Public Hearing Regarding Bank of America Corporation,
and FleetBoston Financial Corporation
Held on Wednesday, January 14, 2004, at the Federal Reserve Bank of
Boston
Unedited Transcript
|
Public Hearing Regarding Bank of America Corporation,
and FleetBoston Financial Corporation |
0001
1 Volume I
Pages 1 - 423
2
3 FEDERAL RESERVE BOARD
4
Public Hearing Re
5
Application of Bank of America Corporation
6 To Acquire
FleetBoston Financial Corporation
7
8
9 Before Federal Reserve Panal:
10 Dolores Smith, Presiding Officer
Mac Alfriend
11 William McDonough
Patricia Robinson
12
13
* * * *
14
15
Held at:
16 Federal Reserve Bank of Boston
600 Atlantic Avenue
17 Boston, Massachusetts
Wednesday, January 14, 2004
18 8:30 a.m.
19
20
21 Jane M. Williamson
Registered Merit Reporter
22 Carol H. Kusinitz
Registered Professional Reporter
23
24
. 0002
1 P R O C E E D I N G S
2 PRESIDING OFFICER SMITH: I am pleased to
3 welcome you to this important public meeting on the
4 application by Bank of America Corporation to
5 acquire Fleet Financial Corporation. And I'll start
6 by introducing myself.
7 I'm Dolores Smith, the Division Director
8 for Consumer and Community Affairs at the Federal
9 Reserve Board in Washington, D.C. I'm the presiding
10 officer for this public meeting. And I want to
11 introduce our other panelists.
12 At the far end is Bill McDonough, who is
13 general counsel from the Federal Reserve Bank of
14 Boston. Next to him is Mac Alfriend, Senior Vice
15 President, Banking Supervision and Regulation from
16 the Federal Reserve Bank of Richmond. And Pat
17 Robinson, Managing Senior Counsel, Legal Division,
18 from the Federal Reserve Board.
19 We are here today because Bank of America
20 Corporation, Charlotte, North Carolina, has applied
21 for approval to acquire FleetBoston Financial
22 Corporation, Boston, Massachusetts.
23 When the Federal Reserve system considers
24 one of these applications, we look at a number of
. 0003
1 factors under the Bank Holding Company Act. These
2 include financial issues, managerial issues,
3 competitive issues and the convenience and needs of
4 the communities affected.
5 In doing so, we particularly look at the
6 record of performance of the parties under the
7 Community Reinvestment Act. The CRA requires the
8 board to take into account an institution's record
9 of meeting the credit needs of its entire community.
10 The purpose of the public meeting today is
11 to receive information regarding these factors. We
12 will be seeking to elicit this information and to
13 clarify factual issues related to the application.
14 We are really very pleased that so many witnesses
15 have been willing to come and testify at this public
16 meeting. We will have more than 100 groups and
17 individuals represented.
18 I'll make a few remarks about the
19 procedures. This is what we call an informal public
20 meeting. Members of the panel may ask those who are
21 testifying about their testimony. This is not a
22 formal administrative hearing, so we are not bound
23 by rules regarding evidence, cross examinations and
24 some of the formal trappings of that kind of
. 0004
1 proceeding. And because we have so many witnesses,
2 we do need to stick to the schedule, so that
3 everyone who has asked to offer oral testimony will
4 have a chance to do so. We are going to ask the
5 witnesses today to be mindful of the needs of others
6 and to help us stay on schedule.
7 The panels of witnesses have been assigned
8 times and will be expected to stay within those
9 allotted times. We do have a signal system with
10 regard to timing. We have two timers at the table
11 here in front. And the timekeepers will be giving a
12 signal when the witness has one minute left to speak
13 and another signal when the time has expired.
14 There may be some individuals who were
15 unable to sign up in advance to offer testimony. To
16 the extent possible, we want to give them a chance
17 to speak as well. And so at the end of the meeting
18 today we will make the mic available to anyone who
19 would like to make a presentation, time-permitting.
20 One more comment about testimony.
21 Witnesses may submit a written supplement to their
22 oral testimony, but must do so by next Wednesday,
23 January 21st. And then the record will be closed.
24 Any written supplements should be directed to -- and
. 0005
1 here I'm going to give information for the record --
2 but the information also is available on a sheet
3 that is available out front at the registration
4 desk. So any written supplements should be directed
5 to Jennifer J. Johnson, Secretary of the Board of
6 Governors of the Federal Reserve, Washington, D.C.
7 They must be received by 5 p.m. eastern daylight
8 time on January 21st. You may also fax your
9 submission to 202-452-3462.
10 If you haven't turned in copies of your
11 written testimony or if you have any other written
12 statements to put into the record, please leave them
13 with the Federal Reserve staff at the registration
14 desk. It is important for us to get this material
15 for the record.
16 A paper copy of the official transcript of
17 the meeting will be available on Tuesday, January
18 20th, through the Federal Reserve Bank of Boston and
19 the Federal Reserve Board. In addition, the
20 official transcript will be available by close of
21 business on January 20th on the board's public
22 website. And here again I'll say the address, but
23 the information is available at the registration
24 table. The board's public website is
. 0006
1 www.federalreserve.gov/events/public meetings/.
2 With that, we are ready to begin. I will
3 ask each of the panels to start by saying their name
4 and the name of their organization.
5 Mr. Lewis?
6 MR. LEWIS: My name is Ken Lewis. I'm the
7 CEO of Bank of America.
8 MR. GIFFORD: My name is Chad Gifford. I'm
9 CEO of Bank of Boston.
10 PRESIDING OFFICER SMITH: Proceed.
11 MR. GIFFORD: Good morning. Thank you, Ms.
12 Smith. My name is Chad Gifford. I'm chairman and
13 CEO Bank of Boston Financial.
14 I'm delighted to be joined by my new
15 partner, Ken Lewis of Bank of America. On behalf of
16 both of organizations, I'd like to begin by thanking
17 the Federal Reserve for inviting us to address the
18 proposed merger of our two institutions. We welcome
19 this opportunity to discuss some of the reasons
20 behind and benefits of this merger and why we
21 believe this merger is in the best interests of all
22 of our stakeholders -- customers, employees, and
23 communities, as well as our shareholders.
24 In the two months since we announced our
. 0007
1 intention to combine our two organizations, we have
2 worked diligently and honestly to communicate openly
3 about what this merger will mean to the residents
4 and businesses located here in the northeast.
5 Many of our colleagues of Bank of America
6 and Fleet have collectively met with more than 150
7 community-based organizations across this region.
8 The team's mission has been to ensure that we
9 understand and continue to do our very best to meet
10 the needs of our communities.
11 This is certainly not a new scenario for
12 the region and particularly for New England, since
13 it was just over four years ago that I sat before
14 many of you here today to present the case for the
15 Fleet/BankBoston merger. At that time the level of
16 discussion was about preserving our Boston-based
17 institutions. Looking back at the questions that
18 particular deal raised, we believe the merger was
19 the right decision at the right time for our two
20 banks and for the local communities.
21 The rightness of that decision has been
22 playing out in what most of you is a very successful
23 melding of two powerful competitors into a singular
24 customer community and employee-focused institution.
. 0008
1 The FleetBoston franchise brought to the region a
2 full range of community development efforts, most
3 notably through our $14.6 billion community
4 investment commitment. I'm proud to say that we are
5 entering this new relationship with Bank of America
6 having already surpassed this five-year commitment
7 in just four years.
8 To date, the lending and investment efforts
9 total $18.4 billion across the northeast. This has
10 been a truly bank-wide effort calling on the skills
11 and commitment of numerous businesses at Fleet. In
12 other words, we followed through on what we said we
13 would deliver. Incidentally, we are grateful for
14 the dedication of our community oversight committee,
15 a group of regional community leaders which has
16 faithfully met with us over these past four years to
17 provide feedback and community insights that helped
18 accelerate our results.
19 Through our efforts in the community, Fleet
20 received outstanding ratings from our chief
21 regulators, the OCC, in our last CRA exam, including
22 the overall rating as well as in each of the exam
23 categories of lending, investment and services.
24 Bank of America has also earned this
. 0009
1 highest rating, as Ken will outline in a few
2 minutes.
3 Specifically in our community, impact has
4 been felt through, one, focus on our serving low and
5 moderate income neighborhoods through our Fleet
6 Community Bank. FCB is an absolute leader in the
7 nation in this effort.
8 Second, leadership and funding non-profits
9 that support economic activity, youth services and
10 arts and culture throughout the region with
11 approximately $25 million in charitable giving in
12 grants each year.
