Public Meeting Regarding NationsBank and BankAmerica
Transcript of Thursday, July 9, 1998
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Public Meeting Regarding NationsBank and BankAmerica |
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6 PUBLIC MEETING
7 NATIONSBANK/BANKAMERICA PROPOSED MERGER
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14 SAN FRANCISCO, CALIFORNIA
15 THURSDAY, JULY 9, 1998
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1 July 9, 1998 8:00 a.m.
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3 P_R_O_C_E_E_D_I_N_G_S
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5 MS. SMITH: Good morning. I think we're ready to
6 start. So let me start by welcoming you to this important
7 meeting on the application of NationsBank Corporation to
8 acquire BankAmerica Corporation. The meeting will last
9 two days. I'll start by introducing myself. I'm Dolores
10 Smith, Director of the Division of Consumer and Community
11 Affairs at the Federal Reserve Board in Washington, D.C.
12 I'll be the presiding officer for this meeting. And our
13 other panelists are, to my left, Bob Frierson who is the
14 Associate Secretary of the board. To my right -- to my
15 immediate right, Ken Binning who is Director for
16 Applications and Financial Analysis in the Division of
17 Banking Supervision from the Federal Reserve Bank of
18 San Francisco. And to his right, Trish Nunley who is
19 Assistant Counsel from the Federal Reserve Bank of
20 Richmond.
21 We are here today because NationsBank Corporation
22 of Charlotte, North Carolina has applied for approval to
23 acquire BankAmerica Corporation San Francisco, California.
24 When the Federal Reserve System considers one of these
25 applications, we look at a number of factors under the
26 Bank Holding Company Act. These include financial issues,
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1 managerial issues, competitive issues, and the convenience
2 and needs of the communities affected.
3 In doing so, we particularly look at the record
4 of performance of the parties under the Community
5 Reinvestment Act. The Community Reinvestment Act requires
6 the board to take into account an institution's record of
7 meeting the credit needs of an entire community -- of its
8 entire community. The NationsBank application transaction
9 also involves the proposed acquisition or retention of
10 non-banking companies engaged in activities permissible
11 for bank holding companies.
12 The board must determine whether the proposed
13 non-banking activities can reasonably be expected to
14 produce benefits to the public that outweigh possible
15 adverse effects such as undue concentration of resources,
16 decreased or unfair competition, conflicts of interest, or
17 unsound banking practices.
18 The purpose of the public meeting today and
19 tomorrow is to receive information regarding these
20 factors. We will be seeking to elicit this information
21 and to clarify factual issues related to the application.
22 We are very pleased that so many have been
23 willing to come and testify at this public meeting. We
24 will have about 200 groups and individuals represented
25 over the two days.
26 I'd like to talk a little bit about the
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1 procedures. First of all, this is what is called an
2 informal public meeting. Members of the panel may ask
3 those who are testifying about their testimony. This is
4 not, and I'll repeat not, a formal administrative hearing
5 so we are not bound by rules regarding evidence,
6 cross-examinations and some of the formal trappings of
7 that kind of proceeding.
8 As you can see from the agenda, we need to stick
9 to the schedule very carefully so that everyone who has
10 asked to offer oral testimony will have a chance to say
11 what they would like to say. We are going to ask the
12 witnesses today to be mindful of the needs of others and
13 to help us stay on schedule. The panels have been given a
14 certain period of time and they will be expected to keep
15 within their alloted times. I'll tell you about the
16 signal system. We have two time keepers and they will be
17 giving you signals as witnesses. When you have -- is it
18 two minutes or one minute?
19 TIME KEEPER: One minute.
20 MS. SMITH: When there is one minute remaining to
21 speak and then another signal when the time is up. They
22 will start by holding up a card with that information on
23 it. Sometimes witnesses may not be paying -- or may be
24 engrossed in their testimony and may not notice the card
25 and so what we have is a second signal. If the -- well,
26 the time expired signal. When the time expired signal is
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1 held up and if the witness doesn't notice it, then we have
2 our second time keeper, Ariel, who is going to give you a
3 musical nudge. It will be very gentle.
4 There may have been some individuals who were
5 unable to sign up in advance, and to the extent possible,
6 we will want to give them a chance to speak, as well. At
7 the end of the meeting today -- tomorrow, not today, at
8 the end of the meeting tomorrow, we will make the mike
9 available to anyone who would like to make a presentation,
10 time permitting.
11 I'll also mention that witnesses may submit a
12 written supplement to their oral testimony by next Friday,
13 July the 17th, and then the record will be closed. Any
14 written supplements should be directed to Jennifer J.
15 Johnson, Secretary of the Board, Board of Governers of the
16 Federal Reserve System, Washington, D.C. 20551. This is
17 information that I think you have already received. But
18 if you need to have it in writing, we will be glad to
19 provide it. The supplements, written supplements, must be
20 received by 5:00 p.m. EDT on July 17th. You may fax your
21 submission to area code (202) 452-3462. Also, if you
22 haven't turned in copies of your written testimony or if
23 you have any other written statements to put into the
24 record, please leave them with the Federal Reserve staff
25 at the registration desk. It is important that we get
26 this information for the record.
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1 A transcript of the meeting will be available by
2 July the 14th through the Federal Reserve Bank of
3 San Francisco and the board. In addition, the official
4 transcript will be available by close of business on July
5 the 15th on the board's public web site on
6 www.bog.frb.fed.us, technology willing. And with that,
7 we'll begin our proceedings and we will start with a
8 presentation from the applicant.
9 MR. GNAIZDA: Good morning, Ms. Smith. On behalf
10 of 36 of the protestors, we have one procedural matter
11 which we think will help expedite matters and it's a
12 letter that we sent to Chairman Greenspan and the members
13 of the Board of Governers yesterday. And what it relates
14 to is your ability to evaluate who is testifying because,
15 as you will note, the Federal Reserve often lists the
16 number of people speaking for and against. I'd like to
17 present you with the letter.
18 MS. SMITH: I might note, for the record, that
19 Mr. Bob Gnaizda from the Greenlining Institute has passed
20 out a letter to all of us on the panel and to the
21 presenting panel, as well.
22 MR. GNAIZDA: Let me just make one brief comment
23 and then we can get a ruling on this. This letter is
24 entitled Big Bank Bucks Buy Votes. What it relates to is
25 this, that out-of-town people have been prejudiced if they
26 wish to protest at this proceeding, that is, they must pay
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1 their own way no matter where they live, 3,000 miles away,
2 to come here for three minutes in San Francisco. The
3 parties have raised the issue that the hearing should be
4 across the country. The banks have not supported that.
5 What the banks have done is they have paid the way for
6 those who will support their merger.
7 MR. FRIERSON: Mr. Gnaizda, thank you very much
8 for the letter. We're going to enter this into the
9 record. And we will request, based on the scheduling of
10 the individual panels, you will be given time at the
11 beginning of your panel to make your remarks, but we would
12 like to move on with the schedule that we have. And this
13 letter is part of the record.
14 MR. GNAIZDA: Thank you very much. We just have
15 one procedural matter which you may wish to rule on and
16 this is this. We are not asking that people who the bank
17 paid to testify ought not to testify, they're welcome and
18 we wish to hear them, but they should identify themselves
19 as having received expenses.
20 MS. SMITH: I think I can interrupt right now and
21 say that we will not be asking the witnesses to give that
22 indication. So we will note your objection for the
23 record. And with that, I think we will proceed with our
24 first panel this morning.
25 MR. GNAIZDA: Thank you very much.
26 MS. SMITH: Thank you very much and we'll see you
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1 later in the day.
2 MR. COULTER: Good morning, Madam Chairmen, my
3 name is David Coulter, with me is Hugh McColl, the CEO of
4 NationsBank. I also want to introduce Don Mullane on my
5 right, Executive Vice President of Corporate Community
6 Development for Bank of America. And Cathy Bessant, on my
7 far left, President of the Community Investment Group at
8 NationsBank.
9 We want to thank the Federal Reserve Board for
10 this opportunity to talk about the proposed creation of
11 America's first coast-to-coast bank.
12 The new BankAmerica will represent the triumph of
13 an idea that began nearly a century ago right here in
14 San Francisco when a local produce merchant named A.P.
15 Giannini founded the Bank of Italy.
16 The Bank of Italy later became the Bank of
17 America and it became a catalyst for economic opportunity,
18 moving capital between communities, funding the rise of
19 major industries and helping to house, feed and move the
20 population of a state that is now the world's seventh
21 largest economy.
22 The story of California is really Bank of
23 America's story. Here are just a few highlights. Through
24 the years and right up until today, Bank of America has
25 purchased the bonds that have built universities, highways
26 and, yes, even the Golden Gate Bridge.
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1 In 1929 when the City and County of San Francisco
2 ran out of funds to complete the Hetch Hetchy water
3 system, our bank stepped in and bought the bonds. Today
4 that water is in the drinking fountains in this building.
5 We financed farmers and ranchers at a time when no other
6 bank would entertain them. And today California boasts
7 the most fruitful agricultural industry in the world.
8 We helped build Hollywood, too. We lent money
9 for thousands of films ranging from Snow White and the
10 Seven Dwarfs to Gone With the Wind, from Lawrence of
11 Arabia to It's a Wonderful Life. In Hollywood we became
12 known as The Movie Bank.
13 The Dodgers came to Los Angeles with BofA's help.
14 Mattel and Disneyland were built with BofA financing. And
15 we've been there for Silicon Valley, too. From O'Malley
16 to Disney to Jobs, the great visionaries have turned to us
17 to finance their dreams. As have millions of individuals
18 who count on Bank of America when the time comes to
19 purchase their home, educate their children or start their
20 business.
21 I can assure you that Bank of America has brought
22 unparalleled commitment to the communities we serve. The
23 new Bank of America will continue in this manner but on a
24 much larger scale than ever before. In fact, it will be
25 positioned to create economic opportunity nationwide.
26 Long ago Bank of America sought to empower people
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1 by opening bank branches in hundreds of communities
2 throughout California. Today we're bringing a wide array
3 of financial services even closer to home and making them
4 available to customers 24 hours a day. And we are not
5 turning our backs on the communities that need financial
6 services the most.
