN:  Thank you very

    19    much.  Mr. Bohl.

    20                MR. BOHL:  Good morning.  My name

    21    is Jeffrey Bohl.  I'm an investor and


    22    entrepreneur.  I'm here to endorse the merger







                                                                         95


     1    of Bank of America and Countrywide Financial.

     2                I want to thank the Federal

     3    Reserve Bank for providing this opportunity to


     4    express my views of this pending merger.  I

     5    would also like to state for the record that

     6    these public forums are essential to the free


     7    market system, because the meetings allow the

     8    public to participate in the process, and we

     9    now know that our voices and thoughts will be

    10    considered in the approval and the outcome of


    11    the merger.

    12                There are a number of thoughts I

    13    would like to mention that I would hope to be

    14    taken into account when the bank executives


    15    and the regulators structure the new combined

    16    entity.  Number one, Bank of America must

    17    return to basics; that is, to return to the


    18    branch loan officer system, scale back ivory

    19    tower financial analysis.  In my opinion,

    20    housing is a local market.  It is very

    21    important that the customer needs an ongoing


    22    relationship with their local banker.  I







                                                                         96


     1    emphasize this point.

     2                In this age of high technology, we

     3    sometimes forget about the human being


     4    fundamentally.  People need to have

     5    relationships with local bank officers.  This

     6    important reality has been severely abused in


     7    recent banking practice, and it needs

     8    immediate attention.  In an age of

     9    securitization, we can build economic models,

    10    make economic forecasts, and work diligently


    11    to demonstrate our knowledge and expertise,

    12    but banking must remember to share this

    13    knowledge, and teach their customers how these

    14    new programs work.  And no matter what,


    15    remember that models fail, and the Greenspan

    16    and Bush model is cracking, and we're broken. 

    17                The bank must remember that even


    18    in globalizing, or global capitalism,

    19    financial limits are part of daily living. 

    20    Banking has become overly dependent on credit

    21    lending agencies and credit scores.  It lures


    22    and is designed strictly to help the highest







                                                                         97


     1    credit scores.  We live in an age where credit

     2    has sometimes become more important than a

     3    productive job itself.  


     4                When viewed in this economy, if

     5    your credit score is not high enough, you can

     6    effectively be eliminated from the economic


     7    system, and we have all heard several times in

     8    these testimonies that the inability of a

     9    homeowner to achieve a high credit score can

    10    force a family out of their house, and into


    11    foreclosure.  

    12                The modern credit agencies and

    13    bureaus are failing.  I don't have to tell you

    14    that.  The sub-prime meltdown is, in part, a


    15    story of delusional credit ratings by the

    16    major rating services.  Look at the

    17    devastation in the  model on bond insurers who


    18    can barely raise capital, but continue to have

    19    a AAA rating as their stock prices is

    20    plummeting to record lows and face bankruptcy.

    21                Banking here in Wall Street are


    22    running in denial and have avoided







                                                                         98


     1    transparency.  We have failed to disclose

     2    their dubious investment in mortgage bank

     3    securities, CDOs, and the like.  They were


     4    demonstrative during the boom, but cowardly

     5    during the downturn.  So it is my hope that

     6    the practice of ivory tower banking may come


     7    to an end.  It distorts the allocation of

     8    resources, and skews the compensation levels

     9    in favor of the elite.  This reality does not,

    10    in the long run, help the public, or the


    11    shareholders.  

    12                Look at Bill Gates and Steve

    13    Johns.  They pay themselves a dollar per year,

    14    but they have achieved their wealth by


    15    building their companies.  I read recently

    16    that Bank of America is going to compensate

    17    the head of its mortgage division, a number,


    18    and I may not be right on th is number, but

    19    I've heard that it could be as high as $28

    20    million to run the mortgage division.  In my

    21    world, this is an outrage.  In my world, this


    22    person would be lucky to have a job at all.







                                                                         99


     1    I would ask that Bank of America to explain

     2    this decision to the shareholders.  

     3                In conclusion, I recommend that


     4    every executive, every employee of Countrywide

     5    and Bank of America review the testimony of

     6    these hearings diligently.  I challenge the


     7    Bank of America to return to the fundamentals

     8    established by A.P. Giannini, who based his

     9    lending practices on the character of its

    10    customers.  I urge the Fed to get tough on the


    11    financial companies that have shown poor

    12    judgment, but still give them an opportunity

    13    to correct their lending practices, and lead

    14    our economy to the right path.  And most


    15    important, I hope the Federal Reserve will get

    16    with it, reform the modern credit rating

    17    services, and the credit bureaus, force public


    18    companies to fully disclose information,

    19    require investments relations departments in

    20    our publicly held companies to more broadly

    21    disclose information that shareholders need to


    22    determine their investments.  And, finally,







                                                                        100


     1    provide a follow-up meeting in the future so

     2    that the public can monitor and make sure the

     3    Bank of America makes the right choices in the


     4    future. 

     5                MS. BRAUNSTEIN:  Thank you very

     6    much.  Ms. Golden.


     7                MS. GOLDEN:  Good morning,

     8    everyone.  I'm Dolores Golden, the CEO of the

     9    Multi-cultural  Real Estate Alliance for Urban

    10    Change.  We're based here in Los Angeles, and


    11    we were formed in 1992 out of the Los Angeles

    12    riots.  Unfortunately, we were formed because

    13    there was red lining of insurance, appraisers

    14    were slashing the property values in our


    15    neighborhoods, and here we are again with the

    16    mortgage meltdown.

    17                Our organization is non-profit,


    18    and we're comprised of real estate

    19    professionals, mortgage lenders, appraisers,

    20    escrow people, all local people in the

    21    neighborhood.  And I have not a statement, but


    22    I have some serious concerns and questions







                                                                        101


     1    about the merger, because we've got a lot of

     2    people that have a program that Countrywide

     3    has to help save their homes, and right now


     4    with this merger in the wings, it stopped

     5    working.  

     6                We also want to know if people are


     7    in a pipeline to get a mortgage workout, or a

     8    loan mod with Countrywide, what's going to

     9    happen when Bank of America takes over.  The

    10    other concern is that about a year or so ago,


    11    we had a World Savings and Wachovia merger,

    12    and we had people that were at loan doc stage

    13    in escrow, and when they got to escrow to sign

    14    their docs, they weren't World any more, they


    15    were Wachovia, and the interest rate was high,

    16    and the terms were changed.  And they didn't

    17    get their Reg Z that the Feds say they're


    18    supposed to have.  And we, the real estate

    19    agents and brokers, we get a call to our

    20    office all the terms are changed, the escrow

    21    company didn't know, nobody knew.  Somebody


    22    knew, but we want to make sure this does not







                                                                        102


     1    happen again.  We want to make a clear path

     2    that we're able to know, and we want Bank of

     3    America and Countrywide, whatever happens, to


     4    be able to reach out to the real estate

     5    professionals in the community.  

     6                There are a lot of organizations


     7    that are around all over the country that we

     8    can have outreach on a nationwide basis, and

     9    know what's going on, so that when we have the

    10    call on the phone with the homeowner in


    11    distress, we'll be able to help them.  

    12                The other concern is that right

    13    now, Countrywide has branched out into

    14    neighborhoods at risk, Compton, Watts, and


    15    opened branches there.  We want to know if

    16    Bank of America takes over, are they going to

    17    close these branches, are they going to keep


    18    them up?  We need to make sure that the people

    19    in the hood, so to speak, have some support

    20    and banking in their neighborhood, so they

    21    don't have to get in a car and drive somewhere


    22    in order to get good banking materials.







                                                                        103


     1                We also want to make sure that

     2    minorities are diverse within nationwide,

     3    countrywide Bank of America, and in major


     4    cities, people that look like the people that

     5    are borrowing, are represented.  

     6                I'm not long-winded today.  I just


     7    wanted to make sure that we get straight to

     8    the point and make sure that people in

     9    foreclosure, or facing foreclosure, have a

    10    clear-cut path that they're able to get their


    11    way out of this mess.  Thank you.

    12                MS. BRAUNSTEIN:  Thank you very

    13    much.  Thanks to this panel, and we'll bring

    14    the next panel in.  


    15                MS. BURDETT:  Good morning,

    16    everyone.  My name is Katherine Burdett.  I'm

    17    a realtor with Howard Realty Center in Los


    18    Angeles.  I'm also President Elect for the

    19    Women's Council of Realtors for Southwest Los

    20    Angeles, and I'm also an officer of the Multi-

    21    Cultural Real Estate Alliance addressing the


    22    predatory lending task force.







                                                                        104


     1                My concerns are - I don't have a

     2    statement, I have concerns.  My concerns are

     3    what policies and practices is Bank of America


     4    going to have for the existing customers of

     5    Countrywide.  And, specifically, I have two

     6    families who have excellent credit, who are


     7    very much employed.  I have a client,

     8    specifically a family, Mr. and Mrs. Gilbert

     9    and Eva Sorano.  They have FICO scores in the

    10    high 700s, and they're both school teachers in


    11    the L.A. and Montebello Unified School

    12    District for over 15 years.  

    13                Because of cutbacks and pay check

    14    errors, their income has decreased.  They have


    15    two children, and they've been attempting to

    16    refinance their home for several months now. 

    17    Now, they had an appraisal done.  Countrywide


    18    accepted the appraisal.  They had loan docs

    19    out, and then all of a sudden they were

    20    required to have a second appraisal, in which

    21    case the appraisal was cut by $85,000.  These


    22    people have excellent credit.  They're trying







                                                                        105


     1    to keep their credit, but yet they're not

     2    being assisted.  

     3                I have another couple who are both


     4    self-employed.  They've been homeowners for

     5    over 15 years.  They have three children. 

     6    Because of the economy cutbacks, they're


     7    needing assistance or modification.  However,

     8    when we contacted the Home Detention

     9    Department of Countrywide, Hope Now Alliance,

    10    as well as the Home Preservation Department of


    11    Countrywide, and some other VPs of that

    12    company, we were told that Countrywide is only

    13    working with people who are late and behind in

    14    their payments.


    15                What is going to be done when Bank

    16    of America acquires Countrywide to assist

    17    people, customers who are good as far as their


    18    credit is concerned, but who need help and

    19    assistance in modifying or forbearing their

    20    existing mortgages because of a declining

    21    market, as far as they can't get loans because


    22    the appraisals are being cut.  Those are my







                                                                        106


     1    concerns.

     2                Also, the community, they seem to

     3    be cutting branches.  They're changing the


     4    reps.  People are leaving in droves.  How are

     5    we supposed to help keep our people in homes,

     6    and put new borrowers in homes in the future?


     7                MS. BRAUNSTEIN:  Thank you very

     8    much.  Mr. Toebben.

     9                MR. TOEBBEN:  Hi.  Good morning. 

    10    My name is Gary Toebben.  I'm President of the


    11    Los Angeles Area Chamber of Commerce.  Thank

    12    you for this opportunity today.