13 And finally, with the support of our
14 greatest assets, our own people, Fleet employees,
15 volunteers have contributed more than 120,000 hours
16 to community projects each year.
17 I'm proud of where our community's efforts
18 have taken us over these past four years, and I'm
19 proud of our employees and of the company we are
20 today. However, over these past four years the
21 stakes within the financial services industry have
22 gotten much higher. As successful and well
23 regarded, we believe, that the Fleet organization
24 has become, it is significantly more difficult to
. 0010
1 survive solely on a regional level.
2 Recognizing this industry reality, my own
3 struggle internally centered on considering the
4 alternative. Preserving the hometown bank in our
5 region was a passionate and a very personal factor
6 for me.
7 I'm the son of a former New England banker
8 with deep roots in the financial services industry
9 in this region. I take it very seriously. But
10 doing what's best for our franchise, given the
11 realities of financial services, it became more
12 important than simply preserving the Boston base.
13 Thankfully we were in a position where we didn't
14 have to do a deal to survive.
15 We turned the corner on revenue, credit
16 quality, customer service and employee morale. We
17 could operate from a position of strength. We
18 therefore had the time to carefully consider a
19 partner that best matched our deeply-held values in
20 addition to business synergies. We also looked to
21 create the least amount of disruption and change for
22 our customers in our community and our own
23 employees.
24 In that line of thinking, let us digest one
. 0011
1 national franchise, Bank of America. The benefits
2 that this merger with Bank of America present to the
3 region will allow for a secure economic future by
4 providing the financial depth and resources that
5 will meet the competitive challenges raised by
6 worldwide financial service consolidation.
7 Our excitement at the prospect of being
8 part of one of the most respected corporations in
9 the United States is palpable throughout Fleet. Our
10 people recognize the tremendous opportunities and
11 resources this merger will bring to our region and
12 to them personally and professionally.
13 I will tell you that a key component of our
14 agreement was the unprecedented commitment by Ken to
15 maintain Fleet's current employment level in New
16 England, as well as our charitable giving and
17 existing community commitments throughout the Fleet
18 region post-merger. But the rationale and benefits
19 of this proposed merger go much deeper. It creates
20 the second largest financial institution in the
21 United States; in fact, No. 1, when one looks at
22 only American assets.
23 The new organization, with increased size
24 and strength, will be in a position to achieve the
. 0012
1 economies of scale that allow us to invest more in
2 technology, more in people and to develop superior
3 products, the best, and services, such as online
4 banking, brokerage and investment services.
5 This strengthened portfolio of products and
6 services ensures that we can match the increasingly
7 sophisticated needs and expectations of both
8 businesses and the consumers we serve.
9 My confidence in this agreement and its
10 benefits to local communities rests in the
11 tremendous synergies between the two entities and in
12 the areas that mean an awful lot to me personally,
13 including the shared commitment to community
14 development, philanthropy and volunteerism I
15 mentioned a moment ago.
16 Both Fleet and Bank of America view
17 community development very broadly as a strategic
18 opportunity. Our community investment efforts are
19 an integral part of our business strategy. Both
20 banks embrace the concept of diversity -- valuing
21 individuals of all races, gender, sexual orientation
22 as customers and employees. Each focus on employee
23 development and opportunity and holds the value of
24 inclusion among our highest priorities.
. 0013
1 Due to our unique franchises, there is
2 little to no overlap in our retail distribution.
3 Therefore, there will be no disruption of service to
4 our customers due to divestiture of bank branches.
5 Additionally, and as I referenced earlier, we will
6 sustain total employment levels in New England and
7 will sustain our levels of customer-facing
8 employees, which again mean continuity in delivering
9 our products and services to our customers.
10 For those who are opposed to this merger
11 based on the grounds that our headquarters city in
12 our region will be losing their local focus, I point
13 to all that has been committed to date on behalf of
14 the merger to preserve in advance the needs of the
15 northeast in community development, philanthropy and
16 employment.
17 That point is further demonstrated in the
18 executive leadership that has been advanced to date
19 to manage the new company. Two of the most senior
20 executives of the new corporation will have national
21 responsibilities and yet be Boston-based; Brad
22 Warner in our premiere in small business and Brian
23 Moynihan in wealth and investment management. In
24 addition, two of my closest colleagues at Fleet,
. 0014
1 Gene McQuade and Jay Sarles. Gene will be president
2 of the new corporation. Jay will be a very
3 important strategic advisor to Ken.
4 More specifically, in terms of maintaining
5 local leadership and decision-making for this
6 region, we were pleased to announce the appointment
7 earlier this month of Ann Finucane, as president of
8 the northeast. In this new role, Ann, well-known to
9 Boston, will oversee the development of a strategic
10 plan focused on a successful transition in the
11 northeast, as well as continued business success in
12 the region. She will ensure the cross-functional
13 coordination of the company's efforts in our
14 communities, including charitable giving
15 sponsorships, customer service issues, public
16 policy, government and media relations and other
17 strategic needs of the market.
18 Despite all the compelling advantages of
19 the merger, I have to admit this was the toughest
20 decision I have had to make personally here in my
21 career, but I also believe with increasing
22 conviction that this has been one of the very, very
23 best. I am personally committed to helping Ken and
24 our associates merge us into a company that indeed
. 0015
1 does value employees, customers and the community.
2 Earlier I mentioned the size and strength
3 of our new company. It's compelling. But this is
4 much more than about size or quantity. It's about
5 quality as well. I have heard Ken state on many
6 occasions that he wants Bank of America to be the
7 most admired company in the world, not necessarily
8 the biggest, not only the most profitable, but the
9 most admired. This is a company with deeply-held
10 values and commitment, vibrancy and opportunity, and
11 I am very proud to be part of it.
12 In closing, let me thank each of you who
13 cared enough to come to offer your support and even
14 raise concerns about the significant transaction
15 before us.
16 And now I'm delighted to turn it over to my
17 new partner, Mr. Ken Lewis.
18 MR. LEWIS: Thanks, Chad. I appreciate
19 your comments about the Bank of America and the
20 bright future our companies and our communities
21 share. I could not agree with you more about the
22 assessment of where we stand and where we're headed
23 together.
24 I've talked a lot over the past two months
. 0016
1 about the competitive and business rationale for
2 this merger and why I believe our new company will
3 be better positioned to serve our customers and our
4 shareholders. Chad covered some of this today, and
5 my thoughts are detailed in the public speeches I
6 made since we announced the merger.
7 Today's meeting, though, has a specific
8 purpose. I'd like to use my time here to address
9 that purpose directly. Today we're here to talk
10 about the effect the combination of our companies
11 will have on our communities and specifically those
12 in our communities who are most in need of
13 affordable, convenient access to financial services.
14 When I assumed the leadership of our
15 company three years ago, I set a simple, clear goal,
16 as Chad just mentioned. I said we will aspire to be
17 the most admired company in the world. Achieving
18 this goal requires that we set and achieve high
19 standards of performance for all of those who have a
20 stake in the company -- not only customers and
21 shareholders, but also the leaders, partners and
22 citizens with whom we work to make all of our
23 communities strong.
24 Our goal in any merger is to build a
. 0017
1 business. This means that working with our new
2 teammates, we intend to lend more money, develop
3 more affordable housing, do more business with
4 minority suppliers, provide more charitable giving
5 and generally make a bigger difference in our
6 communities that a predecessor could have as an
7 independent institution.
8 Simply put, our goal is to be the most
9 admired, the most visible and most effective
10 financial institution in the communities where we do
11 business.
12 I'll respond directly to some of the
13 concerns we've heard from community partners in
14 regard to our planned merger, and I'll discuss my
15 company's accomplishments in community
16 development-related activities, as well as our plans
17 and goals in the following five areas: Community
18 development banking; philanthropy; access to
19 financial services for low- and moderate-income
20 customers; minority business development; and
21 community leadership and associate volunteerism.
22 In each area our approach is based on three
23 principles: One, national goals and corporate
24 values delivered and differentiated locally. Two,
. 0018
1 proactive partnerships with local community-based
2 organizations to achieve shared goals. And three,
3 fully transparent reporting and strict
4 accountability.
5 By adhering to these principles, we are
6 striving to set the highest standards of performance
7 and accountability, not only for our industry, but
8 for the business community in our country.
9 As you know, Bank of America has a strong
10 and consistent record of achievement in community
11 development banking. We have achieved and
12 maintained outstanding CRA ratings throughout our
13 franchise for many years. We've been a leader in
14 our local markets. And we have consistently sought
15 out local community-based partners to help us
16 achieve our community development goals.