7 In South Central Los Angeles, for example, we
8 have more branches than all other banks combined. We've
9 played a principal role in capitalizing one of Los
10 Angeles's three African American owned financial
11 institutions, Founders National Bank. And just last month
12 the CEO of that bank, Carlton Jenkins, said this in a
13 letter to the Federal Reserve Bank in Richmond. Quote,
14 "BankAmerica has been an extremely significant participant
15 in the growth and maturation of Founders National Bank.
16 This, in spite of the fact that several of our branch
17 locations -- in several of our branch locations, we are
18 clearly a competitive institution to them," unquote.
19 The BankAmerica Board of Directors has
20 established a goal that its major operating units receive
21 outstanding ratings for their CRA activities. We are
22 living up to that standard. BankAmerica Corporation has
23 five bank subsidiaries and all five currently hold
24 outstanding Community Reinvestment Act ratings. Two of
25 those have been earned under the new CRA regulations.
26 Our flagship institution, Bank of America
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1 National Trust & Savings Association, has received four
2 consecutive outstanding ratings. Our Federal Savings Bank
3 is rated outstanding by the Office of Thrift Supervision.
4 Our Community Development Bank is rated outstanding by the
5 FDIC. Bank of America Texas and our Credit Card Bank in
6 Phoenix are rated outstanding by the Office of the
7 Comptroller of the Currency.
8 We believe that allocating the resources and
9 performing at a level to achieve these outstanding ratings
10 is very, very important. We believe it is equally
11 important to reward outstanding banks by placing value on
12 their outstanding ratings at times like this.
13 I know that it's important to you to have
14 financial institutions that are committed to community
15 building. I hope you come away from today's hearing with
16 a better understanding of our commitment. To help in that
17 regard, let's take a brief look at Bank of America's
18 record.
19 We surpassed the ten year $12 billion community
20 lending commitment that was announced by the bank in 1992
21 in four and a half years.
22 Last year, we voluntarily set a new, very well
23 defined ten year goal of $140 billion in community
24 lending. It was an unprecedented move by a major bank,
25 once again on a voluntary basis. Mr. McColl will later
26 speak to an even larger voluntary commitment by the
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1 BankAmerica.
2 Since 1992, we have booked $2.5 billion in
3 affordable consumer loans to low- and moderate-income
4 borrowers.
5 Underscoring our commitment to neighborhood
6 revitalization is the success of Bank of America's
7 Community Development Bank which has become the west's
8 number one source of government guaranteed small business
9 loans and multi-family affordable housing finance. In the
10 last five years, we have booked nearly $1.5 billion in
11 community related small business loans and approximately
12 $2 billion in credit for multi-family affordable housing,
13 including more than $600 million in the first half of
14 1998.
15 Last year, Bank of America became the first major
16 bank to launch an initiative tailored specifically around
17 the banking needs of rural America. Our rural 2,000
18 Community Development Initiative includes a three year
19 $500 million community development lending goal. It also
20 calls for $5 million in grants that will benefit rural
21 communities and Indian country. Helping us to carry out
22 this initiative are four advisory committees that include
23 42 rural community experts and practitioners.
24 We were the founders of the California Community
25 Reinvestment Corporation which provides permanent
26 financing for multi-family affordable housing and serves
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1 as the model in the western United States for other bank
2 consortiums. We have invested in dozens of other similar
3 multi-bank organizations.
4 To help create jobs and stimulate economic growth
5 in minority communities, we have invested more than $32
6 million in minority venture capital funds.
7 We continue to expand homeownership opportunities
8 among low-income and minority borrowers through our
9 Neighborhood Advantage program which has generated loans
10 of more than $15 billion since its inception. In 1997,
11 nearly one-fourth of all our mortgage loans were made to
12 minorities and low- and moderate-income borrowers.
13 We've just introduced a new zero downpayment
14 mortgage program for low- and moderate-income borrowers
15 which has had stunning results in our demonstration
16 markets. In fact, we accepted nearly $300 million in
17 applications in just three months.
18 In 1992, we introduced Advantage Business Credit,
19 a lending initiative that has taken much of the paperwork
20 out of small business loan applications for $100,000 or
21 less. In fact, the application for this product is just
22 one page. During the last six years, our so-called ABC
23 program has generated loans of $4.1 billion.
24 And we've trained more than 15,000 of our
25 associates in diversity programs so that they can better
26 respect and cherish the differences that make our company
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1 and our communities unique. We believe that changing
2 demographics represent new markets and opportunities for
3 us to serve people. Or as my predecessor, Dick Rosenberg,
4 said so often, quote, "Service to low-income communities
5 is the right thing to do and the smart thing to do,"
6 unquote.
7 We're also helping to meet the financial needs of
8 a changing population by delivering ATM service in three
9 languages and staffing many branches with employees who
10 speak Spanish, Japanese, Korean, Chinese or Tagalog.
11 And since 1991, we have helped to strengthen
12 local education, economic development and environmental
13 quality with $206 million in contributions to nonprofit
14 organizations across the western United States.
15 We were the leading advocate for the revised CRA
16 regulations, encouraging banks, regulators and politicians
17 to give the regulations a chance. We recently commented
18 positively to the Federal Reserve on Regulation B which
19 calls for the voluntary collection of race and gender data
20 on small businesses. We've spoken out and taken
21 leadership positions on child care, Proposition 13, urban
22 sprawl, water, Hispanic higher education and other issues
23 important to all of our communities.
24 We've established ourselves as good corporate
25 citizens through an environmental program that has
26 resulted, among other things, debt for nature swaps to
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1 preserve Latin American rain forests. We were the first
2 major financial institution to sign the CERES Principles,
3 which hold signatories to a strict environmental code of
4 conduct.
5 Throughout the nation, Bank of America's record
6 is one of commitment, commitments made and commitments
7 kept.
8 I think the point is best made in a letter that
9 was forwarded to me a while back by then Comptroller of
10 the Currency Gene Ludwig. The letter was sent to
11 Mr. Ludwig in October of 1997 by the Greenlining
12 Institute's Executive Director and General Counsel who
13 wrote him about our CRA performance. Here's what they
14 said, quote, "The so-called outstanding rating given to
15 almost half of all very large financial institutions is
16 inadequate regarding Bank of America. As we previously
17 discussed, Bank of America is the overall CRA leader. We
18 believe the rating for Bank of America should be
19 outstanding plus," unquote.
20 I hope this helps give you a better understanding
21 of our community commitment.
22 NationsBank has a similar commitment to its
23 communities just as we are both committed to our
24 associates. Hugh McColl will elaborate on this for you
25 during his testimony. I'd like to turn it over to Hugh
26 but first allow me to close with this thought.
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1 A.P. Giannini once said, "When nationwide branch
2 banking is an accomplished fact, then America will have
3 come of age financially."
4 That's what our merger is all about, it will
5 produce an awesome combination and its power will be
6 unleashed for the benefit of this country.
7 Mr. McColl and I are convinced of this, that is
8 why we shook hand on this deal and that is why we'll
9 become teammates. And now I'd pleased to introduce my
10 colleague at NationsBank, Hugh McColl.
11 MR. McCOLL: Thank you, David. This meeting is
12 about the effects bank mergers have on communities. This
13 subject is close to my heart, as all of you know, my
14 company has been through many mergers over the past 20
15 years.
16 In each, our intention has been to employ more
17 people, win more money, do more business with minority
18 vendors, be more active in the community, and generally
19 make a bigger difference than our predecessor
20 institutions.
21 In fact, in reviewing the effects of these
22 mergers on our communities, we have found almost
23 universally that employment, lending, community
24 development efforts and charitable contributions actually
25 increase. That has been our vision and it will continue
26 to be so with this merger. In San Francisco and in
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1 Charlotte and throughout our coast-to-coast franchise.
2 Our goal is for the new BankAmerica Corporation
3 to be the best community development bank in this country.
4 So I welcome the opportunity to share with you the values,
5 efforts, and achievements that make NationsBank a positive
6 force in all the communities where we do business.
7 Now, as you know, NationsBank has a strong record
8 of community investment. We have achieved and maintained
9 outstanding CRA ratings. We have been a leader in our
10 local market and we have consistently sought out local
11 community based partners to help us achieve our community
12 development goals.
13 Let's consider some of the results. In 1997
14 alone, our mortgage lending to minority borrowers topped
15 $2.7 billion and our mortgage lending in low-income
16 neighborhoods topped $2.5 billion. NationsBank is the
17 number one bank lender to small businesses in this
18 country.
19 Our total production in 1997 was more than $11
20 billion, $2.3 billion of which was loaned in low-income
21 areas. We're also the number one bank originator of SBA
22 loans in the United States and we have preferred lender
23 status in every state in our franchise.
24 Our investment capabilities are significant and
25 unique with more than $520 million in community
26 development equity investments currently on our books.
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1 The NationsBank Community Development
2 Corporation, with the help of many local partners, has
3 involved a or re-habbed more than 14,000 units of
4 affordable housing, investing more than $300 million. Our
5 Community Development Corporation is the only bank owned
6 CDC that serves as both a developer of and investor in
7 affordable housing.
8 The NationsBank Small Business Investment
9 Corporation makes equity investments in small and
10 minority-owned companies. Through it, we've invested more
11 than $15 million in small businesses across the country.
12 Finally, we have invested more than $50 million in
13 minority-owned financial institutions and community
14 development financial institutions. These organizations
15 extend our reach to low-income borrowers and provide
16 capital to distressed neighborhoods in ways that no
17 traditional bank can.
18 Now, looking at what we've accomplished is
19 important, but to understand how we'll continue to be
20 successful in the future, we should look at how we've
21 achieved these results.
22 Our approach can be boiled down to three basic
23 principles. One, we build strategical alliances with
24 community based organizations. Two, we believe in a
25 national commitment delivered and differentiated locally.
26 And, three, we believe strongly in accountability.
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1 Our partners include national organizations as
2 well as hundreds of local community based organizations in
3 cities, towns, and neighborhoods where we do business.
4 These alliances will represent a fundamental way -- the
5 fundamental way that we do business. We seek partnerships
6 for the betterment of neighborhoods.