    13                I'm here in support, the business

    14    community in support of this acquisition of


    15    Countrywide by Bank of America.  We believe

    16    that our nation and our region are very

    17    fortunate that a financial corporation like


    18    Bank of America has stepped forward in this

    19    time of tremendous need in our country.  We

    20    could be here talking about a bankruptcy.  We

    21    could be here talking about a federal buy-out,


    22    or bail-out, but we're not.  We're here







                                                                        107


     1    talking about one corporate citizen who has

     2    stepped forward, even started stepping forward

     3    some six months ago with an initial injection


     4    of capital into Countrywide, who has stepped

     5    forward to buy Countrywide, because they know

     6    how important Countrywide, and all their


     7    mortgages are to the health of this nation.  

     8                As you probably have already

     9    heard, Bank of America is the number one

    10    market share in the Los Angeles market.  You


    11    know that they're the number one SBA lender in

    12    the United States, that they're the number one

    13    SBA lender to minority-owned small businesses. 

    14    I know you've heard from a number of other


    15    panelists how generous Bank of America is, as

    16    a corporate citizen in our community.  They

    17    support hundreds of community organizations. 


    18    You've heard about the $1.5 billion that

    19    they've committed over a 10-year period in

    20    non-profit organizations that are improving

    21    communities and neighborhoods.  


    22                Simply said, our business







                                                                        108


     1    community is relieved that an organization of

     2    the caliber of Bank of America is acquiring,

     3    or would like to acquire Countrywide.  We


     4    believe that it's in the best interest of the

     5    many homeowners in our region who have

     6    mortgages with Countrywide.  WE believe it's


     7    in the best interest of the many employees,

     8    the thousands of employees in our region who

     9    are employed by Countrywide.  We urge your

    10    approval of this acquisition.  Thank you.


    11                MS. BRAUNSTEIN:  Thank you very

    12    much.  Mr. Sandos.

    13                MR. SANDOS:  Good morning.  My

    14    name is Tim Sandos.  I'm the President and


    15    Chief Executive Officer of the National

    16    Association of Hispanic Real Estate

    17    Professionals.  I was also a former board


    18    member, trustee, and chair-elect for the Omaha

    19    Branch of the Federal Reserve.  I'm real proud

    20    of this institution.  I carry this notebook

    21    very affectionately, which has the brand of


    22    the Federal Reserve.  I appreciate the







                                                                        109


     1    opportunity to be here before you today.

     2                For those of you who are not

     3    familiar with NAHREP, we have 16,000 members,


     4    60 percent who are realtors, 30 percent who

     5    are loan originators, the last 10 percent are

     6    anyone else who touches the transaction, be


     7    they title companies, insurers, loan

     8    counselors.  I have 63 chapters in 48 states,

     9    23 of those 63 chapters are here in

    10    California, 7 of which are in Los Angeles. 


    11    Last year my group did $65 billion in

    12    origination, which means that we touched 25

    13    percent of all Hispanic loans in America. 

    14    That for an 8-year old organization, who


    15    started with  few idealists in San Diego,

    16    California, thinking about how they could make

    17    a better opportunity for people.  


    18                Our mission statement from the

    19    beginning has been to increase sustainable

    20    Hispanic home ownership rates by working with

    21    the professionals that serve that


    22    constituency.  And we believe sustainability







                                                                        110


     1    is the key in this merger, because we do no

     2    one any favors by putting them into a home

     3    that they lose two or three years from now. 


     4                Bank of America has an outstanding

     5    record on how they have utilized wisely credit

     6    underwriting valuations of homes that have


     7    kept people in homes.  And we think that this

     8    is extremely important moving forward with

     9    Countrywide, who made a significant commitment

    10    early on to the Hispanic community.  


    11                We speak in favor, of course, of

    12    these two mergers because we think that the

    13    merger brings the two organizations with this

    14    kind of significant history and supporting


    15    professionals with ethically serving Hispanic

    16    communities as trusted advisors.  We believe

    17    the merger will result in combining the


    18    industry's best loan origination technology

    19    and countrywide offers with the resources and

    20    extensive bank footprint that Bank of America

    21    provides throughout the United States, and


    22    indeed in the State of California.  Excellence







                                                                        111


     1    in professional and consumer education that is

     2    offered by these two institutions are most

     3    essential, and they've been the hallmark of


     4    our relationship with them over the years.

     5                Jim Park mentioned earlier the

     6    need to establish trust.  Well, we've been


     7    able to re-establish trust and confidence in

     8    both the consumer market and the professional

     9    market by working with education coming from

    10    both Countrywide and Bank of America for our


    11    members.  Many of our members came into the

    12    industry in the last five to seven years. 

    13    They've never had to be in an industry where

    14    they had to go out earn the business, and do


    15    it without the business walking through the

    16    door.  It's this kind of consumer education

    17    that they provide for us, so that they can


    18    reach out to the marketplaces we serve.

    19                The combination is also going to

    20    serve to address multiple number of consumers

    21    in need of loan modification or refinance to


    22    avoid foreclosure.  One of the things that







                                                                        112


     1    we're working with with both organizations is

     2    retraining some of our professional members as

     3    HUD-certified counselors so that this in the


     4    market when it's down, they can act as

     5    certified counselors helping keep people in

     6    their homes, and then when the market


     7    normalizes return to being realtors, loan

     8    officers, or the other professions that

     9    they've had.

    10                The size and scope of the two


    11    organizations should also provide capital for

    12    minority and first-time home buyers, some with

    13    non-traditional credit who can purchase the

    14    RAO inventory that now is hitting our markets,


    15    and be the replacement of the baby boomers to

    16    purchase that inventory, but sometimes with

    17    non-traditional credit.  Hispanics have a


    18    tradition of having non-traditional credit;

    19    that is, that they have not established a FICO

    20    score, if they've been filed.  They have the

    21    audacity to live within their means, didn't go


    22    out and create credit, and so, therefore, that







                                                                        113


     1    serves to harm them when they go to purchase

     2    a home.

     3                Non-traditional credit models that


     4    use predictive modeling to look at performance

     5    for individuals who are so situated provide

     6    the opportunity for them for first time home


     7    ownership is going to be a clear need for how

     8    we move out of this particular market, and

     9    stabilize price in neighborhoods all across

    10    the country.


    11                Countrywide, as I said before, was

    12    a founding sponsor for NAHREP in 1999.  They

    13    were the first major lender to make the

    14    commitment to  minority community home


    15    ownership in their mission statement.  They

    16    did it before they had a CRA or a regulatory

    17    reason to do it.  They did it rather because


    18    they believed in the opportunity in the

    19    marketplace.  

    20                Now, they have most recently

    21    partnered with two of our largest members at


    22    NAHREP, Vista Asset Management, who is a







                                                                        114


     1    company dedicated to turning RAO assets into

     2    home ownership opportunities for minorities

     3    and low to moderate income buyers.  To-date,


     4    the partnership in less than a year has

     5    yielded 78 percent of the properties being

     6    sold to owner occupied purchasers, and 65


     7    percent of the properties sold were to

     8    minority families.

     9                Bank of America last year received

    10    NAHREP's Founders award for Leadership for


    11    their innovation in developing the

    12    relationship with us.  We think that, again,

    13    the combination is going to be an outstanding

    14    opportunity for minority communities.  We urge


    15    your support.  Thank you very much.

    16                MS. BRAUNSTEIN:  Thank you very

    17    much.  Mr. Espinoza.


    18                MR. ESPINOZA:  Yes. First of all,

    19    I would like to thank the Federal Reserve for

    20    having these hearings.  I think they're very

    21    important, key, obviously, to our community. 


    22                The other is that Bank of America







                                                                        115


     1    -- and I, by the way, submitted some written,

     2    so I'm just going to touch on some of the

     3    important pieces.  Bank of America back nine


     4    years ago, or ten years ago invested actually

     5    the initial funding for Raza Development, and

     6    I'm President and CEO of that corporation, and


     7    help founded with a $1 million grant over a

     8    10-year period, and a $10 million loan we were

     9    able to now become the largest Hispanic

    10    community development financial institution in


    11    the country, and provided over $100 million of

    12    capital to our community, and over half a

    13    billion dollars in leverage, so we've had a

    14    great partnership with Bank of America.  And


    15    it's been a relationship that now goes 10

    16    years.

    17                The concerns we presently have


    18    right now with the market the way it is, one

    19    of the first things that we're concerned with

    20    is the foreclosure rates that obviously are

    21    occurring across the country.  And one of the


    22    major challenges for us moving forward, in







                                                                        116


     1    fact, working with Bank of America is going to

     2    be trying to put our arms around this issue.

     3                Now, obviously, they didn't create


     4    it, and I doubt seriously that anybody in the

     5    market, including Countrywide, could have

     6    foresaw the crash we were going to have, but


     7    we have one, and it's going to impact Hispanic

     8    families, and families all across the country. 

     9    And probably the ones that will take the

    10    hardest hit are going to be the lower income


    11    and middle income families.  And probably more

    12    of the middle income families than anyone

    13    else.  So we're strongly suggesting in the

    14    merger that's occurring between Countrywide


    15    and Bank of America that the possibilities of

    16    looking at history crashes - I hate to create

    17    another RTC - but at the end of the day, that


    18    vehicle, at least at the minimum, allowed

    19    people to know where the assets were, and to

    20    know how bad the assets were, and write them

    21    down, and then obviously get them back out


    22    into the community.







                                                                        117


     1                I think this go-around, obviously

     2    starting to date myself here, I think we have

     3    an opportunity to actually hopefully help


     4    families stay in the houses versus trying to

     5    foreclose them.  And I think that's really the

     6    challenge in front of you, and I think the


     7    challenge in front of all of us is how do we

     8    manage a liquidity problem in the credit

     9    community, a legal problem of who owns the

    10    asset, or who owns the paper, and at the same


    11    time work with existing partnerships across

    12    the country, non-profit and, obviously, for-

    13    profit to put our arms around these assets so

    14    that we can at least figure out a way for


    15    those families that can afford to stay, to

    16    stay, and then those families that are not

    17    going to be able to afford, to get them into


    18    housing, because there still are families out

    19    there that are going to need the assistance. 

    20    So we support our national partner, Bank of

    21    America, and look forward to working with them


    22    on this challenge.  And I'm sure the Federal







                                                                        118


     1    Reserve is going to have to deal with this

     2    issue, also, so thank you very much for your

     3    time, and I'm glad we're able to get this over


     4    quickly.  Thank you.

     5                MS. BRAUNSTEIN:  Okay.  Thank you

     6    very much.  Thanks to the panel.  We will now


     7    take a break, and reconvene at 10:45.

     8                (Whereupon, the proceedings went

     9    off the record at 10:31 a.m., and went back on

    10    the record at 10:47 a.m.)


    11                MS. BRAUNSTEIN:  Welcome.  We're

    12    going to get started.  Housekeeping, there's

    13    a timekeeper there that will let you know when

    14    you have two minutes left, and when your time


    15    is up.  You have five minutes.  And please

    16    begin your statement with your name and

    17    organization so we can get it on the record. 