17 Consider some of our results:
18 In the five years since we began our
19 ten-year, $350 billion commitment to community
20 development lending and investing, we have loaned
21 and invested more than $230 billion in traditionally
22 underserved American communities. We said at the
23 time that the commitment represented a floor and not
24 a ceiling and our performance proves this point.
. 0019
1 We are ahead of schedule and at our current
2 pace would exceed the $350 billion goal before the
3 eighth year of the ten-year commitment. This
4 performance -- in combination with our plan to merge
5 with Fleet -- is why we decided to set a new, even
6 more ambitious goal.
7 Last week we announced that starting in
8 2005, the new Bank of America will set a community
9 development lending goal of $750 billion over ten
10 years, once again setting a higher standard for
11 community development banking in our country.
12 In pursuing these goals, we have worked
13 with hundreds of community groups with shared values
14 and goals. Examples are our partnership with the
15 Enterprise Foundation, through which we've helped
16 create thousands of units of affordable multi-family
17 rental housing over the past 20 years; our 16-year
18 partnership with ACORN, with which we've financed
19 new homes for more than 23,000 families in 18 cities
20 over the past four years; our seven-year
21 relationship with Neighborhood Assistance
22 Corporation of America, with which we helped 2,300
23 families in 21 cities buy homes in 2002 alone, and
24 our most recent work with National Council of
. 0020
1 LARASA, with which we have recently begun to work to
2 help Hispanic customers throughout the nation buy
3 their own homes.
4 We also maintain membership in the Federal
5 Home Loan Bank of Boston.
6 In addition to housing finance, we believe
7 small business lending is an important source of
8 economic support for underserved communities. We
9 have been ranked the number one SBA lender in the
10 country for the past two years, with almost 27
11 percent of all small business or small farm loans
12 made in low- and moderate-income census tracts.
13 In addition, we made 22 percent of all our
14 government-guaranteed loans to minority-owned
15 businesses and 24 percent of such loans to
16 businesses owned by women.
17 Now, even as we consistently set and exceed
18 ever-higher standards in community development and
19 even as we demonstrate a record of working with
20 community partners to achieve shared goals, there
21 are those who oppose this merger because we have not
22 signed CRA agreements or itemized our goals by
23 market or product.
24 I understand the passion these
. 0021
1 organizations have for their communities. As I've
2 said, we share common goals. However, their desire
3 to receive the greatest financial support possible
4 for their individual causes or communities should
5 not overshadow the fact that our pledge -- the
6 largest of its kind ever -- is designed to benefit
7 all of our communities.
8 When we created this pledge, we projected
9 that about $100 billion of it would be deployed in
10 the northeast region of the country. But we decided
11 for good reasons not to itemize it by market.
12 Because community needs and circumstances are always
13 changing, we believe the best approach is a pledge
14 that establishes goals on a nationwide basis, yet it
15 is flexible so we can respond to capacity and demand
16 within each market.
17 We made the same case five years ago in
18 California, and our results are proof that our
19 approach works. The state of California represents
20 about 34 percent of all deposits at our company, and
21 over the past five years 35 percent of all our
22 community investment dollars have been deployed
23 there.
24 Our outstanding record of achievement,
. 0022
1 accountability and public reporting of results
2 demonstrates that CRA agreements and itemized
3 commitments are unnecessary for our company. Our
4 goal is to leverage the power of our financial
5 strength and geographic reach to serve all of our
6 communities with the products, services and
7 resources they need, when and where they need them.
8 Philanthropic investment in our communities
9 has been an important part of our culture throughout
10 the history of our company. Contrary to what you
11 may have heard from some of our critics,
12 philanthropic giving at Bank of America is not
13 declining. Far from it.
14 In 2002 we gave more than $75 million. In
15 2003 we gave more than $81 million. In 2004 our
16 Foundation budget is $84 million. And this is cash.
17 Combined with Fleet's $25 million budget, we expect
18 to give at least $109 million to non-profit
19 organizations this year. Decisions about how to
20 deploy these funds will be made in accordance with
21 the priorities identified by local leaders,
22 following our philosophy of neighborhood excellence
23 in corporate giving. This simply means we believe
24 that local leaders are best able to identify the
. 0023
1 needs of their neighborhoods, so we use a
2 grassroots, bottom-up funding strategy.
3 We think this record and the trend it
4 represents is impressive. But again, we have staked
5 ourselves out as the company that will set the
6 highest standards for American business. So we're
7 raising the bar. On the same day we announced our
8 new Community Development Lending Goal, we also
9 announced, for the first time ever, a goal for
10 philanthropy. $1.5 billion over ten years, starting
11 in 2005. This will make us the most generous
12 corporation in American by a wide margin.
13 With this pledge, our Foundation will be
14 better equipped than ever to work with our
15 businesses, our associates and our community
16 partners to support the vital programs and
17 organizations that make our communities strong.
18 In addition to our community development
19 and Foundation activities, we also work proactively
20 to ensure that we're providing affordable,
21 accessible products and services to all segments of
22 our communities. Consistently, Bank of America
23 originates more mortgage loans to minority borrowers
24 than any other mortgage lender. Also, Bank of
. 0024
1 America originates a higher percentage of mortgage
2 loans to minority borrowers than most lenders. At
3 the end of 2002, 25 percent of our home loans were
4 made to minority customers, while the industry
5 average for all lenders is only 18.8 percent.
6 We also offer a basic checking product that
7 is well-suited to low- and moderate-income
8 customers: MyAccess Checking. This product features
9 a low opening deposit of $25, free checking with
10 direct deposit, no minimum balance, unlimited check
11 writing, free online banking with bill pay, a check
12 card with Photo Security option, and unlimited
13 access to funds using the our nationwide ATM
14 network, online banking and telephone banking.
15 We are also constantly working with
16 community groups to develop new, innovative products
17 specifically targeted to the needs of minority
18 individuals and communities.
19 About 15 years ago our company began to see
20 a great need to take affirmative steps to support
21 small, entrepreneurial companies owned by women and
22 minorities through our supplier procurement process.
23 We immediately put a team in place and rapidly
24 became one of the nation's leading practitioners of
. 0025
1 supplier diversity. In fact, we've twice been named
2 Corporation of the Year by the Minority Supplier
3 Development Council.
4 Five years ago we added companies owned by
5 disabled people to the program and continued to
6 pursue our goals aggressively. We have a goal of
7 directing 15 percent of all supplier spending to
8 companies owned by women, minorities or the
9 disabled. In 2002 we spent $545 million with these
10 companies, representing 7 percent of overall
11 spending.
12 While final figures for last year are not
13 yet available, based on results of the third
14 quarter, we expect to have reached nearly 9 percent
15 in 2003.
16 Our Multicultural Supplier Development team
17 is working with a number of organizations and
18 agencies to increase the percentage spent with such
19 firms. We have hosted eight annual Supplier
20 Diversity Showcases in major markets to provide
21 vendors an opportunity to meet with our business
22 leaders. And we are also a member and strong
23 supporter of the National Minority Supplier
24 Development Council.
. 0026
1 Finally, I'd like to take just a moment to
2 talk about one of the most important aspects of our
3 culture at Bank of America: community leadership and
4 associate volunteerism.
5 At the corporate level we provide
6 leadership to our communities by putting our
7 financial muscle behind important community
8 projects -- by advocating for a stronger CRA and by
9 working with local governments and community
10 organizations to achieve shared goals. At the local
11 level, we encourage all of our associates to provide
12 leadership to their communities, sharing their
13 personal talents and professional skills with the
14 public and private organizations that form the
15 foundation of community life.
16 We also have a strong culture of associate
17 volunteerism. Associate volunteers receive two
18 hours of paid time off every week to work in a
19 school of their choice -- a program that has the
20 potential to generate up to 6 million volunteer
21 hours for our nation's schools each year. Team Bank
22 of America supports local councils within the bank
23 that identify volunteer opportunities for
24 associates -- and a Volunteer Grants program offers
. 0027
1 cash grants in an associate's name to organizations
2 at which associates volunteer.
3 Like any successful business, we understand
4 that our associates are our most precious
5 resource -- not just for our customers, but for our
6 communities as well.
7 In conclusion, we believe this merger
8 raises no concerns under federal or state law, and
9 we urge the Board to swiftly approve our
10 application. Both banks are well-managed and
11 well-capitalized, and our new company will continue
12 to be so upon completion of the merger. Both banks
13 have strong records under the Community Reinvestment
14 Act. The merger does not pose any antitrust
15 concerns and will not result in any merger-related
16 branch closures. The surviving company will hold
17 9.94 percent of the nation's deposits, less than the
18 federal cap on deposits held by one institution.