7 Our purpose in these partnerships is not to
8 compete against community based organizations but, rather,
9 to work with them to improve neighborhoods.
10 Our decentralized management philosophy means
11 that we understand that one size does not fit all
12 communities in need. In other words, associates across
13 the country do not get community development instructions
14 from Charlotte, North Carolina, they get the resources
15 they need and they get a corporate culture that backs them
16 up when they decide what needs to be done.
17 Our commitment to accountability is self-evident.
18 Since 1992, we have provided detailed reporting at the
19 local, state and national level on all of our results.
20 This process ensures that we continue to meet the evolving
21 needs of our communities. Equally important, it provides
22 further opportunities to gain feedback from community
23 groups, civic leaders and the public.
24 Now, let me be perfectly clear about one thing.
25 Our goal has never been simply to meet the requirements of
26 the Community Reinvestment Act. We strive to lead in
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1 everything we do, and that includes building strong
2 communities. Our commitment to our communities extends
3 throughout the company, to every business line and to
4 every associate throughout our franchise.
5 Beyond our core business activity, which fuels
6 the economy, supports the tax base and provides
7 employment, there are five areas in which NationsBank and
8 its associates are active in supporting our communities.
9 And they are, first, community leadership, an associate
10 volunteerism; second, individual and corporate
11 philanthropy; three, commitment to adversity; and, four,
12 minority business development; and, five, progressive
13 marketing programs and business policies.
14 Now, I'd like to touch on each of these areas
15 briefly. Community leadership and associate volunteerism
16 are important parts of the NationsBank culture. At the
17 corporate level we provide leadership to our communities
18 by putting our financial muscle behind important community
19 projects. By advocating for a stronger CRA and a
20 permanent low-income housing tax credit, and by working
21 with local governments and community organizations to
22 achieve shared goals.
23 We also have a strong culture of associate
24 volunteerism. Associate volunteers receive two hours of
25 paid time of every week to work in the schools. Local
26 councils within the bank identify volunteer opportunities
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1 for our associates, and our newest program, NationsBank
2 Neighborhoods, offers cash grants in an associate's name
3 to organizations at which the associates volunteer.
4 Now, the next area I mentioned is philanthropy.
5 Simply put, NationsBank is the most generous financial
6 institution in the country and the new BankAmerica will be
7 so by a long shot. Our combined budget this year will
8 exceed $100 million. No one else even comes close.
9 One of the most important aspects of our
10 decision-making process is that we put the control over
11 charitable dollars in the hands of local executives who
12 know best how to serve their communities. This policy has
13 resulted in not just increased giving but more effective
14 giving with dollars going where they are needed the most
15 throughout the franchise.
16 The third area in which we work very hard to
17 strengthen communities is building diversity among our own
18 associates. Our company will stretch from coast to coast
19 and will include the entire sunbelt, the Pacific
20 Northwest, the Midwest and the Mid-Atlantic. Now, while
21 we are unalterably opposed to quotas of any type, we will
22 continue to support affirmative action and we will have
23 one of the most diverse work forces of any large
24 corporation in this country.
25 And it is our intention that our board of
26 directors will be one of the most diverse corporate boards
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1 in the country. Not at some time in the distant future,
2 but on day one.
3 One of the most important areas of focus in
4 building strong communities is minority business
5 development.
6 NationsBank has been a pioneer and a national
7 leader in creating and sustaining a strong minority
8 business development program. NationsBank was the first
9 financial institution to be recognized by their Minority
10 Supplier Development Council as the corporation of the
11 year. And the first to receive this recognition two years
12 in a row.
13 In 1990, NationsBank set a goal of ten percent
14 for directing discretionary spending to women and
15 minority-owned businesses. Since then, we have averaged
16 more than 15 percent, amounting to more than $470 million
17 spent with women and minority-owned businesses. Once
18 again, our self-imposed goal turned out to be a floor, not
19 a ceiling. And in typical NationsBank fashion, we blew it
20 away.
21 Now, finally, we are supporting our communities
22 through progressive marketing programs and business
23 policies.
24 For example, we have had a formal Hispanic
25 Marketing Program for more than five years in an effort to
26 reach out to this growing segment of our population.
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1 We've installed bilingual ATMs, hired bilingual
2 tellers and telemarketers and formed partnerships with the
3 National Council of La Raza, the Hispanic Association on
4 Corporate Responsibility and SER-Jobs for Progress, Inc.,
5 as well.
6 Now, throughout these partnerships, we have begun
7 to develop programs and products that will make banking
8 with us easier and more accessible for all members of the
9 Hispanic community.
10 What we want to establish with our customers, all
11 our customers, regardless of race, ethnicity or economic
12 means are strong relationships and that's why we
13 implemented a relationship approach to fees and pricing
14 that minimizes fee increases for as many of our individual
15 deposit account customers as possible.
16 This spring NationsBank broke from the pack to
17 offer pricing benefits to a vast number of customers. We
18 eliminated check card fees for all customers, and fees for
19 a broad array of services associated with our two most
20 popular accounts were eliminated or frozen through the
21 year 2000.
22 Now, we've heard Dave Coulter talk about his
23 company's commitment to building strong communities across
24 the western half of the United States. And you've heard
25 me talk about my company's commitment to doing the same
26 across the NationsBank franchise.
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1 In fulfilling these commitments, both our
2 companies have a strong record of accessibility and
3 proactive partnerships with local community groups. In
4 fact, since our merger announcement, we've met with
5 hundreds of community organizations to talk about ways we
6 can best work together to improve our neighborhoods and
7 communities.
8 Bringing our companies together will only enhance
9 our ability to deliver on all of our commitments.
10 The company we will create will be the leading
11 American bank of the 21st Century and we will be this
12 country's premiere community development bank, as well.
13 This will benefit all of our constituents.
14 First, our customers will see a new standard for
15 choice, convenience, value and market presence. Second,
16 our associates will realize more opportunities from
17 working at a larger, stronger company. And, third, by
18 investing in our communities, by providing good jobs and
19 creating new ones and by helping to improve the quality of
20 life for customers and associates alike, we will be the
21 model for corporate citizenship.
22 We will build on the best initiatives from both
23 banks, retaining the Bank of America Community Development
24 Bank and NationsBank Community Development Corporation.
25 These vehicles, as well as new initiatives to promote
26 rural development and Indian country lending and
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1 investment, will be used to rebuild neighborhoods, create
2 jobs and provide access to the financial system as never
3 before.
4 We will keep decision-making in the hands of
5 local bankers and managers who know best how to serve
6 their communities.
7 We will continue to lead locally and nationally
8 and we will deliver on our commitments whatever and
9 wherever they may be.
10 Now, recently we announced a ten year $350
11 billion commitment to community development lending and
12 investing. The commitment targets $180 billion for small
13 business lending. 115 billion for affordable housing, $25
14 billion for economic development and $30 billion for
15 consumer lending. Now, let me underscore, this is a
16 floor, not a ceiling.
17 Furthermore, fulfilling this commitment will not
18 be easy, it will be a stretch. This commitment will push
19 our new company and each of us individually to be even
20 more proactive, more innovative and more creative than
21 we've ever been. We view this as a challenge, and as with
22 all challenges, we are ready and eager to take it on.
23 Both banks have a demonstrated record of working
24 with community partners. Yet, there are those who oppose
25 this merger because we have not signed, quote, unquote,
26 "CRA agreements" and because we have not itemized the
26
1 commitment by market or by product.
2 I understand the passion these organizations have
3 for their specific communities. As I've said, we share
4 common goals. However, their desire to receive the
5 greatest financial support possible for their individual
6 causes should not overshadow the fact that our pledge, the
7 largest of its kind ever, is designed to benefit all of
8 our communities.
9 When we created this commitment, we decided not
10 to itemize the commitment by market or by product. And
11 there's a good reason for this.
12 Because community needs and circumstances are
13 always changing, we believe the best approach is a
14 flexible commitment that establishes goals on a nationwide
15 basis and relies on capacity and demand within each market
16 to determine how goals are met.
17 Our outstanding record of achievement,
18 accountability and public reporting of results
19 demonstrates the CRA agreements and itemized commitments
20 are unnecessary for our company, they are unwarranted,
21 they are burdensome to manage, they divert resources from
22 the areas most in needs and they prevent us and our
23 partners from meeting the changing needs of our
24 communities. In short, they're not in the best interests
25 of underserved neighborhoods.
26 Now, for our part, NationsBank is, and the new
27
1 BankAmerica will be, devoted to building strong, growing,
2 vigorous communities everywhere that we do business.
3 Community development has been a part of both of
4 our cultures and it will be an integral part of our new
5 culture. It's a fundamental part of the way that we do
6 business. It's essential to the future health of our
7 company and perhaps, most important, as Dave said, it's
8 simply the right thing to do.
9 This is what we have always believed, it's what I
10 believe today and I assure you that it is not going to
11 change. Now, we'll be happy to take your questions.
12 MS. SMITH: Thank you. Bob.
13 MR. FRIERSON: Thank you very much. This is a
14 question to the panel, so anyone feel free to respond. I
15 have several. The board is required to consider the
16 effects of this proposal and the convenience and needs of
17 the communities served and this consideration takes into
18 account the records of performance under the Community
19 Reinvestment Act of NationsBank and BankAmerica.
20 In assessing the effects of the proposal on
21 communities, particularly communities in California,
22 should the board rely on NationsBank's record or
23 BankAmerica's record? If the board should rely on
24 NationsBank's record, how does NationsBank intend to
25 ensure that all individuals in all communities will have
26 access to a full range of products that assist in meeting
28
1 credit needs that may differ substantially from community
2 to community? If the board is to rely on BankAmerica's
3 records, which programs -- and I believe I understood you
4 correctly to say you would be retaining BankAmerica's
5 Community Development Bank -- which programs in addition
6 to that would NationsBank expect to continue?
7 MR. McCOLL: Can I answer the last question
8 first? As to the last question, we intend to retain all
9 of what the Bank of America has been doing, including
10 their support through their foundation of local community
11 efforts and Don Mullane can outline all of the aspects of
12 what has been done.