    18    And with that, Mr. Larson.

    19                MR. LARSON:  Well, good morning. 

    20    My name is Scott Larson, and I'm the Executive

    21    Director for Home Aid, Orange County.  Home


    22    Aid is a local and national non-profit







                                                                        119


     1    organization that was established nearly 20

     2    years ago by the local homebuilding industry,

     3    and what's been unique is that the growth of


     4    Home Aid has primarily occurred over the last

     5    10 years.  

     6                Starting in Orange County, our


     7    objective is to build dignified housing where

     8    homeless individuals and families can rebuild

     9    their lives.  The unique role that Home Aid

    10    plays is that we come in as a developer and as


    11    a builder on behalf of other non-profit social

    12    service groups in the community, and build

    13    basically turnkey facilities, or renovate

    14    turnkey facilities for them that are debt-


    15    free.  In Orange County alone we have

    16    developed over 40 projects, and nationwide now

    17    we have nearly 150 projects that have been


    18    developed in cities across the country.

    19                The unique role that I'm here

    20    today is to speak on behalf of what Bank of

    21    America has done through Home Aid in our


    22    communities around the country.  During the







                                                                        120


     1    last 10 years, the primary growth of Home Aid

     2    has occurred from a few chapters in the

     3    southern California area.  It's now over 22


     4    chapters, and Bank of America has been with us

     5    through that significant growth period.  

     6                Several things that they have


     7    played a role in is placing members of the

     8    Bank of America staff on Board of Directors of

     9    organizations across the country.  Currently,

    10    right now, we have 30 Bank of America


    11    employees involved with our organization in 16

    12    chapters across the country, and locally we

    13    employ a lot of their volunteers on our

    14    projects.  And I'll give you a couple of


    15    examples of that.

    16                On a national level, some of the

    17    things that Bank of America has facilitated


    18    for us, since we've had such an opportunity

    19    for growth in our development, through our

    20    national office they've developed with us

    21    what's called The Knowledge Center.  Since we


    22    have a lot of new chapters that need to learn







                                                                        121


     1    from each other, the Knowledge Center was

     2    established so that way through our websites,

     3    that our new chapters can come on and learn


     4    from other chapters, and Bank of America has

     5    helped us facilitate that.

     6                They've also helped us, since


     7    we've had such significant growth in our

     8    organization, to develop accounting guidelines

     9    for our new chapters so that they know proper

    10    business practices as they establish a non-


    11    profit in their community.  And, also, has

    12    allowed us to expand in our marketing and in

    13    community awareness of what we're doing in

    14    those communities.  On a national level, they


    15    have facilitated nearly a half million dollars

    16    in direct support of our work, and indirectly

    17    nearly -- over $1 million of support.     


    18                What I wanted to do is

    19    specifically mention some of the work that

    20    they have done on my behalf in Orange County. 

    21    In Orange County alone, we have worked on 40


    22    developments ranging from small renovations to







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     1    multi-million dollar ground-up construction

     2    projects, and most recently, the role that

     3    Bank of America has played is in a project


     4    we're going to be dedicating next week called

     5    Hope Family Housing Buena Park.  This is 17

     6    row town homes in the City of Buena Park, a $5


     7    million project that will be developed debt-

     8    free for the Orange County  Rescue Mission. 

     9    The role that Bank of America has played, it's

    10    facilitated $1 million through the Federal


    11    Home Loan Bank.  They were our sponsor, but

    12    the role that they played was specifically

    13    they do not have -- we do not have a loan on

    14    this project, and so they were willing to step


    15    in and be our sponsor, despite the fact that

    16    there was not a loan that they were tied to. 

    17    And the Federal Home Loan Bank is anxiously,


    18    or graciously participated, and funded $1

    19    million of our project.

    20                That project is geared towards

    21    homeless families living in motels, and so


    22    next week they're will be an ability for







                                                                        123


     1    people to live in this transitional housing

     2    community that will be debt-free through the

     3    Orange County Rescue Mission.


     4                In addition, we bring in a lot of

     5    Bank of America volunteers to our projects

     6    throughout the year.  Most recently, they were


     7    involved with landscape and renovation

     8    projects on two of our communities, one for

     9    pregnant women in the City of Orange, and one

    10    called The Village of Hope, which is on the


    11    formally closed Tustin Marine Base.  So we've

    12    deeply appreciated the role that Bank of

    13    America has played on behalf of Home Aid, both

    14    here locally in southern California, and


    15    across the country.  And I am proud to be here

    16    to speak on their behalf.  Thank you.

    17                MS. BRAUNSTEIN:  Thank you very


    18    much.  Ms. Duarte.

    19                MS. DUARTE:  Good morning.  My

    20    name is Patricia Garcia Duarte.  I'm Executive

    21    Director for Neighborhood Housing Services of


    22    Phoenix.  Let me start by thanking you,







                                                                        124


     1    members of the Federal Reserve system, and the

     2    members of the Bank of America Corporation

     3    panel for this opportunity to speak in support


     4    of the acquisition plans that Bank of America

     5    has for Countrywide Financial Corporation.

     6                I'm speaking to you this morning


     7    on behalf of Neighborhood Housing Services of

     8    Phoenix, and let me take just a few moments to

     9    explain.  NHS Phoenix is a not-for-profit, a

    10    501(c)(3) mission-based organization.  It was


    11    established in 1975 in an effort to revitalize

    12    Phoenix neighborhoods.  

    13                NHS Phoenix office provides an

    14    array of different programs and services that


    15    support, create, and promote home ownership

    16    for low and moderate income families. NHS

    17    Phoenix is also a chartered member of


    18    NeighborWorks America.  

    19                As I speak to you from my position

    20    as Executive Director, I also speak to you as

    21    someone who has been in the banking and


    22    housing industry for over 20 years, so when I







                                                                        125


     1    tell you that Bank of America has demonstrated

     2    from its national boardroom to our cities its

     3    support for local community programs and


     4    services, I say it with confidence, because I

     5    have witnessed this, not of recent, but over

     6    the last 20 years.


     7                Bank of America has excelled at

     8    promoting and supporting home ownership

     9    opportunities for low and moderate income

    10    families nationwide, and in the Phoenix Metro. 


    11    Bank of America has generously delivered

    12    through their -- has been very generous

    13    through their delivery of their signature

    14    philanthropy programs.  In particular, I give


    15    kudos to Bank of America for the Neighborhood

    16    Excellence Initiative, also known as NEI. 

    17                Through NEI, Bank of America


    18    targets critical needs in local communities,

    19    and works with local community leaders to

    20    direct funding where it will make the greatest

    21    impact.  It recognizes the strengths and the


    22    shortcomings of being a non-profit.  As a non-







                                                                        126


     1    profit, we serve many, but we're typically

     2    funded annually, and long range planning is

     3    difficult when you have to seek funding every


     4    year.  So NEI, Bank of America addresses that

     5    issue, and provides substantial and multi-year

     6    funding.


     7                NHS Phoenix is a proud 2007

     8    recipient of the Neighborhood Excellence

     9    Initiative, and there are many other non-

    10    profits in Phoenix, and throughout the country


    11    that have benefitted from this NEI program.  

    12                The program provides $200,000 in

    13    operating support over a two-year period, and

    14    has been helpful to the recipient


    15    organizations, especially as government

    16    programs and corporate support has been in the

    17    financial decline.  


    18                In addition, the grant also

    19    focuses on leadership training for the

    20    Executive Director and the emerging leader. 

    21    This type of support, in particular, helps to


    22    stabilize, grow, and institutionalize the non-







                                                                        127


     1    profit, especially during times like this when

     2    more people are in need of our programs and

     3    services.


     4                From our local experience, I can

     5    also say that since we opened our

     6    NeighborWorks Home ownership Center in 1999,


     7    Bank of America has been a partner, a very

     8    strong partner.  We enjoy a collaborative

     9    relationship through which Bank of America

    10    sends their customers and borrowers to NHS


    11    Phoenix for home ownership counseling and

    12    education.  Bank of America recognizes that an

    13    educated consumer tends to make better

    14    consumer choices.  Our records prove that


    15    families who have attended home buyer

    16    education and housing counseling sustain home

    17    ownership at a much higher rate.


    18                Bank of America is also an active

    19    member of the Arizona Foreclosure Prevention

    20    Task Force.  In an effort to be proactive,

    21    many of us decided to forego territorialism


    22    and decided to come together last summer, we







                                                                        128


     1    started to reform, and we formed this Arizona

     2    Foreclosure Prevention Task Force.  And it's

     3    a group of more than 200 professionals from


     4    across the state representing financial

     5    institutions, non-profits, and municipalities,

     6    just to mention a few.  The task force goal is


     7    to reduce the number of foreclosures in

     8    Arizona so that that negative impact that

     9    foreclosures cause on families and communities

    10    is also reduced.


    11                Considering the staggering number

    12    of foreclosures, this is a big goal.  That

    13    task force has four committees and education

    14    outreach funding, and political, and


    15    regulations committee, and I'm happy to report

    16    that Bank of America, which is not unusual, is

    17    an active participant of the task force, and


    18    usually among the first to commit financial

    19    resources to help the goals and objectives of

    20    the task force.

    21                What I'm suggesting through my


    22    remarks, and what I have witnessed first-hand







                                                                        129


     1    is that Bank of America has instilled a

     2    culture of service in its employees.  Because

     3    of this, NHS has benefitted from employees


     4    serving on key committees and in voluntary

     5    roles on the board of directors and on

     6    committees.  More importantly, non-profits


     7    throughout the state, in general, benefit from

     8    Bank of America's culture of serving and

     9    giving, and supporting non-profits because our

    10    mission aligns.


    11                We all want to serve those who

    12    have prepared themselves, and are ready to

    13    take the next step towards home ownership.  We

    14    all want to make sure that consumers are on


    15    solid foundation, and on the right path to

    16    success as a homeowner through information,

    17    education, and the right loan product.  It is


    18    not just enough to put someone in a home.  We

    19    want for them, as a new homeowner, to be

    20    successful.  We want the homeowner to build

    21    equity over time, and to build wealth from


    22    their home for their future.  So on behalf of







                                                                        130


     1    Neighborhood Housing Services of Phoenix,

     2    thank you for allowing me to share our local

     3    experience with Bank of America.  


     4                Let me finish my remarks by saying

     5    that as someone who knows, and who has worked

     6    with Bank of America, we support the


     7    acquisition plan for Countrywide Financial

     8    Corporation.  Countrywide would benefit from

     9    incorporating Bank of America's culture and

    10    commitment to improving our communities.  And


    11    in coming together, Bank of America and

    12    Countrywide, that culture could grow

    13    throughout the United States.  Thank you.

    14                MS. BRAUNSTEIN:  Thank you very


    15    much.  Thank you to the panel.  We'll bring

    16    the next panel forward.  