19 To date, the Board has received hundreds of
20 letters expressing support for the merger, while
21 less than a third of the letters received by the
22 Board have expressed opposition to the merger. The
23 supportive letters have been sent by community
24 development corporations, state and local
. 0028
1 governmental agencies, business and civic
2 organizations, cultural, philanthropic, educational
3 and religious organizations, and customers from
4 across both banks' franchises. Each tells a
5 different story about the positive difference we
6 have made in the communities where we do business.
7 As I said at the beginning of my remarks,
8 our goal at Bank of America is to become the world's
9 most admired company in the eyes of all our
10 stakeholders -- customers, shareholders, associates,
11 community partners and the general public. We are
12 pursuing this goal by setting and achieving higher
13 standards every day in all we do. Leveraging all
14 the parts of our company to support our communities
15 is a fundamental part of our culture and the way we
16 do business. It's essential to the future health of
17 our company. Most important, it's simply the right
18 thing to do.
19 This has been our history, and the proof is
20 in the public record of our performance. It also
21 will be our future, as expressed in the new goals we
22 have set in community development, philanthropic
23 giving, business performance and service to our
24 customers.
. 0029
1 I look forward to working with all of our
2 community partners in the Northeast and across the
3 nation as we pursue our common goals. And I look
4 forward to all we'll accomplish together for our
5 communities and for our country.
6 Thank you.
7 PRESIDING OFFICER SMITH: Questions from
8 the panel?
9 MS. ROBINSON: I have a question. How and
10 where do you plan to administer your CRA programs in
11 the region where FleetBoston is located?
12 MR. LEWIS: You said, how do we plan to
13 administrate?
14 MS. ROBINSON: Right. How and where.
15 MR. LEWIS: Every region -- first, there's
16 a national organization and then subsequently
17 there's local teams and a foundation by which we
18 fundamentally -- there are a group of people who
19 would actually carry out the activities and then of
20 course make sure that the records are appropriate,
21 so that we can consolidate them on a national basis
22 for you in your assessment of how we do or the OCC.
23 And so it's both a national organization, but
24 delivered locally and sublevels of administration
. 0030
1 done.
2 PRESIDING OFFICER SMITH: Any other
3 questions?
4 (No response)
5 PRESIDING OFFICER SMITH: Thank you very
6 much.
7 Welcome, Mr. Congressman.
8 MR. FRANK: Thank you.
9 PRESIDING OFFICER SMITH: Start by
10 identifying yourself for the record.
11 MR. FRANK: My name is Barney Frank. I am a
12 member of the United States House of
13 Representatives, representing the Fourth
14 Congressional District of Massachusetts, which
15 starts about three miles from here. And I serve as
16 the senior democrat on the Committee on Financial
17 Services.
18 I want to note by saying at the beginning
19 I've been in touch with a number of my congressional
20 colleagues. My colleague, Mr. Capuano, was at a
21 press conference with me yesterday. I know Mr.
22 Lynch, who represents the place where I was sitting,
23 Mr. McGovern has spoken, and in fact, I appreciate
24 the fact by having this hearing, which is not
. 0031
1 automatic. And all of the members of the
2 congressional delegation through the Massachusetts
3 House Senate did write to the Federal Reserve to ask
4 for this hearing, and I appreciate its being
5 granted.
6 I want to begin by some general comments
7 before getting to my specific ones. And they
8 probably deal with what we've said. I want to begin
9 by mentioning something that he didn't say, but some
10 of us have been asked, "Well, what's the
11 justification for going to this bank, this private
12 corporation owned by stockholders, and making these
13 requests, demands, et cetera?" And I think we
14 should be very clear about that.
15 The banking system in America exists in
16 part because of governmental assistance. It's a
17 private sector operation. And the purpose should be
18 to make a profit. I believe in the free market.
19 And I think the way the free market works is the way
20 in which we generate prosperity. But we haven't
21 decided to have an unrestricted market.
22 For example, one of the reasons that people
23 put their money into banks is the existence of
24 Federal Deposit Insurance. The Federal Deposit
. 0032
1 Insurance system is a very significant example of
2 government assistance to the banking system.
3 The Community Reinvestment Act is specific
4 in its intent.
5 It says that when a financial institution
6 takes advantage of the various federal rules and
7 goes into a particular community and provides this
8 financial intermediary function, there is some
9 obligation to make sure that the community in which
10 the money is raised is beneficiary, because
11 theoretically you could have a situation in which
12 money was put in and simply taken out. And it is a
13 somewhat local statute.
14 Now, there is some suggestion from time to
15 time that we're being too parochial, and I must say
16 that in some of the conversations I've had in
17 requesting that some specific commitments be made,
18 I've gotten the impression that my intervention was
19 not entirely welcome. I don't take that personally.
20 I am used to not being always welcome in various
21 venues. It sort of goes with the job.
22 But I do want to give why I think there is
23 justification for some localism. It's not simply
24 that money is raised in the community. I spent much
. 0033
1 of last year at the request of, among other
2 institutions, Fleet and Bank of America working on
3 legislation which in the end said to every state in
4 this country, You may not pass legislation that
5 regulates the granting of credit to individuals,
6 because overwhelmingly the financial institutions of
7 this country said to us we cannot have states making
8 their own choices with regard to consumer protection
9 in this field.
10 We understand that consumer protection is
11 important, but we need to have a national system.
12 So I participated, and we passed a national law
13 which preempts state law. The State of
14 Massachusetts by the law we passed cannot do certain
15 things it might wanted to have done with regard to
16 protecting consumers, with regard to identity theft
17 and the granting of credit, et cetera. In return, I
18 believe we got very significant consumer protection.
19 But the point is this: I do not think
20 institutions can tell us on one hand that at the
21 federal level we should pass legislation that
22 restricts what local governments can do, but then
23 tell the federal government that we should not then
24 intervene to try to be an advocate for local
. 0034
1 interest to make some of their own decisions here.
2 I think given the logic of a technological
3 economy today, that makes sense, but I think it also
4 justifies some local concerns. So I want to be
5 clear. We are talking here not about this
6 gratuitous intrusion on this purely private entity;
7 but rather, we are talking about an entity which
8 performs an enormously important service, which does
9 its job very well, which plays a very important role
10 in our capitalistic economy, which serves us very
11 well, but which benefits from Federal Deposit
12 Insurance, which benefits from a federal law that
13 preempts states from making some of their own
14 consumer protection laws. This is an inter-mixed
15 system. And I say that because -- and I don't mean
16 to address this to the people here in my dealings
17 with the people at Fleet and Bank of Boston. I have
18 not found this to be their attitude. I don't mean
19 to impute it to them. I don't mean to impute it to
20 Bank of America. I haven't had great dealings with
21 the Bank of America yet.
22 But there is an argument that essentially
23 becomes very one-sided. It says that what the
24 government should do is, in fact, to protect the
. 0035
1 interests of the financial institutions -- by the
2 way, in addition to what I've talked about, we
3 passed a bill this year that allows financial
4 institutions, banks, to send only copies of checks.
5 We have given relief to banks -- it's called "check
6 truncation," which is very important to the Feds.
7 To use a technical term, you used to have to schlep
8 a lot of checks around, and you wouldn't have
9 to do that anymore. And so we passed a law. And
10 now you don't automatically get your checks. You
11 can get copies of your checks.
12 We've done other things to facilitate this.
13 We are endangering America here -- and I really want
14 to set this in context, because again, we have
15 people acting as if this is somehow some intrusion
16 on or exception to what should be the free
17 enterprise system. As I said, I'm a great believer
18 in capitalism. I think it works very well. The
19 rest of the world, where that has not been
20 discovered, is discovering it. And the essential
21 element in capitalism is inequality. We should
22 understand that if you are a believer in the free
23 market, you are a believer that inequality is an
24 important part of the system. Because if people are
. 0036
1 not rewarded unequally, then the system does not
2 work.
3 I also believe, however, that left entirely
4 to its own, our capitalist system will produce more
5 inequality than is necessary for maximum efficiency.
6 And the Community Reinvestment Act in this
7 proceeding is one way in which we seek to diminish
8 inequality -- not abolish it -- diminish it, and
9 diminish it in a way that I do not think will in any
10 way interfere with the efficiency of the market
11 system.
12 So that's the context in which we are
13 operating. It's a context in which banks receive
14 benefits from the federal government, receive
15 protection from the federal government, deposit
16 insurance, legislation that will improve the
17 efficiency. Indeed, over the past few years there
18 have been a number of laws that have helped banks.