13 We ask that you measure us on both of our
14 records. And what we believe we would do is bring
15 whatever we think is the best of NationsBank's efforts
16 also to California and to the west coast to supplement
17 whatever has been done by the Bank of America. In other
18 words, we think the sum will be greater than the parts.
19 And that's where I am on that.
20 I may have missed one of the questions. Oh, you
21 want to talk about making credit available to all
22 individuals?
23 MR. COULTER: Sure. I will be somewhat
24 repetitive but I would indicate that we are trying to
25 create a new company here. In fact, we refer to it today
26 as the new BankAmerica Corporation, and in that sense,
29
1 we're trying to take the best of what we think are two
2 fine organizations today. We're blending this merger, as
3 indicated, from the establishment of a policy committee
4 with three senior individuals from Bank of America and
5 three senior individuals from NationsBank and we are going
6 to attempt to operate on a nationwide basis. This is the
7 first coast-to-coast franchise.
8 And in that sense, I think we have a clear
9 understanding that to be successful on a nationwide basis
10 size is not the only important criteria. To be successful
11 on a nationwide basis and take advantage of size, you have
12 to demonstrate local market or natural market leadership.
13 And that involves community investment efforts as well as
14 day-to-day business efforts in terms of relating the
15 products and services you provide in a natural market, be
16 it the Bay Area or be it St. Louis or be it Jacksonville,
17 Florida in a way that the market clearly believes that you
18 have the decision-making power to offer the products and
19 services that makes sense in that natural market.
20 MR. McCOLL: I would just like to add one thing.
21 As to the understanding of the difference in the markets,
22 which I think is a fair question, it should be noted that
23 NationsBank operates in 16 states now, four major regions,
24 each of which is different. For instance, the cattle are
25 more important in Texas by some staggering margin than
26 they are in South Carolina where cotton is more important.
30
1 And we have different industries, from aerospace to the
2 furniture industry, just illustratively.
3 And we understand that the needs of the
4 individuals in each market are quite different and we
5 respond. I made the point earlier and I'd like to
6 underline it, that we have local market leadership that
7 makes decisions in the best interests of each individual
8 community.
9 So our response in Southern California may well
10 be quite different from South Carolina, albeit it will be
11 to achieve the same goals, which is support small
12 business, adequate housing at fair values and services
13 available to everyone in the areas where we do business.
14 So it's not something we're unfamiliar with.
15 We have earned our CRA ratings over a broad
16 number of states and broad regions and we have
17 demonstrably performed in facing the differences that are
18 existent in each of these markets and we will continue to
19 do so.
20 Let me say one last thing. We are Americans, we
21 understand what America is about, and it's about all of us
22 here in the room, even the right to disagree with each
23 other. And I just might -- in response to the earlier
24 statement, you need to understand that we support and, in
25 fact, furnish money to a large number of the groups that
26 are here protesting this merger.
31
1 MR. FRIERSON: Let me follow up on the
2 characterization which has been used several times here
3 which is the coast-to-coast banking franchise. This
4 proposal has been characterized as allowing customers that
5 would have access to approximately 5,000 branches and I
6 believe 15,000 automated teller machines. In addition to
7 what you've told us already, can you provide us with any
8 more detail on how it's going to serve the convenience and
9 needs of those residents in communities who may only use
10 the branches and the ATMs that are located within their
11 own communities?
12 MR. McCOLL: Well, we'll try. The first and most
13 important thing that I believe that banks should do is to
14 provide the fuel for the economy, that is, provide credit.
15 Now, that's the first thing we should do.
16 We have a large deposit base, but in addition to
17 that, because of our strong earnings and capital base,
18 we're able to raise money across the world. And we have
19 demonstrated conclusively and can demonstrate empirically
20 that we're net importers of capital into every market in
21 which we operate. And so it starts with that, being a net
22 importer of capital and furnishing it to markets no matter
23 how large they are or how small they are. We start with
24 that and that's because of our strong ability to access
25 the world markets and to bring money into the market that
26 is beyond our deposit base.
32
1 Secondly, because of our company's success, both
2 companies' success, we are able to develop software that
3 drives down cost, not only to us but to the customer, that
4 is it makes the products that are available to the
5 customer work better for them and facilitates the ease in
6 which they do their business. And that isn't a lot
7 different, candidly, from Wal-Mart which is a
8 coast-to-coast company which does the same thing.
9 Dave, you may want to comment further about that.
10 MR. COULTER: I have just a few comments. Even
11 if you're confined to a pretty small local market, I
12 didn't move very far out of the small town I grew up in
13 Port City, Pennsylvania for the first 16 or 17 years of my
14 life. I'd still argue that value and convenience that we
15 can provide are quite important.
16 Maybe you go to your normal -- maybe you go to
17 your branch on a weekly basis. But perhaps as technology
18 changes and the world continues to evolve and you don't
19 have transportation, if you can access your bank via your
20 interactive cable TV, that's of some value to you. If you
21 need information about sending a child to college in
22 another part of the United States and need to be able to
23 move money back and forth to that child, that's of value
24 to you.
25 So I think the basic benefits you laid out at the
26 start of the question are quite important and very
33
1 valuable.
2 In addition to that, it's certainly my experience
3 here in California that it does not take a very small
4 business today to have international, if not global,
5 aspirations to look at this broad pacific rim which we're
6 fortunate to be on one edge of and desire to sell some of
7 its product offshore.
8 Now, we're in a little bit of a disruptive
9 economic period but I think that's a long-term desire and
10 a long-term need. And that's a case where I think the new
11 BankAmerica Corporation can bring a wide range of services
12 in how to do business in offshore markets that appear very
13 foreign and very distant to many small businesses today.
14 And as I said, I think most small businesses have those
15 kinds of aspirations and dreams.
16 MR. McCOLL: I'd like to add one thing. We have
17 about a hundred thousand teammates in our company and Bank
18 of America has approximately the same number of people who
19 are drawing a paycheck, in effect, from the company, so a
20 couple hundred thousand people working.
21 We live in these communities, large and small,
22 and if for no other reason, we all like our communities
23 that we live in and it's in our interests both personally
24 and corporately to support those communities and we're
25 going to do that.
26 Secondly, we are interested in making money. We
34
1 cannot make money if we don't do the things that banks are
2 supposed to do. That is, if we don't lend money. If we
3 do not make service and products available at reasonable
4 prices, they can go somewhere else and we will lose the
5 business. So we are incented to do the right thing and
6 will do so.
7 MR. FRIERSON: I have one last question, I just
8 want to clarify the record. NationsBank has stated that
9 it will -- it intends to expand all aspects of the
10 BankAmerica rural 2000 Community Development Initiative.
11 Will the rural 2000 initiative be extended to all rural
12 communities that would be served by the combined
13 organization if the merger is approved and how will the
14 initiative be expanded?
15 MR. McCOLL: Well, we'll do that where it makes
16 sense. And it will be expanded under -- obviously, under
17 the leadership of the people who thought it up inside our
18 company. But we'll obviously have to bring more people to
19 the -- bring more people to it from our company, that is,
20 added staffing. Because of time zones, because of
21 different types of rural needs. As I said, a rural need
22 in eastern North Carolina or South Georgia is quite
23 different from what it is in Kansas or Iowa or in Southern
24 California or in -- right here in the valley. So it will
25 have to be tailored to be responsive to each region. But,
26 yes, we intend to continue with the outreach.
35
1 MS. SMITH: Thank you very much for your
2 presentation and we will move on to the first panel.
3 MS. ORR-SMITH: Madam Chairman, I'd like to
4 address this letter to Mr. McColl and Mr. Coulter
5 requesting a meeting with some of the protestors to
6 discuss the specific issues raised. Thank you.
7 MS. SMITH: I think the first panel is mostly up
8 but if there's anyone who hasn't made it up. And if you
9 will just introduce yourselves to the audience as you are
10 seated and let's start with the person on the extreme
11 right.
12 MR. MARTIN: Good morning, my name is DeWayne
13 Martin, I'm Chief of Staff for the City of Atlanta,
14 Georgia.
15 MS. BROOKS: Did you want us to introduce
16 ourselves?
17 MS. SMITH: No, please, just continue to speak.
18 MR. MARTIN: Thank you. Members of the panel,
19 I'm DeWayne Martin, Chief of Staff to Mayor Bill Campbell.
20 MS. SMITH: Can you pull the mike closer?
21 MR. MARTIN: Mayor Campbell regrets that he's
22 unable to be here today but I have come on behalf of the
23 City of Atlanta because we believe that the issue before
24 this panel is very important.
25 Seven years ago Atlanta, Georgia was in the same
26 place San Francisco is today, a major merger between
36
1 Georgia's leading bank and North Carolina National Bank
2 was before the country. This merger was the formation of
3 NationsBank.
4 From the onset, NationsBank showed its commitment
5 to corporate leadership. And at that time our city was
6 vying to attract the world's most watched event, the 1996
7 centennial Olympic games. NationsBank stepped to the
8 table from the onset extending a $300 million line of
9 credit to the Atlanta Organizing Committee at a critical
10 juncture in that process.
11 At that point in our nation's history when many
12 corporations were accused of disinterest in the
13 communities in which they lived and do business,
14 NationsBank has shown and continues to show by example
15 that good business still means community responsibility
16 and commitment. Certainly economic development,
17 affordable housing and expanding employment opportunities
18 are all important issues for any city.
19 Through its broad array of financial services,
20 NationsBank has served all levels of Atlanta's community,
21 whether helping small businesses expand or supporting
22 efforts to retain or attract large corporations to our
23 area. NationsBank plays a fundamental role in the
24 economic vitality of our city and our region. This has,
25 in turn, helped create jobs which is extremely important
26 to our city.
37
1 The capacity and positive effect of economic
2 development in Atlanta to develop affordable housing and
3 create jobs can only be enhanced by the combination of
4 resources of NationsBank and the Bank of America.
5 The most visible, in fact, of the NationsBank
6 community commitment in Atlanta is in the neighborhoods of
7 Atlanta through neighborhood development initiatives.
8 During the past five years, the City of Atlanta
9 has worked in partnership with NationsBank to create the
10 availability of affordable housing and reinvigorate
11 Atlanta's once forgotten neighborhoods. And for the first
12 time in over 25 years, Atlanta, Georgia has experienced an
13 increase in housing and in population in the inner city, a
14 trend that reverses a trend in many major cities where
15 populations have decreased over the past 25 years.