    17                Welcome.  A couple of housekeeping


    18    notes.  We have a timekeeper who will signal

    19    you when you have two minutes up, and then

    20    when your time -- have two minutes left, and

    21    when your time is up.  You have five minutes


    22    for your statement, and please begin your







                                                                        131


     1    statement with your name and organization so

     2    we can get it on the record.  We'll start with

     3    Mr. Ruiz.


     4                MR. RUIZ:  Good morning.  My name

     5    is Michael Ruiz, and I'm the President of the

     6    Northern California Supplier Development


     7    Council, the regional affiliate in northern

     8    California of the National Minority Supplier

     9    Development Council.  Our organization's role,

    10    quite simply, is to promote minority business


    11    development.  We do this by certifying

    12    minority-owned businesses, and looking to

    13    connect them with procurement opportunities

    14    with Fortune 1000 companies.  


    15                Bank of America is a strong

    16    supporter of the network, both locally and

    17    nationally, both through direct financing. 


    18    And, more importantly, through the provision

    19    of economic opportunity for our certified

    20    minority suppliers.

    21                To give you a sense of the scope


    22    of our organization locally, which can then be







                                                                        132


     1    extrapolated nationally, in northern

     2    California, the businesses that we've

     3    certified represent 36,400 jobs, 23,700 of


     4    which are held by minority persons.  The

     5    economic viability of our certified suppliers

     6    is in excess of $1.6 billion annually in


     7    revenue.

     8                Bank of America's commitment to

     9    working with our suppliers I think really

    10    speaks to the issue of building sustainable


    11    communities, and creating wealth in these

    12    communities, be they of color, or not.  I

    13    think that as we look to bring diverse

    14    suppliers together, one of the great


    15    misconceptions about minority-owned businesses

    16    is that they are all small, and that's not

    17    necessarily the case.  While 80 percent of our


    18    portfolio does consist of businesses that have

    19    $3 million or less in revenues annually, we do

    20    have companies that do $500 million annually. 

    21    Our largest one does $1.2 billion annually, so


    22    there's a definite sense of scope and







                                                                        133


     1    sustainability.

     2                I think that where Bank of America

     3    really demonstrates much of its commitment to


     4    the promotion of minority business development

     5    is in looking to develop the capacity of

     6    businesses so that they can begin to break


     7    through a plateau that tends to occur right

     8    around three to seven million dollars.  That's

     9    where businesses tend to begin to lose

    10    traction in the marketplace.  And without the


    11    resources that Bank of America provides for

    12    the continued development of these businesses,

    13    our efforts, and in conjunction, their support

    14    of our efforts in developing sustainable


    15    communities, and in building wealth amongst

    16    communities of color would fall short of where

    17    it's at right now.


    18                I think that in the grand scheme

    19    of things, given the level of resources that

    20    Bank of America consistently puts forth on

    21    behalf of minority businesses and communities


    22    of color, I think that our position is that we







                                                                        134


     1    are in support of the acquisition of

     2    Countrywide, because there are some synergies

     3    to be had there.  I think there has been a


     4    demonstrated commitment on behalf of Bank of

     5    America to the creation of wealth and

     6    sustainability in the community that it


     7    serves.

     8                MS. BRAUNSTEIN:  Thank you very

     9    much. Mr. Guevara.

    10                MR. GUEVARA:  Yes, ma'am.  Thank


    11    you very much.  Thank you for the opportunity

    12    to speak before you. 

    13                My name is Gil Guevara, and I'm

    14    representing LULAC, League of United Latin


    15    American Citizens.  I bring greetings from our

    16    President, and our Executive Director, and

    17    greetings from the League of United Latin


    18    American Citizens National Housing Commission. 

    19                The league was founded in 1929,


    20    and is based in Washington, D.C.  Our

    21    organization's mission is to advance economic


    22    condition, educational attainment, political







                                                                        135


     1    influence, health and civil rights of the

     2    Hispanic population of the United States

     3    through community-based programs.  And we


     4    operate in more than 700 local councils across

     5    the United States, and Puerto Rico.

     6                I'm testifying as a member of the


     7    board of the National Housing Commission, and

     8    Chair of the California LULAC Housing

     9    Commission to present some suggestions

    10    regarding Bank of America's proposed


    11    acquisition of Countrywide Financial.  

    12                LULAC feels that the merger may be

    13    a positive undertaking.  I say this because I

    14    understand that Bank of America did not


    15    provide sub-prime lending loans, and we

    16    certainly hope that Bank of America will work

    17    closely with Countrywide to insure that their


    18    customers, especially those that are behind in

    19    their mortgage payments are treated honestly

    20    and fairly. 

    21                Secondly, I would like to take


    22    this opportunity to thank both Bank of America







                                                                        136


     1    and Countrywide for their support of LULAC

     2    National organization, and the LULAC National

     3    Housing Commission.  We look forward to a long


     4    and fruitful partnership with them.  It is in

     5    this vein that I am here to offer our insight

     6    and suggestions.


     7                The sub-prime mortgage squeeze has

     8    been painful throughout the country, but the

     9    pain has more acute here in California.  We

    10    urge that the Federal Reserve Bank continue


    11    its diligent oversight, especially on this

    12    merger. 

    13                Since the end of 2007, at least a

    14    million borrowers that obtained sub-prime and


    15    adjustable rate home mortgages from either

    16    Countrywide or one of its subsidiaries are

    17    either in foreclosure, or behind in their


    18    payments.  Given that this merger will have a

    19    dramatic impact on those homeowners, the

    20    Federal Reserve should insure a realistic plan

    21    that is in place to prevent an ever-increasing


    22    number of homeowners from losing their homes. 







                                                                        137


     1                Based on Bank of America's current

     2    community development lending and investment

     3    goals, LULAC hopes that Bank of America will


     4    continue these efforts in the new markets, and

     5    with the future customers it will be absorbing

     6    through this merger.  We suggest the


     7    following.

     8                Bank of America should investigate

     9    to see if a moratorium on certain Countrywide

    10    mortgages is warranted, and if warranted, act


    11    on it immediately to assist as many families,

    12    as possible, to remain in their homes.  This

    13    effort does not only benefit the families, but

    14    also benefits the neighborhoods, cities, and


    15    states that are experiencing the high rate of

    16    foreclosures.  All efforts should be made to

    17    explore all options available to help the


    18    borrowers who are in danger of losing their

    19    homes.  To stay in their homes, whenever

    20    possible, the priority should be to provide a

    21    low fixed interest rate to eligible borrowers. 


    22    Those whose homes cannot be saved should be







                                                                        138


     1    assisted with self-lending short-sale or deed-

     2    in-trust, deed-in-lieu of foreclosure, rather. 

     3    They should not have their credit score


     4    damaged so they're able to rent a home for

     5    their families. We're also concerned about

     6    what happens to tenants who pay a rent and get


     7    evicted because their landlord does not --

     8     because the landlord goes into foreclosure. 

     9                Neighborhoods with occupied homes

    10    are less likely to become eyesores and


    11    dilapidated neighborhoods.  Paying rent to the

    12    bank while in the default process is a better

    13    option than having vacant homes with broken

    14    windows, unkept yards, and boarded up windows. 


    15    This will prevent distressed sales, and keep

    16    home values from falling further.

    17                As of the result of the


    18    acquisitions over the past four years, Bank of

    19    America has now had the most bank branches in

    20    the U.S., and the most deposits.  In 2007,

    21    Bank of America reported $68.1 million


    22    revenue, and an income of $15 billion. 







                                                                        139


     1    Despite current yields or their decline in

     2    earnings, Bank of America will continue to

     3    make great gains in global markets.  They will


     4    be positioning themselves for rapid growth

     5    when the current economic crisis abates.

     6                Bank of America is bumping up


     7    against the federal law prohibiting any bank

     8    from controlling more than 10 percent of the

     9    U.S. domestic deposits.  The results of the

    10    merger will create 11.8 percent of all bank


    11    deposits nationally.  Bank of America

    12    dominance has not benefitted the consumers, as

    13    is evidenced in their decision to be a leader

    14    in raising consumer fees on ATM, check


    15    cashing, overdrafts, and credit cards.  It's

    16    community development activities for

    17    California's low income and Latino communities


    18    are not reflected in the same proportional

    19    numbers as their continued growth.

    20                LULAC and other Latino-based

    21    organizations serving the California low


    22    income and Latino communities have not had a







                                                                        140


     1    very fruitful relationship with Bank of

     2    America, but as a merger evolves and their

     3    market experience, we look forward to


     4    developing a more productive and strategic

     5    partnership with Bank of America.

     6                Any Federal Reserve Bank action


     7    needs to look at not only helping the banking

     8    industry and investors, but also to assist

     9    families obtain sustainable home ownership. 

    10    Greater measures need to be instituted to help


    11    the ground-level non-profit groups that are

    12    working to help Latinos and low income

    13    families stay in their homes.  The outcomes

    14    and conditions imposed by the Federal Reserve


    15    and Congress need to reflect the urgency and

    16    the massive impact of this crisis affecting

    17    our families, neighborhoods.  LULAC stands


    18    ready to help in any way possible.

    19                MS. BRAUNSTEIN:  Thank you very

    20    much.  Thanks to the panel, and could the next

    21    panel come forward, please.  Good morning.


    22                MR. EMERSON:  Good morning.







                                                                        141


     1                MS. BRAUNSTEIN:  Just a few

     2    housekeeping notes.  We have a timekeeper, who

     3    will show you signs when you have two minutes


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

     5    minutes for your statement, and please begin

     6    your statement by stating your full name, and


     7    your organization so we can get it on the

     8    record.  And with that, Mr. Emerson, do you

     9    want to start?

    10                MR. EMERSON:  Thank you.  I'll


    11    keep it brief.  Thank you for holding these

    12    proceedings and allowing us the opportunity to

    13    speak today.  My name is Todd Emerson.  I am

    14    President and Chief Executive Officer of


    15    Springboard Consumer Credit Management.  

    16                I'm here today in support of Bank

    17    of America's application recently filed with


    18    the Federal Reserve to acquire Countrywide

    19    Financial.  As a California 501(c)(3) non-

    20    profit credit counseling agency, I feel I am

    21    well-positioned to provide insight and a


    22    unique perspective on Bank of America given







                                                                        142


     1    our past relationship.

     2                I am aware that there are several

     3    consumer-based organizations that are here in


     4    opposition to this merger for various reasons,

     5    but I would encourage you to look at all sides

     6    of the argument before rendering your


     7    decision.

     8                Bank of America has been a

     9    longstanding and trusted partner with our

    10    organization, providing funding for our


    11    programs with the sole purpose of providing

    12    financial education to consumers in

    13    California, as well as consumers on a national

    14    level.  They have been leaders in the industry


    15    for several years in regards to financial

    16    literacy programs and educating the consumers,

    17    and have proven time and time again that the


    18    consumers come first.