19 When I got to Congress, there were very
20 great restrictions on the ability of banks to branch
21 to different states. There were very severe
22 restrictions on the ability of banks to get into the
23 securities business and vice versa.
24 When I first got there, many institutions
. 0037
1 resisted the banks being able to do that.
2 You said two minutes. I thought I had more
3 than that. What's my time obligation?
4 TIME KEEPER: Ten.
5 MR. FRANK: Now let me get specific. When
6 I approached the banks, I asked for some specific
7 commitments here in Massachusetts. And here's where
8 I will take issue with Mr. Lewis on two grounds.
9 First of all -- and partly it's the
10 statute. I am pleased to learn of past performance,
11 but I think it is legitimate also to be more future
12 oriented.
13 Now, I have to say I think there's a flaw
14 in the Community Reinvestment Act here. The
15 Community Reinvestment Act does not, I think,
16 empower the regulators enough to look at things.
17 The Community Reinvestment Act comes into play here
18 for a very specific reason. No one thinks that it
19 would be a good idea regularly to revoke charters to
20 financial institutions because they failed the
21 Community Reinvestment Act obligations. It would be
22 very disruptive. It is unlikely to be done. And I
23 must say with all due respect, the Fed is
24 particularly unlikely to do it. The notion that
. 0038
1 you're going to go and revoke charters because
2 people didn't do enough for poor people is a harder
3 one to accept than some others with which I have to
4 live with from time to time.
5 But when a decision has to be made to go
6 forward, that's when the Community Reinvestment Act
7 ought to be coming into play.
8 Secondly, I am glad to know about national
9 activity, but it's the Community Reinvestment Act.
10 And it's particularly important here because this is
11 a unique moment. The last major financial
12 institution rooted here in Boston, in New England,
13 is about to be bought up by people outside. That
14 means that national commitments won't work. We need
15 to have some fairly specific commitments.
16 Now, I'm glad to know that some of them
17 have been made; staying in the Federal Home Loan
18 Bank system's affordable housing program, cashing
19 out part of the Mass. Housing partnership, agreeing
20 with Mass. affordable housing.
21 A week ago I would have been here asking
22 you to reject this because of a lack of specificity.
23 I'm not doing that today. I wish I could be more
24 enthusiastic, but I have moved from opposition to
. 0039
1 saying it's incomplete. And I know we will have
2 more work to do.
3 So I just want to close by saying this:
4 We've been told we're going to make some specific
5 commitments further on. I do want to stress again
6 that I disagree with the suggestion that it's
7 somehow inappropriate to look for state-specific and
8 community-specific rules. I think that violates the
9 spirit of the Community Reinvestment Act.
10 And all I can say is this: I expect if
11 this is approved -- and I would not bet heavily
12 against that prospect -- as a member of the
13 Financial Services Committee, it will be my
14 intention to talk to the chairman of that committee.
15 And about seven or eight months from now, after
16 we've had a chance to get further, after the
17 November elections, to have a hearing here of the
18 Financial Services Subcommittee, in which we could,
19 several of us, review the progress that has been
20 made, both with regard to the specifics of this
21 merger and because I think this is the time to take
22 a look at the Community Reinvestment Act.
23 Thank you for your time.
24 PRESIDING OFFICER SMITH: Thank you very
. 0040
1 much. We have Panel No. 2. And you each have three
2 minutes. I just want to remind you we have the
3 timer, who will give you the signal when you have
4 two minutes left, mainly to let you know how quickly
5 one minute goes. And then when you have one minute
6 and then when your time has expired, if you're in
7 the middle of a sentence when the time has expired,
8 please finish, but make it a shortening.
9 I'd like for you to start by giving your
10 name and the name of your organization, if you're
11 representing one. And then just to remind you that
12 if you have written testimony, either present it to
13 our registration folks or submit it. You may submit
14 comments by a week from today, close of business
15 information at the registration table.
16 If you will start, Mr. Kriesberg.
17 MR. KRIESBERG: Good morning. My name is
18 Joseph Kriesberg. I'm the president of the
19 Massachusetts Association of CDCs, and I have two
20 minutes left now.
21 We appreciate that the Federal Reserve is
22 having this hearing, and we think it's very
23 important because Massachusetts is not North
24 Carolina and it's not California. And it's not just
. 0041
1 that the weather is different here. I'm surprised
2 that you still want to buy this bank, given today's
3 weather, but it's because we have our own
4 Massachusetts state community reinvestment law that
5 must be conformed with. And that law does require
6 the banks to show a net benefit to this merger going
7 forward.
8 And so it's a very different situation than
9 I believe any other state, but certainly most other
10 states. And that is why from the beginning we have
11 asked Bank of America to do what Fleet and Citizens
12 and Sovereign and all the major banks have done in
13 the past decade, which is to lay out their plans
14 going forward for community investment in
15 Massachusetts.
16 And I am pleased to say that after a couple
17 of months of uncertainty about that, the bank has
18 agreed to adopt a business strategy for
19 Massachusetts and to make that available to the
20 public and to work with us in putting that together.
21 And we have made some progress on that, some of the
22 things that Congressman Frank mentioned. But we
23 think that there is a lot of work that has yet to be
24 done. And until such time that it is done, we would
. 0042
1 encourage the Fed not to improve the merger.
2 Some of the things involve money,
3 obviously -- lending, investments and so forth --
4 and very much fit within the $750 billion national
5 commitment. But it isn't just about dollars and big
6 dollars. That commitment tells us that Bank of
7 America is a very large institution, and we already
8 knew that.
9 Some of the things that are most important
10 don't involve dollars at all. They involve the
11 availability of branches in low income areas, the
12 availability of low cost checking accounts, like the
13 basic banking account here in Massachusetts.
14 Sometimes we want less dollars, not more.
15 We want small business loans, not big business
16 loans. And so sometimes what we're looking for is
17 for the bank to make smaller loans which may result
18 in a lower total dollar amount, but more impact. So
19 we think there's still a lot of work to be done in
20 terms of figuring out how this is going to affect
21 Massachusetts and my colleagues. My board members
22 and members that are here with me today are going to
23 talk a little bit more about our experience in the
24 communities in Massachusetts and the needs that we
. 0043
1 have -- the credit and capital needs that we have in
2 our communities.
3 Thank you.
4 PRESIDING OFFICER SMITH: Ms. Lattimore?
5 MS. LATTIMORE: I'm going to read from my
6 testimony. My name is Gail Lattimore. I'm the
7 Executive Director of the Codman Square Neighborhood
8 Development Corporation, also known as "NDC."
9 The NDC is a non-profit community
10 development corporation located in the South
11 Dorchester neighborhood of Boston.
12 Our mission is to stabilize our inner-city
13 service area, on behalf of the 50,000 plus primarily
14 low and moderate-income residents, by implementing
15 initiatives that focus on real estate development,
16 assets and wealth-building and community planning
17 and organizing.
18 Over the past 23 years we developed over
19 600 units of affordable housing, 50,000 square feet
20 of commercial space, and have supported the
21 strengthening of a large number of civic and block
22 associations and small businesses.
23 Our accomplishments are due in no small way
24 to the impact of resources available through our
. 0044
1 advocacy around and involvement in key community
2 reinvestment issues.
3 As has been the case nationally, over the
4 past decade or more there have been a number of
5 mergers and acquisitions of locally-based banks in
6 New England. As a member of the Massachusetts
7 Association of Community Development Corporation,
8 the Codman Square Neighborhood Development Corp. has
9 worked, as these transitions occurred, to ensure the
10 strong community investment plans which positively
11 impact community development needs in low and
12 moderate income neighborhoods are put in place. I
13 want to speak a little bit about our past experience
14 with Fleet in this regard and then talk about some
15 of the concerns we have going forward around this
16 particular acquisition.
17 Fleet's early track record in our
18 neighborhood raised some significant concerns. In
19 the early to mid 1990s certain census tracts in the
20 Codman Square area experienced the highest rate of
21 home foreclosures than any other area of Boston.
22 Upon investigation of this troubling
23 situation, the Codman Square NDC discovered, among
24 other things, that unscrupulous speculators were
. 0045
1 flipping dilapidated homes to unsuspecting and
2 unprepared low/moderate income homebuyers at well
3 above market sale prices. These sales prices were
4 supported by questionable bank appraisals. Fleet
5 Bank was the investor in a number of these loans.
6 Around this same time, Fleet was involved
7 in acquiring Bank of Boston. The development of a
8 local community investment plan was key to the
9 Codman Square NDC's ability to resolve this issue.
10 It was within this context an environment that the
11 Codman Square NDC was able to negotiate with Fleet
12 to address concerns related to Fleet's home mortgage
13 lending operations and practices in our service
14 area.