16 I will simply touch on three projects which block
17 by block are making a difference and are evidence of
18 Nationsbank's commitment to cities and communities.
19 First, the Historic Development -- Redevelopment
20 Partnership is revitalizing the Martin Luther King
21 District in Atlanta. When completed next year, the
22 district will have 67 new or historically re-habbed houses
23 representing an investment of four and a half million
24 dollars. This project has increased property values in
25 the area and is attracting more homeowners and businesses
26 to the inner city. Additional phases are being planned
38
1 with the help of NationsBank.
2 Another public/private partnership is the $5.9
3 million to replace at Summerhill which includes 70
4 single-family homes constructed along the neighbor
5 traditional designs. In Summerhill, this development has
6 been a catalyst for additional development, continuing
7 development in the inner city.
8 And the park at Lakewood, a $6.8 million project,
9 represents complete overhaul of a multi-family complex.
10 More than 200 units have been provided. An additional $10
11 million of indirect investment is furthering neighborhood
12 and economic development efforts in Atlanta.
13 NationsBank has established itself as a leader in
14 the community because of its commitment to involvement and
15 investment in the crucial parts of our city and across the
16 country through effective public and private partnerships.
17 We've seen that this commitment can make a difference and
18 we believe that it will continue to. Thank you very much.
19 MS. BROOKS: Good morning. My name is Roberta
20 Brooks and I'm Assistant District Director for
21 Congresswoman Barbara Lee representing the 9th District,
22 California. Thank you for providing -- I'm quoting her.
23 Thank you for providing this opportunity to me and my
24 representative, Ms. Roberts Brooks to address the issue of
25 the merger of Bank of America with NationsBank. I very
26 much regret not being here personally to talk with you but
39
1 I only learned about this meeting accidentally and not in
2 time to rearrange my schedule.
3 The first issue I will raise is the regulatory
4 role of the Federal Reserve Board relative to the ability
5 of these two banks to merge. Congress, through the 1956
6 Bank Holding Company Act, gave the Federal Reserve System
7 the responsibility to review such mergers and to
8 specifically consider the likely affects of the
9 acquisition on competition and the convenience and needs
10 of the community to be served. Due to the increasing
11 number of mergers in the 1950s, Congress reinforced the
12 1956 Act by passing the Bank Merger Act in 1960.
13 The Bank Merger Act strengthened the language of
14 the Federal Reserve Board's responsibility. It stated
15 that the Federal Reserve may not approve any merger that
16 could substantially reduce competition. It also was
17 concerned that a merger not create a monopoly unless it
18 finds that the anticompetitive effects of the transaction
19 are outweighed by the transaction's probable beneficial
20 effects regarding the convenience and needs of the
21 community served.
22 The second issue I wish to address is that of the
23 scale of the banks that are merging. The planned merger
24 of BankAmerica with NationsBank would make it the second
25 largest bank in the United States with assets of $580
26 billion. This merger must be placed in the context not of
40
1 a single event but as the first of a series of announced,
2 planned mergers, Citcorp's $72 billion merger with
3 Travelers Corp., and First Chicago Corp's $30 billion deal
4 with Bank One Corp. Another merger with similar
5 significance to California as BankAmerica is that of
6 California Wells Fargo with Norwest Corp. The
7 consolidation of Wells Fargo with Norwest Corp will make
8 it the seventh largest bank in the nation with assets of
9 190 billion.
10 This leads me to my third point. Given the
11 regulatory responsibilities of the Federal Reserve System
12 and the size of the banks under consideration, I would
13 expect, as many of my constituents and colleagues on the
14 House Banking Committee do, that the Federal Reserve would
15 consider this merger with appropriate gravity. One
16 measure of the seriousness of the Federal Reserve would be
17 its willingness -- is its willingness to listen and the
18 respect it will give to the testimony from people who
19 would be affected by such a merger.
20 It was, therefore, suprising to learn that only
21 one session was to be held on a single day in all of
22 California. You have undoubtedly received a great volume
23 of mail on the subject of your willingness to listen. I
24 understand that, as a consequence of the extent of the
25 mail, we the public now have two days instead of the
26 original single day.
41
1 I run the risk of stating the obvious, that a
2 two-day hearing in one part of California on the loss of
3 the largest bank in California is totally inadequate. And
4 with the risk of being rude by being clear, it's
5 unacceptable behavior from a government agency.
6 My colleagues on the House Banking Committee,
7 Congresswoman Lucille Roybal-Allard and Maxine Waters,
8 representing constituents in Southern California share my
9 concern with the negligible time that's being given by the
10 Federal Reserve to the public and to elected
11 representatives to hold the appropriate discourse on this
12 merger. Although, I am pleased that my representative did
13 not have to travel to Los Angeles to voice our concerns, I
14 am dismayed that so serious a matter should be given such
15 short attention.
16 This is a merger that affects the entire nation,
17 just as Microsoft's practices affects the whole nation. I
18 strongly recommend that the Federal Reserve hold hearings
19 in every state in which either BankAmerica or NationsBank
20 has assets of $1 billion or more.
21 I ask that a letter signed by myself,
22 Representative Roybal-Allard and Waters to Hugh McColl,
23 Chairman and CEO of NationsBank, and David Coulter,
24 Chairman and CEO of Bank of America, be accepted as part
25 of my testimony. We will fax that at a later time.
26 So I have one minute left. I need to move on.
42
1 The major concerns that we have are loss of
2 service. There is a great anxiety expressed by our
3 constituents very directly over the steady decline in the
4 last 20 years or so of banking services and the
5 accompanying tariffs for even the smallest services, such
6 as using the ATM. The pattern of less service and more
7 cost is so clear as to make this proposed merger a crisis
8 point. By delegation from Congress, the Federal Reserve
9 System has the responsibility for responding to these
10 concerns. How are you executing this responsibility?
11 Loss of jobs. How many jobs will be lost when
12 Bank of America moves from the Bay Area to North Carolina?
13 Job holders, families and the public need to have an
14 answer to this.
15 Community development and reinvestment, we have
16 heard a strong commitment from the bank with that but we
17 are concerned about it.
18 I don't have time to finish. I'll submit the
19 written testimony but I just want to indicate that we
20 trust that the Federal Reserve does remember its birth in
21 the republic and its true loyalties will be with the
22 people and give time for people to really give their
23 opinions throughout the country. Thank you very much.
24 MS. SMITH: Thank you. Mr. Brown.
25 MR. BROWN: Thank you, I'm Lee Brown, I'm the
26 Mayor of Houston, Texas which is the fourth largest city
43
1 in America and I want to express my appreciation for the
2 opportunity to provide testimony here today.
3 I've been a customer of NationsBank or one of its
4 predecessor banks for several years. Currently I hold
5 several accounts with the bank plus a mortgage loan. But
6 today I want to talk about NationsBank as a corporate
7 citizen in our city. NationsBank has been an excellent
8 corporate citizen, but most important, it has been a
9 partner with our efforts to improve the quality of life
10 for our citizens in Houston.
11 There are staff in Houston led by Joe Mosellino
12 (phonetic) who is the vice-chairman of NationsBank. They
13 have engaged in hundreds of hours of volunteer work. They
14 have supported many major philanthropic endeavors. And
15 often they've taken the lead in those efforts. Joe has
16 been very active in our Houston Chamber of Commerce which
17 is known as the Greater Houston Partnership and, thus,
18 worked very closely with the city on numerous economic
19 development efforts.
20 NationsBank has been a strong supporter of
21 affirmative action for many years. It was Hugh McColl,
22 the CEO of NationsBank, who called the press conference in
23 Washington, D.C. several years ago to champion affirmative
24 action at a time when the issue is being debated on
25 Capitol Hill. I would like to point out that he did not
26 have to do that, but he did it because he believed in what
44
1 our country, America, stands for, equal opportunity for
2 all. And that philosophy is reflected in the culture of
3 the organization.
4 Last year in Houston when this issue was being
5 voted on in our city, NationsBank lenders were out front
6 supporting this cause. And although I wasn't mayor at the
7 time, I'm told that NationsBank or its predecessors have
8 supported community development programs launched by the
9 City of Houston since 1980.
10 The $350 billion commitment announced by
11 NationsBank and BankAmerica is intended to address the
12 major concerns that I, as mayor of my city, and many other
13 mayors across the country have. Concerns such as how can
14 we get more affordable housing in our cities? This
15 commitment has $150 billion for affordable housing.
16 Concerns such as how can we assist small businesses which
17 provides jobs and economic opportunity to our cities? The
18 NationsBank/BankAmerica commitment will provide $180
19 million for small businesses.
20 This commitment, I'm told, and as we heard
21 earlier from Mr. McColl, is a floor, not a ceiling. So we
22 can expect more to happen.
23 During the past few years, the NationsBank has
24 provided a report to communities which documented the
25 progress they made on previous $10 billion commitments.
26 In 1993, NationsBank committed to spending $10 billion
45
1 within ten years to help build urban communities. They
2 exceeded that goal in four years. We expect they will
3 continue this practice with the $350 billion commitment.
4 I've been pleased with what I've observed about
5 NationsBank, pleased both on a personal basis and as a
6 leader of our city. Our cities throughout America need
7 responsible corporate leaders and community development
8 needs strong private sector commitments to make it a
9 reality.
10 And that's why I'm here today, to give support to
11 the proposal by NationsBank Corporation of Charlotte,
12 North Carolina to acquire BankAmerica Corporation of
13 San Francisco, California. And thank you for allowing me
14 the opportunity to speak before you today.
15 MS. SMITH: Thank you.
16 MS. TAVANLAR: Hello, ladies and gentleman, my
17 name is Katrina Tavanlar and I'm representing
18 Congresswoman Lucille Roybal-Allard from the 33rd District
19 of California.