    19                The most recent evidence of this

    20    commitment to consumers was the grant of

    21    $500,000 that Bank of America awarded the


    22    California Reinvestment Coalition to help stem







                                                                        143


     1    foreclosure crisis of which my agency

     2    benefitted.  In addition to the grant money we

     3    received from the California Reinvestment


     4    Coalition, Bank of America also awarded my

     5    agency an additional $65,000 in grant money to

     6    help fund the opening of Springboard's new


     7    foreclosure crisis center, known as the SHINE

     8    Center, which stands for Sustaining Home

     9    ownership In The Inland Empire. I am hopeful

    10    that the Federal Reserve will see the benefit


    11    of this acquisition, and will allow a smooth

    12    transition that all consumers can benefit

    13    from.

    14                In conclusion, I would like to


    15    point to the fact that Bank of America is a

    16    very responsible lender, with by far the

    17    lowest foreclosure rate in the industry.  This


    18    level of responsibility, oversight, and

    19    professionalism would only benefit Countrywide

    20    Financial when applied in a post-merger world. 

    21    Again, thank you for your time, and the


    22    opportunity to speak.







                                                                        144


     1                MS. BRAUNSTEIN:  Thank you very

     2    much.  Ms. Drayton.

     3                MS. DRAYTON:  Good morning. I am


     4    Kim Drayton.  I serve as the Director for the

     5    Metroplex Economic Development Corporation, a

     6    non-profit organization established by Bishop


     7    T.D. Jakes to bridge the socio economic gap

     8    that exists in historically under-served

     9    communities.  Once again, I'd like to thank

    10    the Federal Reserve Board for the opportunity


    11    provide comments in this public hearing.  It

    12    is truly an honor and a privilege to carry the

    13    voice and the heart of the people to decision

    14    and policy makers who have the power to make


    15    a real difference.

    16                As I did in the Chicago hearings,

    17    I had an opportunity to sit through the


    18    morning testimonies yesterday.  I did this

    19    because I believe that it is critical that in

    20    order to provide effective solutions to

    21    current economic crisis, we, in our individual


    22    capacities, cannot operate in a vacuum.  On a







                                                                        145


     1    day-to-day basis, I operate in a capacity that

     2    allows me and my team to not only hear the

     3    human reality of the crisis, but to have an


     4    intimate perspective on the root causes of the

     5    issues that are driving the crisis.

     6                Based on the media coverage and


     7    quite a bit of the testimony I've heard in

     8    these proceedings, I would be inclined to

     9    believe that the crisis is due to the

    10    recklessness of lenders, and the victimization


    11    of consumers.  I contend that the reality lies

    12    somewhere between the two.

    13                While there is no doubt that many

    14    lenders have acted in a reckless and


    15    economically irresponsible manner contributing

    16    to the current crisis, the more prevailing

    17    issue impacting the crisis is the lack of


    18    regulation and oversight to assure that

    19    consumers, particularly in LMI communities are

    20    properly equipped with the skills and tools

    21    necessary to engage in a transaction as


    22    sophisticated as signing a 30-year mortgage,







                                                                        146


     1    or maintaining a modified mortgage.

     2                I hold a B.A. with a minor in

     3    business, and a J.D., and I will assure you


     4    that even with all of my skill and training,

     5    there were many things that I needed to learn

     6    prior to acquiring the mortgage on my home. 


     7    These are not skills that we learn in the

     8    classroom, and for many of the LMI

     9    constituents, they are not skills that are

    10    learned at the dinner table, either.  But this


    11    does not mean that the LMI individuals and

    12    families cannot achieve and maintain the

    13    American dream of economic empowerment, or

    14    responsible home ownership.


    15                Behavioral scientists have

    16    determined that it takes 21 days to form a

    17    habit; however, many lenders only LMI and at-


    18    risk borrowers to attend an eight-hour session

    19    as a prerequisite to qualifying for various

    20    loan programs.  It appears that perhaps this

    21    has not been the most effective strategy.


    22                Based on the analysis of our







                                                                        147


     1    participants, which include LMI and minority

     2    individuals and families, the changes are

     3    behavioral.  However, we have demonstrated


     4    that these challenges can be overcome by

     5    empowering and equipping them with practical

     6    hands-on learn it today, use it today economic


     7    life skills and strategies, and long-term

     8    accountability that will help individuals and

     9    families become overall good stewards of their

    10    resources, and properly in the long run


    11    responsible homeowners.

    12                In 2006, our organization in

    13    conjunction with Bank of America and Freddie

    14    Mac piloted a one-day workshop to address the


    15    home ownership gap in our community.  Upon

    16    evaluation of the outcome measurements, my

    17    team determined that more substance follow-up


    18    and evaluation were necessary to achieve real

    19    results.  In the second quarter of 2007, we

    20    redesigned and reimplemented the initiative

    21    and expanded it to five weeks, three hours per


    22    session series, with follow-up and intensive







                                                                        148


     1    credit triage workshops that hold the

     2    participant in our process until resolution. 

     3    That means until they achieve their goal. 


     4                In less than a year, our three-

     5    person staff and a team of volunteers touched

     6    over 1,000 individuals, produced 25 new home


     7    owners responsibly, with another 20 currently

     8    qualified, and dozens on track for potential

     9    responsible home ownership in 2008.  Over 52

    10    percent of our attendees who desired to be


    11    tracked have shown exponential improvement in

    12    their credit performance, which is evidence of

    13    improved personal financial management.  

    14                This program could not have been


    15    possible without the leadership of Bank of

    16    America's community impact executives, who

    17    thought more of our vision than to simply


    18    write a check.  Their respect for and in

    19    deference to our understanding of our

    20    constituents, and their availability on every

    21    level to provide hands-on resources to


    22    participate in our sessions have yielded







                                                                        149


     1    results, and it is invaluable.

     2                It is a model of partnership and

     3    best practices that I pray Bank of America


     4    duplicates whether they acquire Countrywide or

     5    not.  It is a model that I sincerely hope we

     6    have an opportunity to introduce and unveil to


     7    over 10,000 pastors and leaders as they

     8    convene in Washington, D.C. in September. 

     9    This would be a tremendous opportunity to

    10    present a platform for real change at the very


    11    foundation of the issue.  There is no doubt

    12    that duplication of this model will multiply

    13    the results, and positively impact the

    14    economic well-being of individuals, and


    15    families, which will ultimately impact LMI

    16    communities, the economy, and the bottom line

    17    in social responsibility of Bank of America


    18    and Countrywide.

    19                Finally, based on our experience

    20    with Bank of America, I believe that they

    21    possess the leadership and initiative to work


    22    with community partners to devise innovative







                                                                        150


     1    solutions to proactively and retroactively

     2    address the crisis, and the integrity to

     3    evaluate, manage, and provide guidance to the


     4    practices of Countrywide, if acquired.  Thank

     5    you.

     6                MS. BRAUNSTEIN:  Thank you very


     7    much.  Ms. Stanford.

     8                MS. STANFORD:  Hi.  Millicent

     9    Stanford, and I'm a member of Multi-cultural

    10    Real Estate Alliance for Urban Change.  I'm


    11    also a real estate broker.

    12                I am not staunchly against the

    13    merger of Bank of America and Countrywide,

    14    because that would be contrary to the benefit


    15    of living in a capitalistic society.  However,

    16    in this wonderful society, we have such laws

    17    as Anti-Trust.  They prevent dangerous


    18    monopolies.  I'm concerned about a dangerous

    19    monopoly. This would give Bank of America a 25

    20    percent market share.  I do not believe that

    21    that would play well with inner city borrowers


    22    that they, at this time, do not service in the







                                                                        151


     1    way of loans.  

     2                Now, I believe that without strict

     3    safeguards, this merger would be akin to


     4    McDonald's acquiring In and Out Burger, Burger

     5    King, Wendy's, and Jack In The Box, and

     6    starting to charge $25 for a burger.  We


     7    really need to have more information regarding

     8    just exactly what Bank of America plans to do.

     9                I have done research over the past

    10    couple of days prior to this testimony, and my


    11    opinion has swung back and forth as the media

    12    has come out with the changes that Bank of

    13    America plans for this merger.  On yesterday,

    14    I read an article that states they're going to


    15    modify the loans of those Countrywide

    16    borrowers who are in distress.  That will

    17    affect about 265,000 borrowers. Currently,


    18    Countrywide has approximately 600,000

    19    borrowers who will be in distress.  And this

    20    nation has an upcoming 2 million borrowers who

    21    will be in distress.  


    22                I'm awfully concerned that the







                                                                        152


     1    borrowers are being demonized as

     2    irresponsible, and that, in my experience and

     3    my estimation, also as a loss mitigation


     4    counselor, is not the case.  That, in my

     5    estimation and my experience is not the case. 

     6    What I'm really concerned about is taking a


     7    step back and insuring that those borrowers

     8    who have legitimate problems, those that are

     9    borne out of the type of sub-prime loans that

    10    were major to Countrywide's repertoire are


    11    addressed, that we step back and give both of

    12    those entities, both Bank of America and

    13    Countrywide, time to look at it and come up

    14    with a plan that will really look at what the


    15    problems of the borrowers are.  

    16                We really need to back up and look

    17    at that.  So, therefore, I have a few


    18    questions for you for Bank of America, and

    19    Countrywide both.  First of all, in the

    20    interim period between the purchase, should it

    21    happen, what will Countrywide do now about


    22    their distressed loans?  How are they







                                                                        153


     1    determining which people use their homes as a

     2    piggyback or ATM machine, and drew all of the

     3    equity out of it, did irresponsible things,


     4    those borrowers have no business being helped. 

     5    They've already been helped.  They helped

     6    themselves to their equity, and they threw it


     7    away.

     8                The other thing is, knowing that

     9    Countrywide has had such a almost unregulated

    10    operation, who will insure that the plan that


    11    Bank of America comes up with for this merger

    12    will actually take place, or will it change to

    13    being something other than what was proposed

    14    to you?  That's very important to me.


    15                Also, I'd like to know what

    16    exactly is Bank of America trying to do?  Are

    17    they attempting to extend their reach? 


    18    Because in the inner cities, the communities

    19    that I serve, there are numerous Bank of

    20    America branches, but will they be closed,

    21    will the Countrywide branches be closed?  Who


    22    will serve the consumer?  And because Bank of







                                                                        154


     1    America is so conservative, will they develop

     2    programs and loans that will fit with the

     3    responsible inner community borrowers?  And


     4    with that said, I would like to thank you for

     5    allowing me to testify.

     6                MS. BRAUNSTEIN:  Thank you very


     7    much, and thanks to the panel.  We'll bring

     8    the next panel forward.  Okay.  Mr.

     9    Erlenbusch, it looks like you're by yourself. 

    10                MR. ERLENBUSCH:  So that means I


    11    get 20 minutes?

    12                       (Laughter.)

    13                MS. BRAUNSTEIN:  No, unfortunately

    14    it doesn't work that way.


    15                MR. ERLENBUSCH:  Just thought I'd

    16    try.