15 Based on Fleet's track record in our
16 community, prior to these negotiations, the Codman
17 Square's NDC Board's policy was to not do business
18 with Fleet. Since these early days, things have
19 evolved more positively. With the Fleet/BankBoston
20 merger and the development of a responsive local
21 community investment plan and Fleet's apparent
22 embracing of the First Community BankBoston
23 approaches to community development lending and
24 support, those working within the community
. 0046
1 development field have seen increasing partnerships
2 with Fleet. The Codman Square NDC is currently
3 working with Fleet as a lending partner on the
4 development of 26 units of affordable housing with
5 the prospects of partnering to develop an additional
6 50 units within the next year. This progress has to
7 continue and be further strengthened with Bank of
8 America's acquisition of Fleet.
9 A local community investment plan is
10 required to continue this progress. The strong
11 existing network of community development
12 corporations and other such groups in Massachusetts
13 that understand and have successfully advocated for
14 the financial and community development needs of our
15 communities stands ready to continue to work with
16 Bank of America on this plan. The Codman Square NDC
17 urges you to condition Bank of America's acquisition
18 of Fleet Bank on the development of such a plan so
19 that we don't lose the significant progress that
20 we've made with Fleet, as it is incorporated into
21 the Bank of America.
22 Thank you for allowing me to testify.
23 PRESIDING OFFICER SMITH: Thank you.
24 MR. THAL: Good morning. My name is
. 0047
1 Richard Thal. I'm Executive Director of the Jamaica
2 Plain Neighborhood Development Corporation.
3 Like a lot of inner-city neighborhoods, our
4 community for many years suffered the effects of
5 disinvestment. In fact, some of the first
6 organizing efforts in this Commonwealth were
7 undertaken by residents of our community in response
8 to the systematic disinvestment in neighborhoods
9 similar to ours.
10 I'm happy to say, however, that especially
11 over the last ten years or so, we have seen a lot of
12 improvements. And Fleet and its predecessor
13 entities have played an important role in some of
14 the changes that we've seen and some of the
15 investments that they've made, whether it's in
16 affordable housing cooperatives for low income
17 families -- the first major supermarket to come back
18 into the inner city in about 15 years in Boston that
19 Fleet was a major investor in, the creation of
20 opportunities for first-time home buyers on
21 long-abandoned sites. And we are starting to see
22 over the last few years -- though the progress has
23 been slower -- starting to see progress in an area
24 that is very important to us, which is the lending
. 0048
1 activities with small businesses.
2 We have the largest Latino business
3 district in New England with over 100 businesses in
4 our main area, over 80 percent of whom are owned by
5 Latino individuals and families. And the process of
6 improvement and openness to that market has been
7 slow.
8 I'm happy to say that where a few years ago
9 there was almost no opening and very little activity
10 with the entrepreneurs in our neighborhood, that
11 that has slowly been changing. And that's a
12 positive development, but we certainly are very
13 concerned -- and especially looking at some of the
14 larger statewide and regional numbers of some of the
15 small business lending that Fleet has been involved
16 in and Bank of America, as it enters this market, we
17 feel that that emphasizes the need for a very
18 specific plan with specific targeted goals, so that
19 those low income business owners and people of
20 color, who are so important to our community, have
21 the opportunities that they need to move forward.
22 Thank you.
23 MS. VAN CAMPEN: Good morning. My name is
24 Jennifer Van Campen, and I'm the Executive Director
. 0049
1 of the Waltham Alliance to Create Housing, a
2 community development corporation in Waltham,
3 Massachusetts.
4 Waltham is a suburban community, but we
5 still have poor people. WATCH serves about 350 low
6 and moderate income individuals and families each
7 year, but there are over 19,000 families in Waltham
8 who are eligible for affordable housing. There are
9 over 8,000 low-wage workers in Waltham looking for
10 better jobs. And there are over 2,000 recent
11 immigrants looking for English classes. WATCH needs
12 to help more families in the coming years, not less.
13 We need to make sure that the Fleet/Bank of America
14 merger adds up to more, not less for our
15 communities.
16 Fleet has been a strong partner of WATCH's
17 over the last few years. Fleet's small business
18 products have met several of our company's needs
19 while their charitable donations have launched
20 several new initiatives in Waltham. Fleet is a
21 major employer in Waltham and has lent volunteers to
22 several of our projects and programs. Our
23 job-training program has placed several people in
24 Fleet's branches. A recent Fleet donation has
. 0050
1 helped position us to acquire a 10-unit residential
2 property. We have come to rely on Fleet. Will we
3 have the same partner in Bank of America? Without a
4 specific commitment to our cities and towns, how can
5 we be sure that this merger will help and not hurt
6 our efforts?
7 Banks will merge and local control will
8 evaporate. Banks will become fewer and power will
9 consolidate in far-away places. But we don't have
10 to accept less. If huge national banks are the
11 trend, then let state-by-state plans be the trend,
12 too. If banks can announce huge national plans, let
13 them announce detailed local plans, too. They're
14 smart. They can do both. Thank you.
15 MR. VAN METER: Thank you for the
16 opportunity to testify today. My name is Bob Van
17 Meter. I'm the Executive Director of the
18 Allston-Brighton Community Development Corporation
19 which serves Allston-Brighton, the western-most
20 neighborhood in the city of Boston with 70,000
21 residents. I'm an MACDC board member and support
22 the overall goals articulated by Joe Kriesberg, our
23 president.
24 I'm here to speak about the variety of
. 0051
1 community development activities and initiatives
2 that Fleet Bank is now engaged with in our community
3 and how important it is that these initiatives
4 continue in the future here in Massachusetts. As my
5 colleagues have stated, community reinvestment is
6 about communities and requires specific plans and
7 goals in local communities and perhaps even more
8 importantly, locally accessible and accountable
9 people to undertake the work.
10 Just five weeks ago we broke ground on 50
11 affordable new homes in our community. Fleet Bank
12 is providing a construction loan of over $7 million
13 for that development, and we've been delighted to
14 work with knowledgeable and creative staff in the
15 Fleet lending group who have been of great
16 assistance in moving the project further. Fleet
17 provided a technical assistance grant to the project
18 during the predevelopment period, which was also
19 very helpful.
20 Our CDC offers education and counseling for
21 first-time homebuyers, and Fleet has been a partner
22 in our first-time homebuyer program over the last
23 five years. Over 40 graduates of our classes have
24 bought homes with mortgages from Fleet Bank over the
. 0052
1 last five years. Fleet's support of the SoftSecond
2 Program continues to be very important to our
3 homebuyers.
4 We're part of a collaborative of ten
5 community development corporations here in Boston
6 called the Community Business Network, which
7 provides technical assistance to small businesses.
8 Fleet has supported the Community Business Network
9 with philanthropic grants and Fleet staff has served
10 on an advisory committee for the Community Business
11 Network and on the loan committee for one of our
12 member CDCs.
13 Our CDC, the Allston-Brighton CDC, is
14 pioneered in creating individual development
15 accounts or matched savings accounts to help low
16 income people build assets. Fleet has worked very
17 hard with us over the last two years as we have
18 tested the development of a new model of account
19 management for individual development accounts.
20 With Fleet's support and the support of another
21 organization, Doorways to Dreams, 17 individuals
22 have saved for the last 18 months and are making
23 their savings deposits and managing their accounts
24 electronically. It is our collective hope that this
. 0053
1 will be an important innovation which will help make
2 individual development accounts accessible on a
3 broad scale. Fleet staff committed many hours to
4 the technical and other challenges involved in a new
5 banking product.
6 Fleet has also supported the development of
7 a statewide collaborative of community-based
8 organizations of which we are the lead agency, the
9 Massachusetts Individual Development Account
10 Solutions collaborative, which is promoting best
11 practices and training in building IDA programs.
12 Fleet's philanthropy has been consistent
13 and Fleet's philanthropy staff has been accessible
14 and knowledgeable about the issues facing Boston and
15 Massachusetts, taking the time to listen and learn
16 and to challenge us to think about new ideas as
17 well.
18 Finally, I'd like to add on a similar note
19 to my colleague, Jennifer Van Campen, the
20 Allston-Brighton neighborhood, like many Boston
21 neighborhoods, has experienced rapidly rising rents
22 and prices of homes and condominiums. Despite this,
23 there is a substantial population of low and
24 moderate income people. It's important that
. 0054
1 community reinvestment and community development
2 efforts support strategies to maintain diversities
3 in these communities, as well as meeting the needs
4 of low income communities.