20 As a member of the Banking Committee and Chair of
21 the California Democratic Congressional Delegation, I'm
22 writing to express my concern ith the proposed merger of
23 Bank of America and NationsBank. I'm especially concerned
24 about its impact on lending, investing, employment and
25 other financial services for low-income and minority
26 Californians.
46
1 This merger will no doubt have a greater impact
2 on California than any other state in the country. The
3 relocation of the headquarters of California's largest
4 financial institution to North Carolina particularly
5 concerns me, and the merger activity that has occurred in
6 California to date reinforces this concern.
7 In California alone, more than 80 banks and
8 thrifts have been acquired by other institutions since
9 1996. In 1992, when Bank of America purchased Security
10 Pacific Bank, they closed over 400 branches. In 1996,
11 Wells Fargo closed hundreds of branches throughout the
12 state after purchasing First Interstate Bank. While we
13 cannot fully anticipate the long-term effects of these and
14 future mergers, the obvious and the immediate impact has
15 been fewer branches and escalating bank fees.
16 I commend Bank of America for its prior and
17 current community reinvestment commitments to our
18 California communities.
19 However, I would appreciate receiving details on
20 how this pledge will benefit California's consumers and
21 communities. In requesting this information, I would
22 respectfully point out that these specific requests are
23 not unprecedented and reflect commitments that other
24 California institutions have made in the past. Therefore,
25 I am confident that NationsBank and Bank of America will
26 continue the good faith efforts to meet the needs of our
47
1 California communities.
2 Specifically, I would appreciate your response to
3 the following questions. One, does the bank intend to
4 earmark a portion of the 350 billion to California? Given
5 Bank of America's dominance in California, it's critical
6 that the community reinvestment commitment be California
7 specific and commensurate with the proportion of the
8 bank's deposits and activities originating in the state.
9 How will the institution fulfill regional
10 commitments within California given the geographical,
11 social and ethnic diversity of our communities? What
12 culturally appropriate products and services will be
13 available to consumers considering the various credit,
14 investment and economic development needs of our state's
15 communities?
16 Second, how will the new bank maintain and expand
17 Bank of America's present programs and commitments in
18 California such as the Community Development Bank, Rural
19 2000 Initiative, Economic Development Initiative, the
20 BankAmerica Foundation and affordable housing activities?
21 It is vital that these programs be distinct entities
22 within the merged bank and continue to be based in
23 California, given the tremendous need in our state and the
24 collective expertise Bank of America has acquired in
25 serving our communities.
26 Third, what will be the bank's specific goals on
48
1 the type and amounts of loan for minority or women-owned
2 businesses -- small businesses and home loans?
3 Fourth, how will the new bank minimize branch
4 closings and increase branch openings in regions and
5 communities that are presently underserved by traditional
6 banking institutions.
7 And finally, does the new bank intend to lower or
8 stabilize ATM and bank fees? I am very concerned about
9 rising bank fees and their adverse impact on financially
10 underserved and low-income communities.
11 A dedicated commitment to California is an
12 exciting and challenging opportunity for banks. This
13 merger has the potential to create mutually beneficial
14 outcomes for both consumers and banks, given ever growing
15 entrepreneurial immigrant communities, expanding small
16 business markets and the booming economy.
17 I look forward to working with you to meet these
18 above-mentioned goals and anticipate your prompt reply.
19 Sincerely, Lucille Roybal-Allard, Member of Congress.
20 MS. SMITH: Thank you.
21 MR. LENO: Good morning and thank you very much
22 for your warm welcome. My name is Mark Leno and I'm a
23 member of the Board of Supervisors for the City and County
24 of San Francisco.
25 Since NationsBank announced in April that it
26 would acquire Bank of America, the San Francisco Board of
49
1 Supervisors has been very concerned about the potential
2 decline and community reinvestment that could result from
3 the proposed merger. We, the undersigned, believe that
4 the proposed Bank of America/NationsBank $350 billion
5 community reinvestment commitment should be included in
6 the bank's intermerger application to make it binding on
7 the new bank.
8 Also, we have asked NationsBank/Bank of America
9 to provide specific commitments to California and the
10 San Francisco Bay Area and its small businesses, minority
11 businesses, minority and low-income neighborhoods and
12 nonprofit organizations. We have concern that consumer
13 services, small business lending, low-income housing and
14 charitable giving may all be negatively affected by the
15 NationsBank acquisition.
16 There is cause for concern that the new bank may
17 not be as responsive to the needs of San Francisco and the
18 Bay Area. In general, larger banks mean higher fees,
19 fewer bank branches, fewer product options and fewer
20 banking options for consumers. A Federal Reserve survey
21 of bank fees and interest rates reveals that, on average,
22 large banks charge higher fees than small banks with an
23 average monthly fee on interest-bearing checking accounts
24 of $10.12 at large banks and $6.13 at small banks. By
25 contrast, the average yield on interest-bearing accounts
26 is 1.1 percent at large banks and 1.58 percent at small
50
1 ones.
2 With bank mergers comes the possibility of bank
3 closures. The National Community Reinvestment Coalition
4 has noted that mergers lead to fewer branches in
5 underserved communities. A 1997 Federal Reserve study
6 found that from 1980 through 1995 branches in middle and
7 moderate income neighborhoods increased eight percent
8 while branches in low- and moderate-income neighborhoods
9 decreased 14 percent. The closure of a branch in a
10 low-income neighborhood could reduce lending in the area,
11 and in turn, spur the decline of the neighborhood. In
12 addition, when bank branches close, teller and other bank
13 jobs disappear.
14 Small business lending is also affected by
15 mergers. A study by Federal Reserve economists predict
16 that small business lending will continue to decline in
17 the next three to five years at the rate of 33 percent.
18 This is the same rate of decline as that of the last five
19 years. A February '98 study of the Federal Reserve Bank
20 of San Francisco found subtle discrimination in lending
21 against minority businesses in the Bay Area. If community
22 reinvestment is diminished in the Bay Area, minority
23 businesses will be the first to suffer.
24 A decline in lending to small and minority-owned
25 businesses would also affect the city's ability to meet
26 our welfare-to-work mandate. The city is counting on
51
1 small businesses to play a significant role in providing
2 jobs for those moving from welfare to work. Small
3 businesses are creating more jobs than larger businesses
4 in the Bay Area and, therefore, more opportunities for
5 welfare recipients. King Security, a local small
6 business, was the first to hire welfare-to-work recipients
7 in San Francisco.
8 NationsBank's record of community reinvestment
9 raises additional concerns. For example, Bank of
10 America's level of lending for low-income households in
11 California is 21.3 percent, but NationsBank's level of
12 lending for low-income households in North Carolina is
13 only 6.3 percent compared to an average for all lenders of
14 8.4 percent.
15 There is a litany of additional questions
16 regarding the activities of NationsBank. As of March
17 1998, NationsBank offered one of the most expensive
18 checking accounts in the country. NationsBank was
19 recently fined $7 million by Wall Street regulators for
20 illegally selling high risk mutual funds to unwary, and
21 mostly elderly, investors. NationsBank is in the process
22 of closing 205 branches in Florida since its purchase of
23 Barnett Bank in 1997. State regulators in Texas are
24 examining NationsBank's transfer of almost half of the
25 bank's Dallas deposits to its corporate headquarters in
26 Charlotte, North Carolina in April to determine if the
52
1 transfer was an attempt to circumvent the state's merger
2 rules.
3 Given that California will suffer the most with
4 the acquisition and loss of Bank of America, we believe a
5 major proportion of the $350 billion community
6 reinvestment pledge should be committed to California. To
7 date, we have not received any commitments, and we
8 understand that the bank will not establish specific goals
9 until after the completion of the merger. The bank merger
10 should be -- the bank should be directed to outline
11 specific community reinvestments in their intermerger
12 application. Our communities deserve a stronger show of
13 commitments to the specific needs of the San Francisco Bay
14 Area. The possible loss of Bank of America, a bank with a
15 proven record of community reinvestment would be
16 devastating and specific commitments are necessary.
17 This is cosigned by my colleagues on the board
18 Michael Yaki, Tom Ammiano, Sue Bierman, Amos Brown, Leslie
19 Katz and Jose Medina. I thank you very much.
20 MS. SMITH: Thank you very much. Are there any
21 questions?
22 MR. FRIERSON: I'd like to thank all of the
23 panelists for coming and sharing your views with us this
24 morning.
25 Mr. Leno, I just have one question from you.
26 Could you provide us with a little more detail on this
53
1 February 1998 study showing the subtle discrimination?
2 And you can just provide that to us. We can proceed to
3 track down that stuff.
4 MR. LENO: I certainly will.
5 MR. FRIERSON: Thank you very much.
6 MS. SMITH: Any other questions? Fine. Thank
7 you very much for coming today and we will go on to the
8 next panel. I might mention that this is a very large
9 panel as you will see on the agenda, however, the time
10 allocations have all been made to fit within a 50 minute
11 period.
12 Mr. Gamboa.
13 MR. GAMBOA: Yes, thank you. Before I start, I
14 want to also express my appreciation for you for holding
15 these hearings. And I have a procedural matter I'd like
16 to raise before my timed testimony takes place. I know
17 from reading up about you that you are attempting to do
18 the best job you can in making a determination on this
19 bank merger. And to do that job, I know you want to get
20 as much fair testimony balanced as possible. So I'm going
21 to make a procedural request. I'm not an attorney, so
22 bear with me, please.
23 And the procedural request is, since you're only
24 having one hearing, that limits grassroots community
25 organizations who don't have the resources to come here
26 today to give testimony. I think you should weigh that in
54
1 when you hear from other organizations that are supported
2 by Bank of America who pay their travel. That will give
3 you good information, the kind of information to give a
4 balanced approach to make a decision.
5 The other thing that's critical is information
6 that you should use in determining this merger is there
7 are numerous, I understand, outstanding discrimination
8 complaints against NationsBank. That information and
9 those should be resolved and you should have that
10 information before you make a determination. I think that
11 would be critical information for you in coming to a
12 conclusion. Or a decision.
13 And, also, there is a CRA review being made now.
14 I think that also will provide you with critical
15 information. I don't think any decision should be made
16 until you're able to assess that CRA review of these
17 financial institutions. That kind of information I think
18 would be extremely helpful for you to coming to a fair
19 decision that I know you will come to.