    17                MS. BRAUNSTEIN:  You get five


    18    minutes, and the timekeeper will give you a

    19    signal, and please begin your statement

    20    whenever you're ready, and start by stating

    21    your full name and your organization so we can


    22    get it for the record.  Thank you.







                                                                        155


     1                MR. ERLENBUSCH:  Okay, thank you.

     2    My name is Bob Erlenbusch.  I'm the Executive

     3    Director of the Los Angeles Coalition to End


     4    Hunger and Homelessness.  I'm also President

     5    of the Board of Directors for the National

     6    Coalition for the Homeless in Washington, D.C. 


     7    So I bring what I hope is a very unique

     8    perspective after two days of hearing a range

     9    of testimony, because I'm going to focus on

    10    the link between foreclosures, the sub-prime


    11    crisis, and homelessness.

    12                The National Coalition for the

    13    Homeless, about November, our Board of

    14    Directors decided that 39 different states are


    15    represented on the board, and that to the

    16    persons, all our board members were seeing

    17    shelters reporting an increase in homelessness


    18    due to foreclosures, not only homeowners, but

    19    particularly homeowners who are first time

    20    home buyers, but increasingly people who,

    21    through no fault of their own, were renters,


    22    paid their rent on time, and unfortunately,







                                                                        156


     1    their landlord wasn't paying the mortgage, and

     2    they became evicted.  And shelters are

     3    starting to fill up.  I mean, it's no more


     4    anecdotal any more.  Sacramento Bee on Sunday

     5    was filled with a story of shelters to

     6    capacity, MPRs in a couple of stories in the


     7    New York Times, et cetera.  

     8                The National Coalition completed a

     9    survey, conducted a survey of national

    10    breadth, 29 states, representatives from 29


    11    states responded.  Let me just give you a few

    12    highlights.  Sixty-one percent of the

    13    respondents said that they saw an increase in

    14    homelessness since the foreclosure crisis


    15    began in 2007, so we, in Los Angeles, if you

    16    don't know, just to put homelessness into

    17    perspective, on any given night there's 80,000


    18    homeless people who are homeless in L.A., in

    19    California pushing 350,000, so what this has

    20    done is add people to an already unbelievable

    21    human crisis.  Seventy-two percent of the


    22    respondents provided multi-responses to the







                                                                        157


     1    question, "How do you know that there's been

     2    an increase?"  And was far from anecdotal. 

     3    Most of it was either media reports,


     4    government reports, or clients coming in and

     5    saying -- telling their stories.

     6                The vast majority of the


     7    respondents, 88 percent, almost 90 percent,

     8    "Where were people staying after their

     9    property had been foreclosed on?"  Seventy-six

    10    percent were people who were staying doubled


    11    and tripled up with family and friends, as you

    12    probably would suspect.  Fifty-four percent

    13    said that they were going to emergency

    14    shelters, and an alarming 41 percent of


    15    individuals and families said that after they

    16    lost their homes, or their apartments, that

    17    they were winding up on the streets of their


    18    community.  Over one-third said that people

    19    were able to pay rent, which probably were

    20    former homeowners, but a third said that they

    21    were going to transitional shelter because


    22    they had no money.  







                                                                        158


     1                So the important thing about this

     2    is that there's a clear link between the

     3    foreclosure crisis, not only for homeowners,


     4    but for renters and homelessness.  And what I

     5    would like -- I want to make three points,

     6    briefly.  One is that in this transaction, if


     7    it moves ahead, that Bank of America must be

     8    fully transparent.  Unfortunately, I'm holding

     9    a letter that was from the Federal Reserve

    10    Bank of Richmond dated April the 10th, and I


    11    can give this to you if you haven't seen it,

    12    but I'm sure you have.  Neither the Bank

    13    Holding Company Act, nor the Board Regulation

    14    Y requires any response from Bank of America. 


    15    That would be like telling presidential

    16    candidates that they don't have to provide

    17    their income tax returns on an annual basis. 


    18    It's not acceptable.  In an era of skepticism,

    19    Bank of America and Countrywide need to be

    20    fully transparent.

    21                Number two, a specific data


    22    request, that we need to know, the community







                                                                        159


     1    needs to know, what are the loans held by

     2    Countrywide that are now apartments.  Before

     3    you decide anything, we need to know what kind


     4    of mess we're potentially getting ourselves

     5    into.  That banks are not, and have said over

     6    and over again in many communities, banks are


     7    not in the business of becoming landlords.  I

     8    would assume Bank of America is no exception;

     9    but, nevertheless, they need to understand

    10    what their portfolio is that has been brought


    11    to them, and how many people potentially could

    12    be evicted because Bank of America is not in

    13    the business of being a landlord.

    14                Number three, this is a request


    15    from the National Coalition for the Homeless,

    16    in conclusion, that Bank of America put up $25

    17    million for a homeless prevention fund modeled


    18    after the program in New York City, started by

    19    the New York Times, for $1 million in New York

    20    for first and last month's rent, security

    21    deposits, and moving costs.  Thank you.


    22                MS. BRAUNSTEIN:  Thank you very







                                                                        160


     1    much.  We're going to adjourn for an early

     2    lunch break until 12:15, and we will reconvene

     3    at 12:15, and wrap up.  Thank you. 


     4                (Whereupon, the proceedings went

     5    off the record at 11:33 a.m., and went back on

     6    the record at 12:21 a.m.)


     7                MS. BRAUNSTEIN:  All right.

     8    Welcome, and thank you for coming today.  A

     9    few housekeeping notes.  We have a timekeeper

    10    that will show you when you have two minutes


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

    12    minutes for your statement.  And please begin

    13    your statement by stating your name and your

    14    organization so we can get it on the record. 


    15    And we could start with you, MS. Lucey.

    16                MS. LUCEY:  Wonderful.  Thank you. 

    17    Good afternoon.  My name is Martha Lucey, and


    18    I'm the President and CEO of By Design

    19    Financial Solutions.  By Design is a non-

    20    profit organization with a mission of changing

    21    lives through financial education.  Founded as


    22    Consumer Credit Counseling Service over 40







                                                                        161


     1    years ago, By Design provides credit and

     2    housing counseling and education in 11 offices

     3    throughout California.


     4                By Design has a strong

     5    relationship with Bank of America, and we've

     6    worked collaboratively on numerous affordable


     7    housing and financial education projects in

     8    our various markets.  

     9                In early 2007, Bank of America was

    10    the first major financial institution to


    11    support  the expansion of By Design's local

    12    home ownership preservation in some of the

    13    hardest hit markets in the nation, Stockton,

    14    Modesto, Merced, Sacramento, San Bernardino,


    15    Fresno, and Los Angeles.  Bank of America

    16    funded default housing counseling and outreach

    17    to over 500 homeowners at a time when few


    18    others were ready, willing, or able to do so.

    19                In the fall of 2007, Bank of

    20    America sponsored first time home buyer

    21    classes targeted at low income buyers in the


    22    Stockton area.  And this helps to generate







                                                                        162


     1    interest and home purchases in a market that

     2    is crippled by over-supply due to

     3    foreclosures.  


     4                In the fall of 2007, Bank of

     5    America sponsored two series of financial

     6    firsts, delivered in conjunction with the


     7    Fresno area Hispanic Chamber of Commerce, the

     8    10-hour workshop series helps to educate at-

     9    risk youth on how to navigate through their

    10    first independent financial decisions.  


    11                In early 2008, Bank of America and

    12    By Design began a targeted campaign to provide

    13    financial education and workshops to the

    14    Southeast Asian immigrant population in


    15    Central California.  This initiative includes

    16    a live weekly one-hour radio show called Mong

    17    Financial Solutions in the Mong language, and


    18    is the only one of its kind in the nation to

    19    provide financial information in the Mong

    20    language.  

    21                Through these, and other joint


    22    projects, Bank of America has displayed a







                                                                        163


     1    commitment to understanding the needs of the

     2    community at a local level.  Bank of America

     3    has also been instrumental in bringing


     4    multiple partners together to work

     5    collaboratively to develop impactful solutions

     6    to address the need for more financial


     7    knowledge in under-served communities.

     8                The issues surrounding Bank of

     9    America's servicing of Countrywide's clients

    10    are certainly broad and complex.  By Design's


    11    experience with Bank of America's local

    12    development efforts shows a community

    13    commitment that will certainly be a crucial

    14    part of reaching out to Countrywide's clients,


    15    and to help them access the assistance that

    16    they need.  Thank you.

    17                MS. BRAUNSTEIN:  Thank you very


    18    much.  MS. Grajada.

    19                MS. GRAJADA:  It's a test.

    20                MS. BRAUNSTEIN:  Grajada.

    21                MS. GRAJADA:  Grajada.


    22                MS. BRAUNSTEIN:  Oh, okay.  I was







                                                                        164


     1    close.

     2                MS. GRAJADA:  Close, very close

     3    but no cigar.  My name is Anel Grajada, and


     4    I'm the President of Local 721 of the Service

     5    Employees International Union.  And on behalf

     6    of the 1.9 million SEIU members, their


     7    families, and communities, I urge greater

     8    scrutiny of Bank of America's proposed

     9    purchase of Countrywide Financial Corporation.

    10                The long-term implications of the


    11    proposed deal raise serious policy and

    12    regulatory questions that need to be

    13    addressed.  Regulators must insure that the

    14    acquisition will benefit America's working


    15    families, and the Bank of America and

    16    Countrywide customers, in particular.

    17                Countrywide's business practices


    18    have already reeked havoc on America's

    19    communities.  Over 100,000 of Countrywide's

    20    borrowers are currently in foreclosure, and

    21    over 620,000 are delinquent on their


    22    mortgages.  The lender is the subject of many







                                                                        165


     1    lawsuits, is being investigated by the FBI,

     2    the U.S. Justice Department, and three

     3    different State Attorney General offices in


     4    Illinois, Florida, and California.  And

     5    according to the New York Times, Countrywide

     6    is Exhibit A for the lax, and until recently,


     7    highly lucrative lending that has turned a

     8    once hot business ice cold, and has touched

     9    off a housing crisis of historic proportions.

    10                Bank of America must make


    11    verifiable promises that it will not import

    12    Countrywide's method of doing business as it

    13    has indicated.  While we welcome Bank of

    14    America's recent pledge to help keep 265,000


    15    troubled borrowers in their homes, this plan

    16    still leaves out three out of five Countrywide

    17    borrowers who are in danger of losing their


    18    homes.

    19                The announcement that BofA plans

    20    to place Countrywide President and COO, David

    21    Sambol, in charge of new mortgage lending unit


    22    also raises some concern.  Sambol is not







                                                                        166


     1    merely a symbolic hire.  He was the leader of

     2    Countrywide's aggressive expansion in

     3    adjustable rate mortgages, and other products


     4    that facilitated the crisis.  Rather than

     5    repudiating one of the architects of the

     6    crisis, what Bank of America has said is that


     7    they offered him a $28 million retention

     8    bonus.  Bank of America must make commitments

     9    to cleaning up Countrywide that can be

    10    verified by independent community groups.