5 Thank you.
6 MR. WAITE: Good morning. My name is John
7 Waite. I'm the Executive Director of the Franklin
8 County Community Development Corporation located in
9 Greenfield, Massachusetts, which is the western part
10 of Massachusetts.
11 I'm attending this public meeting, and I'm
12 making a statement on behalf of my Board of
13 Directors, who represent people from 26 towns in
14 rural Franklin County. I am also on the Board of
15 Directors of the Mass. Association of CDCs. I
16 represent some 68 members as well.
17 The Franklin County CDC has been involved
18 in community economic development for more than 25
19 years. We have a lending program, a small business
20 incubator and a technical assistance program.
21 Fleet has provided us with funding for our
22 technical assistance program for the past year and a
23 half, and we are very grateful for its financial
24 support. And we believe it's been made possible
. 0055
1 because Fleet understands western Mass. and they
2 know about our programs. They have a staff person
3 out in Springfield.
4 We are concerned that Bank of America will
5 not have the local community presence, knowledge and
6 decision-making to effectively work with
7 organizations like ours, who work with low and
8 moderate income people that have few, if any, other
9 options to start to improve the business.
10 We are concerned that Bank of America will
11 close branches in rural areas that have smaller
12 populations and in areas with low income residence.
13 In Franklin County we are lucky to still have two
14 local banks and one regional banks that have not
15 disappeared in all these mega-mergers. However,
16 many rural and low-income areas have lost their
17 local banks and branches due to the consolidations,
18 and the residents depend on the services from the
19 branches that do remain.
20 I wrote this statement actually two days
21 ago. This morning driving in I heard on the news
22 that our regional bank has actually just requested
23 to close the Conway branch, which is one of the
24 smaller towns in Franklin County. This town has had
. 0056
1 a bank -- at least a branch since 1854. So for 150
2 years they've had a bank located in this rural area
3 of western Massachusetts and now they're going to
4 lose it. This is just a result and this is one of
5 the things that we're most concerned about when
6 these large banks move in.
7 We're also concerned that Bank of America
8 will not address the needs of small businesses.
9 Fleet has done a decent job of providing these loans
10 under $100,000 and to businesses with annual
11 revenues under a million dollars. We would expect
12 Bank of America to establish aggressive goals for
13 the percentage of these types of loans as well.
14 In addition, we would want Bank of America
15 to employ a second look program for its small
16 business loans, which means that the applicants will
17 be looked at individually and not just put through
18 some computer-based assessment process. Bank of
19 America should also refer declined loans to
20 technical assistance programs and non-traditional
21 lenders such as ourselves where appropriate. And as
22 earlier, Bank of America should continue to expand
23 on Fleet's contracts with community-based
24 organizations that provide technical assistance.
. 0057
1 We do not support this acquisition because
2 it will take ownership and control even further away
3 from our community, which is contrary to our
4 organization's mission statement, which says we
5 strive to maximize community control over our
6 economic destiny.
7 In closing, I want to tell you that in our
8 business technical assistance program we teach
9 business people about the triple bottom line --
10 social and environmental as well as economic. We
11 ask that Bank of America develop a meaningful plan
12 and be held accountable as a socially responsible
13 business.
14 Thank you very much.
15 PRESIDING OFFICER SMITH: Thank you all
16 very much. Do we have questions from the panel?
17 (No response)
18 PRESIDING OFFICER SMITH: We are ready to
19 start with the panel. And we are a little bit ahead
20 of schedule, so we can give them four minutes each.
21 If you are reading your comments, if you would try
22 to sort of glance toward the time-keeper
23 periodically. So with that, we're ready to start
24 with Mr. Sanchez.
. 0058
1 MR. SANCHEZ: Good morning. My name is
2 Jeffrey Sanchez. I'm the state representative for
3 the 15th Suffolk District. That includes the areas
4 of Jamaica Plain, Roxbury, Mission Hill, Brookline.
5 Thank you for this opportunity to come
6 before you today to testify regarding this merger.
7 I am also someone who has actually lived through
8 mergers myself. I worked in the California banking
9 system and have seen a great deal in a span of about
10 five years at the time that I was there in
11 California.
12 While at times mergers can be good for
13 particular communities, at times there's a lot
14 that's left unclear. And I think that that's the
15 case right now. I know that there's been certain --
16 there has been certain discussion that Bank of
17 America has worked with a few people within
18 particular segments of the community. But I think
19 given the breadth of this merger, it behooves them
20 to continue to work with cross-sections of the
21 communities throughout the Commonwealth.
22 FleetBoston has worked diligently in terms
23 of working with particular communities. And I think
24 that there were certain commitments that were made
. 0059
1 to communities that still haven't necessarily shown
2 total fruition right now in terms of the outcomes.
3 And I think that given that, we still need to make
4 sure that the Fleet/Bank of America merger respects
5 a number of those commitments that were made in the
6 previous merger with Fleet and BankBoston.
7 I'm aware that Bank of America has a
8 history of making few or small business loans under
9 $100,000 in smaller institutions, and I think it's a
10 concern because we have such a great number of
11 microenterprise within our communities. While small
12 business is definitely a priority, microenterprise
13 makes up our small business communities in our main
14 streets districts, and we would like a significant
15 presence there.
16 Given the time frame that I have to
17 discuss -- I have a lot to discuss, but I'm going to
18 try and generalize a number of things. While again
19 there were certain commitments that were made
20 through a press conference yesterday, I'm still
21 concerned that Bank of America has not addressed the
22 issue of work force development effectively and
23 completely yet, as well as procurement, as well as
24 the community development dollars; and given the
. 0060
1 presence the Bank of America will have in this
2 region, I feel that Bank of America should commit to
3 an increased percentage in the amount of community
4 development dollars which they disperse to
5 communities.
6 I would also again support the legislatures
7 of the banking committee and request that Bank of
8 America voluntarily submit to local regulations. I
9 think it would be an extreme act of goodwill that
10 would show that Bank of America is willing to work
11 at a local level, not only at the national.
12 I would also like to -- I'll actually
13 conclude by saying that there was a group that was
14 working at the Community Advisory Committee, which
15 Senator Wilkerson here was sitting -- actually, I
16 think cochairing, if I'm correct -- that submitted a
17 lengthy list of pieces for Bank of America to
18 address. And in looking at that, I feel it's
19 extremely detailed. There are a number of issues
20 that are addressed through it. I would ask
21 respectfully that the people that are involved in
22 this merger, both Fleet and Bank of America, sit
23 down with this Community Advisory Committee to
24 discuss these details to make sure that we get the
. 0061
1 biggest bang for our buck in your plans to move into
2 our communities.
3 There were certain -- when I got involved
4 in communicating myself with Bank of America, I was
5 happy to see that I received a letter from them.
6 Unfortunately, I didn't receive anything from the
7 Fleet side, and I was a little concerned with that.
8 And with the Bank of America, it was noted that they
9 would refer me to a public relations or a public
10 affairs person, and I'm still currently waiting to
11 hear from that person.
12 So again, I would hope that this is not an
13 indication of how the bank will come into our
14 communities. We have active communities. We have
15 felt positive impacts within the past with Fleet.
16 And while, again, it's unclear to me what the total
17 impact -- what the commitment to -- our previous
18 commitments were -- the commitments that currently
19 exist, I would encourage those to please -- those in
20 this merger to please stick with us in the
21 community, because we will also make your
22 institutions thrive.
23 Thank you very much.
24 PRESIDING OFFICER SMITH: Thank you.
. 0062
1 Mr. Fort?
2 MR. FORT: My name is Vincent Fort. I
3 served the Third and Ninth District in Atlanta,
4 Georgia.
5 Over the last four years I've led the fight
6 in Georgia against predatory mortgage lending.
7 During that time, we passed the strongest law to
8 restrict predatory mortgage lending in 2002. That
9 same law was gutted just last year in 2003.
10 Councilmember Derrick Boazman, who is to my right,
11 authored an Atlanta city ordinance that prohibited
12 the city from doing business with companies that did
13 predatory lending. In both instances Bank of
14 America opposed those legislative efforts to
15 restrict predatory lending.
16 While working on these issues, we've become
17 intimately familiar with predatory lending practices
18 of Bank of America. And I'd like to talk very
19 quickly about five points that I'd like to make.