20 MS. SMITH: Thank you for your comments and
21 observations. And then if we may go to your presentation.
22 MR. GAMBOA: Certainly. I agree with Mr. McColl
23 in one statement he made, that this hearing is not about a
24 bank merger. I think it's a little bit more than what he
25 said than community investment. I think it's about what
26 kind of a country we want to be. It's about a fair chance
55
1 for the underserved community, the poor minority, recent
2 immigrants to achieve the dream that most of us here today
3 enjoy, the ownership of a home, and a safe neighborhood
4 with good schools for the children, a chance for
5 employment that provides a fair wage and health insurance
6 for the family. I think that's what we're discussing
7 today.
8 This dream is not being realized for far too many
9 people, far too many people today. We're involved right
10 now in probably the most unprecedented booming economy
11 ever in this country, and yet that economy is not being
12 equally shared across this country.
13 For instance, every day you see in the newspaper,
14 you read the rich are getting richer and the poor are
15 getting poorer. This economy is not being balanced out
16 and spread out evenly. For instance, the national child
17 poverty rate grew BY 26 percent from 1970 to 1997. Entry
18 level wages for male high school graduates fell 28 percent
19 from 1973 to 1998 in real dollars. 80 percent of white
20 families in this country own their own homes. 40 percent
21 of minorities do. 71 million low-income children have no
22 health insurance, yet most of their parents are working.
23 In the richest nation ever in the history of the world,
24 over one million children will not have an adequate meal
25 the day before their parents are made. You may ask what
26 does this have to do with a bank merger? I think it has
56
1 everything to do with a bank merger. In the first place,
2 it's not a merger, it's an acquisition.
3 You heard today Hugh McColl make a commitment of
4 $350 billion, a CRA commitment. Well, I can state that
5 that commitment is hollow. It's hollow because CRA,
6 itself, has -- is weak. CRA does not -- will allow
7 financial institutions to receive outstanding ratings, and
8 have before in the past, that have made zero, and I mean
9 zero, not one loan to an African American family, that's
10 what CRA can do. And the reason that we have requested
11 definitive commitments in that CRA commitment is because
12 the track record of the financial institution is not good.
13 For instance, you heard Hugh McColl speak about
14 the millions of dollars. I was impressed when I sat in
15 that chair right there and when I heard him talk about
16 these millions of dollars. What you did not hear him
17 speak about is the percentage of the billions of dollars
18 they have. That is much more meaningful. We can get
19 swayed when people talk about a million dollars because
20 that's a lot of money to me and to most people in this
21 room. But it's not a lot of money when you look at the
22 amount of money they have.
23 For instance, less than one percent of the total
24 dollar amount of NationsBank loans went to African
25 American owned businesses. Less than two percent of the
26 total dollar amount of the NationsBank business loan went
57
1 to African American owned businesses. Less than two
2 percent of the dollar amount of BofA's home lending
3 dollars went to African American households. And adjusted
4 for differences in population, BofA has a similar report
5 lending record among Latinos and Asian Americans. And
6 neither bank has goals for minority business contracts.
7 That's the kind of record that this financial institution
8 has.
9 What we are asking them to do is not to do any
10 precedent setting but to match the CRA commitments that
11 other good financial institutions have done. Wells Fargo,
12 NationsBank -- Wells Fargo and WaMu, Home Savings, Union
13 Bank, CoAmerica and others have all made specific
14 commitments because they're not afraid to make those kind
15 of commitments because they know they will meet them. But
16 NationsBank is the only large bank and Bank of America who
17 have refused to make these commitments to our community.
18 Why? If they're sincere about making them, they should
19 put them down and put it into the record. I can only
20 guess that they're not sincere about doing it.
21 We have met with CEO of NationsBank and BofA a
22 couple of times and they have said, "We're against
23 quotas." Well, our community is against quotas, too,
24 because quotas have always frozen us out. But every
25 single business organization sets goals. The commitments
26 we're asking are goals, not quotas. It's not any
58
1 different than any part of the working business. You set
2 goals in sales, you set goals in marketing, you set goals
3 in service. We're telling them to set goals in the CRA,
4 it's no different.
5 Lastly, I'll conclude, Dave Coulter said that
6 BofA was The Movie Bank. I guess it should be something
7 to be proud of, I wouldn't be. I think what we're asking
8 for Bank of America and NationsBank to be is a moving
9 bank, moving to reach out to our communities, to make
10 money by providing new services and products and doing
11 good in our community. It will be a win-win solution, a
12 win for them, they'll receive income and profits, and
13 certainly a win for our community, but they cannot do that
14 without creating a work force that matches the diversity
15 of the marketplace they want to reach. Both banks have
16 refused to provide us with the data of their top
17 management.
18 And one other thing, too, is that they talked
19 about their charitable contributions and how they should
20 get lots of credit for their charitable contributions.
21 But if you look at their charitable contributions, they're
22 doing about one-half of what the banks I have previously
23 mentioned in percentages. And if you look at their
24 charitable contributions, I think the total for one of the
25 banks was $77 million, it looks real impressive. But when
26 you look at the income of just a few, a handful of those
59
1 executives who make those decisions, it was $88 million.
2 That's not much of a charitable contribution. Thank you.
3 MR. FISHER: Good morning. I'm Alan Fisher from
4 the California Reinvestment Committee. We're a statewide
5 coalition of more than 190 nonprofits and public agencies
6 that advocate for increased access to banking for
7 low-income communities and communities of color. We've
8 negotiated CRA agreements with all the major California
9 financial institutions over the last decade.
10 I was interested in listening to Mr. McColl talk
11 about some of the fine things that the bank has done.
12 Many of those things has come out of discussions with CRC
13 members and other community organizations, Greenlining, et
14 cetera, that has really moved the bank on. And I think
15 that's one of the worrisome things that I'll get to about
16 the press release that talks about $350 billion. That's
17 preemptive of community discussion.
18 You'll hear CRC members speak on this panel and
19 other panels today representing their community and
20 community development organization because CRA is about
21 local neighborhoods, it's not about 22 states all at one
22 shot, it's about what happens in particular neighborhoods.
23 We have concerns about this, and clearly as you've heard
24 today, the majority of the California Congress people on
25 the Banking Committee, the L.A. City Council, the
26 San Francisco Board of Supervisors and other elected
60
1 officials have, as well.
2 It worries us, not only because it's the sale of
3 a great California bank, because from our point of view
4 it's not a merger, it's an acquisition of Bank of America.
5 But the loss of that headquarters to a bank that's
6 headquartered 3,000 miles away and to a bank that has
7 refused to make a specific CRA commitment to California
8 and its diverse communities, therefore, we oppose this
9 acquisition.
10 More than 300 of our members and other California
11 organizations and individuals joined with us writing in to
12 the Federal Reserve calling for hearings and we are
13 pleased that you are holding hearings in at least this one
14 location of the 22 states. But, again, we call on you to
15 hold hearings throughout California and in the other
16 states affected because CRA is about what happens in local
17 communities.
18 Anyone can see by the amount of response to this
19 hearing that one hearing alone is tokenism. We all know
20 that a hearing itself is not the same as the sort of
21 regulatory oversight that you'll have to have over these
22 22 states. So we hope that this one hearing is not a
23 portent of the level of oversight that there will be.
24 I'm going to try and just hit on a few specific
25 points today and our letter will go into more detail. I
26 mean, our concerns are such that I could probably talk all
61
1 day.
2 I'm not a lawyer, either, I didn't know that John
3 and Bob were going to raise this issue about people
4 traveling here, but I have a somewhat different suggestion
5 in terms of speakers. I know you're going to hear a great
6 many people. In the interest of a clear record, I would
7 recommend the following. That if grantees of either bank
8 testify against the merger, their testimony should be
9 given a plus 2. If grantees of either bank have been paid
10 expenses to testify, they're testimony should receive a
11 minus 2 and so forth.
12 So, again, community reinvestment is about access
13 to banking for neighborhoods. It's about a bank
14 affirmatively meeting the local needs of low-income people
15 and people of color. So we worry when NationsBank
16 preemptively sums up 22 states in a three-page big dollar
17 press release with nice phrases and little substance. It
18 presumes that they know better than the communities about
19 what the needs are.
20 We've met several times with the bank and would
21 sum up the last meeting and the ones before as saying that
22 they say no very nicely. This is particularly worrisome
23 because, as far as we're concerned, California came into
24 this takeover with, one, a 1992 commitment letter from
25 Richard Rosenberg, CEO of Bank of America, that was a very
26 good specific commitment which is still in effect, as far
62
1 as we're concerned, it has no ending date.
2 Secondly, last year Bank of America upped its
3 1992 goal to 140 billion of which the bank has stated that
4 70 billion is for California communities.
5 Thirdly, the commitment for $40 billion -- $40
6 million, all these big numbers, 40 million dollars in 1998
7 charitable contributions of which, from our calculations,
8 roughly 25 million was for California and 25 percent for
9 community economic development and housing development.
10 Bank of America also, as you've heard, has made
11 commitments around the economic development and rural
12 initiatives that were just beginning to be defined and are
13 still being defined. There needs to be a specific CRA
14 commitment by NationsBank to California that addresses the
15 diverse needs of California's communities, retains the
16 Community Development Bank with its mission to build a
17 nonprofit infrastructure and not compete with it, gives
18 clear dollar amounts and objectives for the economic
19 development and rural initiatives, honors the written
20 commitments and practices of BofA and targets those most
21 in need.
22 Your own studies cast doubt on the real value for
23 sharholders and customers in such mega-mergers. From the
24 altitude of $570 billion in assets, will such a monolithic
25 bank even see local neighborhoods? Without a specific
26 measurable commitment, NationsBank can ignore all but the
63
1 most profitable customers. Bigger is not better, as far
2 as we're concerned, and less neighborhoods are affected.
3 We think that this merger will -- this merger, acquisition
4 will decrease competition.
5 After all, this is a bank, as was said before,
6 that has a worse record in 1996 making home loans to
7 African Americans in its home state than Bank of America
8 did in North Carolina.
9 Every major bank merger in California has
10 included a specific commitment since Richard Rosenberg's
11 1992 letter. BofA set a standard that NationsBank is
12 undercutting and obliterating.