    11                Working families have been

    12    particularly hit hard by the foreclosure

    13    crisis and the deteriorating economy. 

    14    Regulators have been very quick to point out,


    15    excuse me, to bail out Wall Street firms like

    16    Bear Stearns, but they've been slow to respond

    17    to the needs of ordinary Americans.


    18                I urge the Federal Reserve to

    19    closely scrutinize this deal, and to insure

    20    that Bank of America takes adequate protection

    21    to protect the interests of working families


    22    going forward.  Thank you.







                                                                        167


     1                MS. BRAUNSTEIN:  Thank you very

     2    much.  MS. Goelzer.

     3                MS. GOELZER:  Thank you.  Good


     4    afternoon.  My name is Mary Jo Goelzer.  I'm

     5    the Chief Operating Officer of Jamboree

     6    Housing Corporation.  Jamboree is a non-profit


     7    provider of affordable workforce housing and

     8    resident services with a corporate office in

     9    Irvine, California, and regional offices in

    10    Sacramento and San Diego.


    11                Since 1990, with the help of our

    12    many community partners, we have housed over

    13    15,000 residents in more than 5,000

    14    apartments, manufactured homes, and single-


    15    family homes developed throughout the State of

    16    California.  

    17                This past year, 20 million of our


    18    46 communities, our resident services

    19    division, Housing With Heart, has delivered

    20    over 20,000 hours of free on-site programs and

    21    services to approximately 3,500 residents. 


    22    None of this work is possible without the







                                                                        168


     1    assistance of strong community partners, such

     2    as Bank of America.  

     3                Over the past 18 years, Bank of


     4    America has been instrumental in the growth of

     5    Jamboree's portfolio to a market value of

     6    almost $1 billion, and the fulfillment of its


     7    mission to provide all Californians with the

     8    opportunity to access affordable housing, and

     9    resident services essential to improving the

    10    quality of their lives.


    11                Bank of America is more than just

    12    a lender.  Not only has Bank of America

    13    provided Jamboree with construction loans,

    14    permanent financing, and capacity-building


    15    grants, they have provided us with volunteers,

    16    leadership training for our senior staff

    17    members, student interns we can mentor and


    18    train to be the next generation of affordable

    19    housing leaders, expert advice, and creative

    20    solutions to the complexities of financing

    21    affordable housing developments.  And,


    22    finally, services and programs for our







                                                                        169


     1    residents, such as financial literacy classes

     2    for adults and teens, and first time home

     3    buyer programs.


     4                Over the many years we have worked

     5    with Bank of America, they've shown their

     6    willingness to invest in neighborhoods where


     7    others may fear to tread, and steely resolved

     8    to live up to their financial commitments no

     9    matter how difficult the situation.

    10                During the course of a multi-year


    11    neighborhood preservation program in Orange

    12    County, Bank of America stayed the course when

    13    one of our developments lost its general

    14    partner and financial backer, failed to


    15    complete its rehabilitation, and lost its

    16    permanent financing.  Bank of America played

    17    a critical role and demonstrated great


    18    patience during the year it took to

    19    successfully restructure the existing

    20    financing, reorganize the ownership, and

    21    complete the development to everyone's


    22    satisfaction.  They clearly demonstrated that







                                                                        170


     1    they were more than just a leader, they are a

     2    good neighbor with a vested interest in the

     3    success of that neighborhood.  Thank you.


     4                MS. BRAUNSTEIN:  Thank you very

     5    much.  Mr. Song.

     6                MR. SONG:  Thank you.  Jong Ho


     7    Song, Executive Director of Korea Town Youth

     8    and Community Center.  Our mission is to serve

     9    the need of Korea Town and provide multi-

    10    services, including after-school programs,


    11    mental health programs, environmental

    12    programs, as well as low-income housing, and

    13    community economic development, assistance to

    14    small business owners in Korea Town.


    15                I live in Burbank in 1998-1999,

    16    that Bank of America funded $100,000 of -- the

    17    start-up of API, Asian Pacific Islander Small


    18    Business program, which is made up of five

    19    different Asian Pacific Islander

    20    organizations, and currently is still going

    21    strong, serving thousands of small business


    22    owners in technical assistance.  







                                                                        171


     1                Bank of America also created back

     2    in the 80s, mid-80s, and they invested quite

     3    a bit in Korea Town, and opened the doors for


     4    a lot of young management.  And they grew a

     5    lot of young management teams where they

     6    provide a lot of culturally and linguistically


     7    sensitive customer service in Korea Town, when

     8    they were very few Korean banks at the time.

     9                I also believe that Bank of

    10    America really understands the needs of the


    11    community-based organizations.  Currently,

    12    they're providing a lot of technical

    13    assistance, management training for many

    14    different organizations, and I have no doubt


    15    that Bank of America will continue to be very

    16    responsible corporate citizen.  Thank you.

    17                MS. BRAUNSTEIN:  Thank you very


    18    much.  Thank you to the panel.  

    19                MR. GORDON:  So I get 20 minutes?

    20                       (Laughter.)

    21                MS. BRAUNSTEIN:  Unfortunately, it


    22    doesn't work that way.  But you do have your







                                                                        172


     1    full five minutes.  And please, when you

     2    begin, state your name and organization so we

     3    can make sure we get it on the record.


     4                MR. GORDON:  Sure.  Do I start

     5    now?  Okay.  Good.  Good afternoon. My name is

     6    Andrew Gordon, and I'm President of Arizona


     7    Multi-Bank Community Development Corporation,

     8    and we really appreciate the Federal Reserve

     9    Bank conducting this public meeting.  I'm here

    10    to bring your attention to BofA's tremendous


    11    leadership in creating and supporting Arizona

    12    Multi-Bank, as well as strong involvement in

    13    the community.

    14                But before I get into my prepared


    15    remarks, I thought I'd just talk a little bit,

    16    because I don't want to lose it at the end. 

    17    I went to Countrywide's website.  They have a


    18    foreclosure section there, and it shows nearly

    19    4,000 foreclosed properties in Arizona.  And

    20    Arizona has, as Patricia Duarte from NHS has

    21    already discussed, Arizona's Foreclosure


    22    Prevention Task Force, which the Fed has been







                                                                        173


     1    really helpful to us.  And they also helped us

     2    on the Arizona RAO Non-Profit Coalition, and

     3    these are for vacant foreclosed properties. 


     4    And what we're looking at is some way to

     5    reverse engineer, if you will.

     6                Now, we have foreclosed


     7    properties, can we find people, the teachers,

     8    the people working in hospitals, the people in

     9    uniformed services and connect them to those

    10    homes?  In the past in Arizona, is was drive


    11    until you qualify.  But now we have all the

    12    empty houses there, can we put houses in

    13    connection with the people, the moderate

    14    income people who really deserve that housing? 


    15    And that's what we'd like to do.  It's kind of

    16    a reverse engineered approach.  It's a big

    17    challenge, but that is the silver lining of


    18    this crisis, in our opinion; is an opportunity

    19    to connect people in their own communities

    20    where their kids are going to schools, where

    21    they're doing their shopping, to the houses


    22    right there.  And that's going to require some







                                                                        174


     1    type of flexibility, I think, by the

     2    regulators, as well as the banks, on how to do

     3    that.  And there are some suggestions that we


     4    have locally, and we'd love to have that

     5    conversation with BofA and Countrywide.

     6                Countrywide has also already made


     7    a commitment to local list in Arizona.  I'm

     8    Chairman of the Board for the Arizona office,

     9    to look at these foreclosed properties, so we

    10    appreciate that very much.


    11                So now the rest is I just run

    12    against the clock, don't I?  Thank you. 

    13    Arizona Multi-Bank does not take exception to

    14    the proposed acquisition.  And, as you'll


    15    hear, we have benefitted for over a decade and

    16    a half from BofA's commitment to addressing

    17    credit needs in the community that are


    18    legitimate, but under-met by traditional

    19    banks.

    20                BofA's commitment to Arizona

    21    Multi-Bank's efforts in the enterprise of


    22    community development is above and beyond its







                                                                        175


     1    substantial $3 million share of Arizona Multi-

     2    Bank's total capitalization.  

     3                Furthermore, I've seen over the


     4    years BofA play an increasingly significant

     5    role in a wide variety of important community

     6    development initiatives and forge meaningful


     7    partnerships in the community.  

     8                By way of background, Multi-Bank

     9    is a non-profit corporation certified by the

    10    U.S. Department of Treasury as a CDFI. 


    11    Arizona Multi-Bank provides financing to small

    12    businesses, affordable housing projects, non-

    13    profit organizations.  Our first loan in 1992

    14    was to the development of a residential


    15    facility for homeless families.  Since,

    16    Arizona Multi-Bank has directly provided

    17    nearly $40 million to 369 projects throughout


    18    the state.  When combined with senior debt,

    19    including BofA's, and equity from borrowers,

    20    nearly $160 million has been invested in these

    21    community development projects.  Arizona


    22    Multi-Bank's loans range from 500 bucks to a







                                                                        176


     1    million dollars, 32 percent of the dollars go

     2    to affordable housing, 28 percent to non-

     3    profits, and 40 percent to small business. 


     4    Nearly two-thirds of our small business loans

     5    are to minority and women-owned operations,

     6    and over 70 percent of the small business


     7    loans are $50,000 or less.

     8                Multi-Bank also makes larger loans

     9    to non-profit corporations, including those

    10    serving affordable housing needs, charter


    11    schools, special education programs, senior

    12    citizens, and Native Americans.  Several

    13    strategic partnerships have enabled us to

    14    reach into markets we might not otherwise


    15    serve.  Over the years, we have enjoyed

    16    relationships with the Urban League, SBA

    17    Supported Micro Lenders, Small Business


    18    Development Centers, Arizona Loans for

    19    Assisted Technology which serves folks with

    20    disabilities, Habitat for Humanity, LISC, as

    21    I mentioned, I'm the local chair, Fannie Mae,


    22    Housing Trust Fund, and the CDFI Fund.  These







                                                                        177


     1    partnerships have complemented the powerful

     2    resources of BofA and the other 17 banks that

     3    have invested in Arizona Multi-Bank.


     4                Since our founding, BofA has

     5    played a central leadership role in shaping

     6    the concept and development.  And along with


     7    the Arizona Bankers Association, pioneered our

     8    equity equivalent capitalization that to this

     9    day provides the financial muscle and

    10    stability necessary for us to be effective in


    11    our line of work over the long term.  A

    12    representative of BofA has been on our board

    13    since our inception, and the current chair is

    14    a BofA senior credit officer who has


    15    volunteered first on our Investment Committee

    16    when we started, and has now provided us

    17    guidance for over 17 years.  


    18                In addition to representatives of

    19    BofA volunteering for leadership positions on

    20    our board and committees, many areas of

    21    expertise have supported us, which include


    22    loan executives, technical support, human







                                                                        178


     1    resources, appraisals.

     2                Now, earlier BofA actually

     3    provided us our office space, and they are


     4    still our largest in-kind contributor. 

     5    Arizona Multi-Bank also maintains operating

     6    accounts with BofA, and their business banking


     7    branch and clearinghouse support has been

     8    totally essential to our operation.

     9                Multi-Bank is proactive about

    10    being reactive, and BofA has always been there


    11    to expand Multi-Bank's financial products in

    12    order to address and reach under-met needs in

    13    the community.  BofA has been there to work

    14    with us on a range of important projects,


    15    making the largest Boys and Girls Club in the

    16    state, start-up lemonade stand at the Diamond

    17    Back's baseball stadium, to hundreds of lots


    18    for migrant farm workers for their homes in

    19    the Mexican border community of San Luis, to

    20    funding the first small business

    21    administration, small business investment


    22    company that had a new markets emphasis.  







                                                                        179


     1                BofA was there, and as one of the

     2    largest banks in Arizona, I'm confident will

     3    continue to be there.  We are counting on


     4    their commitment to Multi-Bank and the

     5    community, and together with BofA and our

     6    other financial community partners, we will do


     7    more for the people and the economy of

     8    Arizona.  Is that it?

     9                MS. BRAUNSTEIN:  Yes.

    10                MR. GORDON:  Okay.


    11                MS. BRAUNSTEIN:  Thank you very

    12    much.

    13                MR. GORDON:  Well, thank you for

    14    the opportunity.  We do have that, as they


    15    call that silent tsunami of foreclosures in

    16    Arizona.  

    17                MS. BRAUNSTEIN:  Is that it?


    18                MR. GORDON:  That's it.  Thank you

    19    very much for the opportunity.

    20                MS. BRAUNSTEIN:  Well, thank you

    21    for coming.


    22                MR. GORDON:  You bet.  







                                                                        180


     1                MS. BRAUNSTEIN:  Okay.

     2                MR. JOHNSON:  Good afternoon,

     3    everyone.  My name is James Johnson, and I


     4    represent Fed-Up USA.org.  We are a grass

     5    roots online group dedicated to restoring

     6    truth in America's financial institutions.


     7                We generally support merging

     8    failing institutions with stronger rivals in

     9    order to protect the banking industry.  When

    10    banking officials make bad investment


    11    decisions that critically impair tier capital

    12    requirements, the bank needs to be merged with

    13    a stronger bank, or closed by regulators.  The

    14    bank's officers and senior executives should


    15    be fired.  Depositors' accounts can be moved

    16    to another bank, subject to FDIC limitations.

    17    The fear of banking officials losing their


    18    jobs without the benefit of a golden parachute

    19    is an effective means to insure that bankers

    20    make sound loans.  

    21                We are adamantly opposed to any


    22    taxpayer money being used to socialize the







                                                                        181


     1    losses when the previous profits were private. 

     2    And while it may be harsh, we are also opposed

     3    to any bailouts for homebuilders, bond


     4    insurers, investment banks, and yes, even

     5    individual homeowners caught speculating in

     6    the real estate market.


     7                We are an equal opportunity

     8    advocate of letting the makers of bad

     9    financial decisions suffer the consequences. 

    10    If an individual lender, such as BofA, wishes


    11    to renegotiate the loan terms with a

    12    homeowner, we have no problem with that.  But

    13    neither the lender, nor the borrower should

    14    receive any government incentive to do so.  


    15                BofA's proposed takeover of

    16    Countrywide is only a symptom of a much larger

    17    program, which is that after years of easy


    18    money, we now have a massive credit crunch

    19    triggered by real estate values plummeting. 

    20    The securitization of the mortgage industry

    21    has allowed banks to underwrite a bewildering


    22    array of toxic mortgages, including interest







                                                                        182


     1    only and Option Arms, with little or no

     2    downpayment required.  Sound lending standards

     3    have been destroyed by no docs, and stated doc


     4    loans where fraud was so rampant that these

     5    are routinely referred to as liar loans.  

     6                Real estate values have soared far


     7    beyond the tried and true formula of three

     8    times incomes.  Yet, mathematically, we know

     9    this is impossible for home prices to outstrip

    10    income over the long term.  Claims for prices


    11    to rise 7 or 8 percent annually for years were

    12    repeated by realtors, mortgage brokers, and

    13    bankers in what can easily be described as a

    14    Ponzi scheme.  Now the bubble has burst.  


    15                The median price of an existing

    16    single-family home in California decreased 29

    17    percent from March 2007, to March 2008. 


    18    Notable economists, such as Robert Schiller,

    19    are predicting even further decline.  As a

    20    result, defaults, walk-aways, jingle mail, and

    21    foreclosures are rampant and growing.  


    22                In the first quarter of 2008,







                                                                        183


     1    default notices nearly equaled all the

     2    existing home sales in the State of

     3    California.  Massive losses by the financial


     4    industry are clearly unavoidable.  And don't

     5    be fooled into thinking this is merely a sub-

     6    prime problem.  It will affect every mortgage


     7    with little or no downpayment written in the

     8    State of California since as early as 2004,

     9    including Alt A and prime loans.  The same is

    10    true for many other states, such as Florida,


    11    Nevada, and Arizona, as well.

    12                This crisis will affect keylock

    13    loans, it will also spill over into credit

    14    card and auto loans.  Commercial real estate


    15    loans will not be immune, either.  

    16                The lack of transparency in the

    17    current financial system makes it impossible


    18    to know who is holding the losses, and how big

    19    these losses will grow to be.  Banks are

    20    currently hiding losses through special

    21    purpose entities, special investment vehicles,


    22    and other off-balance sheet tricks.  They are







                                                                        184


     1    currently holding tens of thousands of

     2    foreclosed homes on their balance sheets at

     3    full loan value after sending them out for


     4    sales with a reserve that was not met.  Yet,

     5    the value of these homes is not adjusted on

     6    the bank's balance sheets to reflect an actual


     7    market price, the highest bid offered.

     8                Financial institutions are also

     9    shifting hundreds of billions of dollars from

    10    Level 2 to Level 3 asset characterization


    11    solely because they do not like the market

    12    price being quoted.  

    13                In addition, financial instruments

    14    are being shifted from Held For Investment to



    15    Held For Sale, simply to allow the bank in

    16    question to avoid taking a mark-to-market on

    17    that instrument.  These securities that are


    18    being marked model are really just being

    19    marked up fantasies.  

    20                All of these actions overstate the

    21    financial strength of banks resulting in


    22    bloated and inaccurate tier capital ratios. 







                                                                        185


     1    This increases the risk of systemic collapse

     2    by preventing banking regulators from either

     3    directing that corrective measures be taken,


     4    such as the suspension of dividends, and

     5    raising of more capital, or in extreme cases,

     6    closing the offending institution.


     7                We currently do not know if BofA

     8    is healthy enough to absorb Countrywide. 

     9    Therefore, we have no way of knowing whether

    10    this merger is beneficial or not to the


    11    public.  What do both Bank of America and

    12    Countrywide's balance sheet actually look

    13    like?  We just don't know.  

    14                There are many other details of


    15    this merger that we simply do not know yet,

    16    either.  Many allegations of fraud have been

    17    raised against Countrywide's loan origination


    18    and servicing processes.  Who gets that

    19    liability if this merger goes forward?  Is

    20    BofA assuming that risk, or will they retain

    21    the ability to send Countrywide, as a


    22    subsidiary, into bankruptcy, if necessary,







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     1    while retaining the servicing platform, and

     2    taking none of that risk.  How does BofA

     3    justify retaining Mr. Sambol, given his


     4    potential complicity in the alleged fraudulent

     5    behavior by Countrywide when it was an

     6    independent company?


     7                What we do know is that we will

     8    continue to see more meltdowns and implosions,

     9    such as Bear Stearns, until we have full

    10    disclosure potentially placing taxpayers on


    11    the hook.  The idea that the credit crunch is

    12    over is pure fallacy.  The Fed Fund's rate is

    13    at 2.25 percent, Lieper is at 2.91; however,

    14    Bank of America just sold 4 billion of


    15    perpetual hybrid bonds that pay 8.1 percent

    16    until 2018.  

    17                We also have Citi Group raising


    18    money at 8.4 percent and Merrill Lynch raising

    19    money at 8.6 percent, proving the crisis

    20    continues.  The array of -- 

    21                MS. BRAUNSTEIN:  Can you wrap up?


    22                MR. JOHNSON:  I'm almost finished.







                                                                        187


     1                MS. BRAUNSTEIN:  Okay. 

     2                MR. JOHNSON:  The array of lending

     3    programs, like the TAF, the TLSF, and the PDCF


     4    have now burned through half of the Fed's

     5    balance sheet in a failed attempt to restore

     6    liquidity.  The key to any banking system is


     7    trust, and until this trust is restored

     8    through fair dealing, transparent balance

     9    sheets, and honest accounting, the credit

    10    crisis will only get worse.  Forced marriages


    11    in the dead of night absent even a facade of

    12    transparencies are appropriate for medieval

    13    times, not 21st century America.

    14                What we need is for the Fed to do


    15    a better job regulating the banks, instead of

    16    blindly cutting interest rates, and destroying

    17    the dollar so we have fewer banks getting into


    18    trouble initially.  

    19                I would also like to present a

    20    White Paper written by Mr. Carl Denninger, one

    21    of the founders of our organization, regarding


    22    the mortgage mess, with 17 specific steps







                                                                        188


     1    needed to restore confidence to our financial

     2    system.  Obviously, because of time, I have no

     3    intention of going through these.  I recognize


     4    that -- 

     5                mS. BRAUNSTEIN:  You can leave

     6    that at the table where you checked in, and


     7    we'll make sure it's part of the record.

     8                MR. JOHNSON:  I would appreciate

     9    that.  If anyone else wants a copy of it, I

    10    also have additional copies available.  And I


    11    would like to acknowledge that portions of

    12    this speech were based on Mr. Denninger's work

    13    with permission, and I do wish to acknowledge

    14    that.


    15                MS. BRAUNSTEIN:  Thank you very

    16    much.

    17                Okay.  Apparently, we have no


    18    other speakers this afternoon, so we're going

    19    to adjourn the meeting.  

    20                First, I just wanted to give a

    21    both personal and professional thanks to the


    22    Federal Reserve Bank of San Francisco, in







                                                                        189


     1    particular, the L.A. Branch, for their

     2    gracious hospitality, and for doing such a

     3    good job on hosting this.  It's a lot of work,


     4    and we want to give a special thanks to Scott

     5    Turner and Joy Hoffman and their team, and

     6    John Olson, in particular.  And also thank the


     7    L.A. Branch, their security forces who have

     8    done such a great job, and everyone here at

     9    the branch who has done a good job of hosting

    10    the public, and making everybody feel welcome. 


    11    And with that, we will adjourn.

    12                (Whereupon, the proceedings went

    13    off the record at 12:50 p.m.)   

    14


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Last update: December 3, 2010