13 If the Federal Reserve wants to maintain
14 progress, it must condition any approval on a specific and
15 enforcible commitment. In addition, this bank has a
16 concentration that is extremely worrisome from our point
17 of view. It has almost nine percent of the national
18 market share but it's only in 22 states. In those 22
19 states, it has a one percent market share in almost every
20 state, and we think that's of grave concern in terms of
21 competition and access for those who are, quote,
22 "unprofitable."
23 So, again, thank you for the opportunity to
24 speak.
25 MR. BIVINS: Good morning, my name is George
26 Bivins, I'm the Chairman of the Black Association of
64
1 Los Angeles. We have over 850 African American business
2 owners. Many of those business owners are customers of
3 the Bank of America.
4 Take any statistics compiled by local, state or
5 federal government regarding banking, including the many
6 statistical reports compiled by independent surveys, and
7 you will find African American -- African Americans are
8 consistently benefiting less from banks, S&Ls and thrifts.
9 Government regulators must take action to protect us.
10 My colleagues and I would not be here today if
11 Bank of America and NationsBank were good corporate
12 citizens. The Black Business Association shares the lack
13 of confidence of this merger along with the National Black
14 Business Council and the National Black Chambers of
15 Commerce. These three organizations nationwide represent
16 over 75,000 black businesses nationwide. We are prepared
17 to prove that less than one percent of the dollar value of
18 all business loans lent by these two banks went to African
19 American businesses. What we have here is a clear case of
20 white wealth built on minorities' labor. We have a clear
21 case of white wealth built on minority labor. Regulators
22 hear are plea.
23 The black community demands inclusion, inclusion
24 leads to growth, exclusion leads to poverty for all our
25 communities. Regulators, hear our plea.
26 Less than two percent of the Bank of America and
65
1 NationsBank vendor contracts are awarded to African
2 Americans. Unlike its competitors of Wells Fargo, Union
3 Bank and Sanwa Bank.
4 I will give you an example, a clear example of
5 this. I am in the insurance business and I am the
6 insurance agent for Sanwa Bank which is the fourth largest
7 bank in this state. Bank of America will not even give me
8 an appointment to come in and present my product to them.
9 I have tried for five years. This is a personal
10 experience that I can tell you. And I'm a very good
11 insurance agent, I've been in the business 26 years, I
12 compete with the same insurance agents for business of
13 Bank of America as I did with Sanwa Bank and I beat the
14 price. So what does this tell you? I am just as
15 qualified or even more qualified than some of the vendors
16 that call on Bank of America, but they choose not to even
17 give me an appointment.
18 Inclusion leads to growth, exclusion leads to
19 poverty. Regulators, please hear our plea.
20 They are willing to set goals of any kind. They
21 throw out large numbers such as $350 billion CRA
22 commitment. How do we monitor this? Regulators, hear our
23 plea.
24 There are many pending race discrimination cases
25 which were brought out earlier before the Justice
26 Department. While these cases are waiting to be heard,
66
1 the large number of cases filed would suggest there is a
2 definite problem with the validity of these cases. Some
3 of these cases must be valid. Regulators, hear our plea.
4 Bank of America lost millions of dollars overseas
5 but were bailed out by the IMF but minorities can't get a
6 small business loan. Regulators, please hear our plea.
7 Is this the outline of a good corporate citizen?
8 This is how Bank of America and NationsBank represent
9 themselves to you, but they can't fool us. We have had
10 the opportunity to deal with them on a firsthand basis.
11 This merger brings capitalism to our communities but
12 without capital.
13 During the civil rights movement, we won
14 everything we fought for but we don't have what we need.
15 Regulators, please hear our plea. Thank you very much.
16 MS. ORR-SMITH: Good morning, my name is Gayle
17 Orr-Smith and I'm here representing the San Francisco
18 chapter of National Association of Negro Business and
19 Professional Women.
20 My focus today would be to introduce to Bank of
21 America some data about minority women in business. And I
22 offer this testimony and this information because of the
23 dismal record that NationsBank and Bank of America have
24 with providing loans to minority women business owners.
25 Also, there's a caution in my remarks that, when you
26 target women, you're targeting majority women, white
67
1 women, non-minority women in their outreach for small
2 business loans. When you target minorities, you target
3 minority women, as well. Very often, that segment of the
4 target group is really underrepresented and underfocused
5 on as a target group.
6 Bank of America and Nations have said they don't
7 need specific goals. But I think after hearing some of
8 this data you might agree with me that there should be
9 some targets for this particular segment.
10 One in eight or 13 percent of nearly eight
11 million women owned businesses in the United States is
12 owned by a woman of color. These 1.2 million minority
13 owned firms employ 1.2 million people and generate nearly
14 $200 billion in sales annually. Over one-third or 37
15 percent of minority owned business firms are owned by
16 blacks, roughly 400,000 firms. 35 percent are owned by
17 Hispanic women, roughly 380,000. And 28 percent are owned
18 by women of Asian, American Indian or Alaskan native
19 heritage, 300,000 firms.
20 Between 1987 and 1996, the number of minority
21 owned women firms has increased about 153 percent. It has
22 increased by 206 percent among Hispanic women owned firms,
23 by 138 percent among Asian and other women owned firms,
24 and by 135 percent by black or African American women
25 owned firms.
26 Between 1987 and 1996, employment, that is jobs,
68
1 within these firms, among all minority firms, has
2 increased nearly fourfold or roughly 300 percent. It has
3 grown by 487 percent among Hispanic women owned firms, by
4 319 percent among Asian and other Native American firms
5 and by 70 percent among black women owned firms.
6 Between 1987 and 1986, sales, that is revenues
7 generated, by all minority women owned firms has increased
8 fourfold as well, up to 318 percent. It has jumped by 534
9 percent among Hispanic women owned firms and by 430
10 percent among Asian and others, and 55 percent among black
11 women owned firms. And it will be interesting to know the
12 top ten states for minority businesses, based on the
13 average ranking of the number of firms, employment and
14 sales, are number one, guess, California. Number two,
15 Texas, Florida, New York, Illinois, Virginia, Maryland,
16 New Jersey, Hawaii, and Washington, D.C.
17 Now, just think what the bank could accomplish if
18 it were targeting small business loans to minority
19 business women. This data is provided by the National
20 Foundation of Women Business Owners in Washington, D.C.
21 who extrapolate such data, and this data has been used by
22 many corporations to market and target women owned
23 businesses as a market group because their revenues and
24 their sales and their growth demonstrates that they need
25 this kind of attention. And I think this would be a key
26 opportunity for Bank of America and Nations to look at an
69
1 entirely new market segment and recognize these women as
2 contributing to the national economy.
3 They say that their programs of goal setting
4 doesn't need specifics, they say that their minimum goals
5 and commitments are a floor. Well, I tell you without a
6 clear plan and strategy, a floor can quickly become a
7 ceiling. And if you're looking at local versus national,
8 at least here in California we've had the benefit of
9 working closely with BofA. They've been able to listen
10 and we can work with them. There's still room for growth,
11 but I don't know how much more effective they will be and
12 how effective we'll be talking to North Carolina, so we
13 think local is better.
14 And without clear goals, many things can affect
15 your commitment or the corporate commitment over time,
16 there's erosion as a result of personnel changes. How do
17 we know that McColl and Coulter are going to stay at the
18 helm and, in fact, their legacy or their commitment to
19 minority outreach, as they stated, will, in fact, stay in
20 place when personnel changes occur.
21 And then a leadership philosophy is more than
22 just words, it means that it has to be communicated
23 throughout the organization and enforced and incentives
24 provided within the corporation to ensure that all of the
25 local affiliates and associates of the branch and of the
26 bank adhere to the goals and standards that are set at the
70
1 highest level.
2 Targets and measurable data help us to know where
3 we've been, where we're going and can focus us to be
4 effective in targeting where the greatest need is and the
5 greatest opportunity for economic gain by the banks,
6 themselves. We're seeking a win-win relationship and we
7 believe that targets, established goals with clear
8 strategies where minorities and others can work with the
9 bank to achieve these goals will be the maximum benefit
10 for everybody concerned. Thank you.
11 MS. ADAMS: Members of the Federal Reserve, my
12 name is Stella Addams and I'm the Executive Director of
13 the North Carolina Fair Housing Center and I bring you
14 greetings today on behalf of the people from the woods and
15 the hoods of North Carolina. Our state motto is to be
16 rather than to seem.
17 The people of North Carolina want to be
18 homeowners. The people of North Carolina want to be
19 entrepreneurs and business owners. The people of North
20 Carolina want to be residents in safe and healthy
21 neighborhoods. The people of North Carolina want to
22 reside in communities that are economically and socially
23 integrated. The people of North Carolina want to be
24 catalysts for positive change in their communities.
25 By contrast, NationsBank seems to be a leader in
26 lending to minorities. NationsBank seems to be a leader
71
1 in lending to small minority business people. NationsBank
2 seems to be a leader in community reinvestment.
3 But I can honestly say to you that Nations
4 expansion west has reduced its commitment at home. When
5 NationsBank first merged with C&S/Sovran, it was the
6 number one bank in North Carolina. Now, it is the number
7 five bank in our state. It used to be the best bank in
8 the neighborhood. You ask any native tarheel whose slogan
9 that was and they will readily tell you it was NCNB. But
10 now that it has a focus on being the best bank in the
11 world, our neighborhoods in North Carolina have become
12 insignificant. We are worried about our future with this
13 bank. How long will it be profitable to remain
14 headquartered in a state in which you are not competitive?
15 Nations certainly shows no interest in obtaining
16 greater market share in our state. When we shared our
17 concerns with them about their sixth place placement in
18 small business lending in North Carolina, they had a sort
19 of "What do you expect? We're not the biggest bank in the
20 state" attitude. Well, when I share with their
21 competitors where they're missing the mark, they have a
22 "What can we do together to improve" attitude.
23 NationsBank's commitment to community
24 reinvestment is all smoke and mirrors. This is easy to do
25 when one has no set targets, no set goals. Who then can
26 question whether or not you have done enough? Who then
72
1 can say that you've accomplished anythi