20 While Bank of America shuttered
21 NationsCredit and EquiCredit in 2001, we find that
22 many of these loans are still alive. That is,
23 people are still paying on these loans, still
24 entrapped in these loans that are characterized by
. 0063
1 high interest rates and single premium financed
2 credit life insurance. We know that Bank of America
3 in one instance acquired about $10 billion of
4 securities in their own subprime loans.
5 Over the years I have received complaints
6 regarding these loans. One that comes to mind is
7 that of a minister in my community who was
8 downstreamed from Bank of America and sent over to
9 NationsCredit to get a loan. Shortly thereafter, he
10 was foreclosed upon by NationsCredit.
11 These loans that are still in place ought
12 to be reformed. They ought to be reviewed and their
13 terms adjusted, so that the victims of these loans
14 can be made whole.
15 From an examination of the available data,
16 Bank of America denies African-Americans in the
17 Metropolitan Atlanta area 2.66 times more frequently
18 than they do whites. And Latinos are denied 3.5
19 times more frequently than whites. These
20 discriminatory patterns -- and these are refinance
21 loans, by the way -- ought to stop. These practices
22 fuel predatory lending. People of color who are
23 turned down by Bank of America find themselves
24 forced into the subprime market.
. 0064
1 3. Bank of America is further involved in
2 predatory lending by virtue of its purchasing of
3 subprime loans. These loans contain prepayment
4 penalties and once again, very high interest rates.
5 For example, Bank of America purchases Option One
6 loans. And I have a fax sheet of one victim in the
7 Atlanta area that I will share with you. I don't
8 have it available now, but I will share a fax sheet
9 of one victim who has come to Atlanta Legal Aid for
10 redress. So this is an issue that we need to deal
11 with.
12 4. Bank of America fuels predatory lending
13 by securitizing subprime lenders in the last two
14 years, such as Ameriquest, Wells Fargo Home
15 Mortgage, and New Century. Bank of America also
16 securitized Superior Bank loans which are
17 characterized by many of the features that I've
18 already mentioned.
19 5. Bank of America has made capital
20 business loans to payday lenders, which are
21 increasingly becoming a legislative focus in
22 Georgia, particularly as they function around
23 military bases.
24 We have increasingly gotten complaints and
. 0065
1 a lot of media attention regarding servicemen near
2 these payday loan companies that Bank of America
3 finances who are being ripped off. That's a
4 particularly, in my thinking, an egregious situation
5 where the servicemen who are in harm's way, so to
6 speak, servicemen who are committed to protecting
7 each and every one of our lives, are in a situation
8 where they are being ripped off by the payday loan
9 companies. That is beyond the pale of my
10 estimation.
11 The merger of Bank of America with Fleet
12 should not go forward until they cease their
13 indirect and direct involvement in predatory lending
14 practices. Otherwise, such a merger will create a
15 larger machine to do even more predatory lending.
16 MR. BOAZMAN: Good morning. I want to
17 thank the panel to allow me the opportunity to be
18 here this morning.
19 PRESIDING OFFICER SMITH: Please state your
20 name.
21 MR. BOAZMAN: I'm Derrick Boazman. I'm a
22 member of the Atlanta City Council, representing the
23 12th District of the City of Atlanta. And I am here
24 really to be the voice for the thousands who could
. 0066
1 not be here. I left sunny Atlanta where it's 60
2 degrees to come to the coldest day in Boston,
3 because I thought it important that this committee
4 hear from the voice of the voiceless.
5 Senator Fort really laid out the case, and
6 he has worked very diligently alongside me as my
7 partner over the state legislature as we dealt with
8 this issue at the city level. But I wanted to make
9 sure that it get reemphasized.
10 When we see these mega-mergers, there's
11 also a human factor. Unfortunately, on the Bank of
12 America side in particular, the human factor plays
13 out in predatory mortgage lending, the subprime
14 market we see, as Senator Fort has already stated,
15 people who are looking to refinance, as well as
16 people who are looking for loans on the first end,
17 oftentimes sent out of the door of the primary bank,
18 where the signal sets forth a certain reputation to
19 the subprime market, as it was said, which was
20 supposed to be closed in 2002. NationsCredit and
21 EquiCredit have millions and millions of dollars
22 that are still being made off the securitization of
23 those loans which have been bought back by Bank of
24 America. It's very problematic.
. 0067
1 I've sat in too many homes, most of them
2 widows. The only thing that stands between them and
3 the one asset that they still hold is a slickster.
4 And oftentimes that slickster, whether he shows up
5 as a home repair company, goes straight to the
6 subprime lenders, EquiCredit and NationsCredit. And
7 at the end of the day, they end up losing their
8 home. But not only do they lose their home to this
9 pernicious practice, they oftentimes lose their
10 dignity and their self-worth. And we thought that
11 that was an effort to reform and make some mends to
12 this community.
13 No doubt you will hear small
14 community-based organizations, from Girl Scouts and
15 Boy Scouts, come and talk about how much uniforms
16 have been donated and how much money has been given.
17 But in those same communities grandma is losing her
18 home because of the practices of Bank of America.
19 What is particularly troubling is also the
20 capitalization and the continued funding at levels
21 that are just unheard of of organizations like
22 payday loan companies.
23 Payday loans are nothing more than modern
24 day sharecroppers. It's a modern day sharecropping
. 0068
1 system that preys on sometimes the poorest of the
2 poor, who pay to cash checks, only because Bank of
3 America have pulled their branches out of these very
4 same neighborhoods.
5 So we see payday loan companies come when
6 the banks pull out on the front end. And so those
7 are some very serious concerns.
8 Going back to those who we represent and
9 sitting in their homes and looking at the
10 devastation of their lives, when we see people,
11 particularly seniors moving out of our communities,
12 we think that they're just moving back in with their
13 children and their daughters and their sons because
14 that's what they want to do. But oftentimes the
15 option is either be forced out into the street or to
16 move back into a housing arrangement back with
17 families, simply because they have been swindled out
18 of their homes. And at the end of that transaction
19 is Bank of America in some form, whether it's
20 through their predatory lending or through the
21 capitalizations of payday loans and other kinds of
22 predatory practices.
23 So we are very concerned about this merger,
24 because what it does is give a greater level of
. 0069
1 resource to continue the practices that have
2 devastated lives and devastated homes.
3 So we would ask you to look with a serious
4 discernment into this issue. It may be legally
5 right, but it's morally wrong. It may be legally
6 right to extend these loans, but it's morally wrong
7 to extend the loan when you know that this
8 individual has no possibility of making the payment
9 terms that is given to them.
10 So we would ask you to forego the moving
11 forward of this merger and to look very seriously
12 into this issue, because the human toll is
13 tremendous, and it is terribly unfair.
14 MS. WILKERSON: Good morning to the
15 presiding officer and members of the panel. Welcome
16 to Boston. For the record, my name is Dianne
17 Wilkerson. For 11 and a half years I've had the
18 privilege of serving as the State Senator from
19 Boston, of Boston Second Suffolk District. And I
20 sit in that capacity, as well as in the capacity
21 this morning as the convener of the Statewide
22 Community Advisory Committee, which was actually
23 created in 1999. The original name was the
24 Statewide Community Advisory Committee for the Fleet
. 0070
1 Bank/BankBoston merger.
2 Within three months of the creation of the
3 committee, Citizens Bank announced the plan to
4 acquire Sovereign Bank, so we changed our name to
5 the Community Advisory Committee on Bank Mergers.
6 We've been busy, busy, busy. And we are here today
7 yet again.
8 I want to stay at the outset and make it
9 emphatically clear that I am here to speak in
10 opposition to the merger as it has been presented
11 today. I am a realist. I understand that this is
12 looking like a juggernaut, but I am appealing to
13 you, because it is my understanding that you are the
14 only avenue that we have to address what I think are
15 some very serious issues. The Community Advisory
16 Committee is made up of about 45 organizations from
17 mostly eastern Massachusetts. And we did believe
18 that it was important to have a unified voice,
19 because we didn't know just from the experience in
20 Roxbury or Dorchester what the banking experiences
21 were on the ground.
22 So organizations -- everyone from the
23 NAACP, the Lawyers' Committee for Civil rights, the
24 Burroughs Group, professional organizations, civil
. 0071
1 rights organizations -- the collective and common
2 interests that they all have is that they have a
3 customer base of regular folks who depend on access
4 to credit on a day-to-day basis. And it is that
5 standard, the realization that your obligation and
6 our obligation to make sure that whatever merger
7 that is approved or acted upon, among other things,
8 meets the credit needs of the community. That is
9 what I am here to speak to you today.
10 I sat on the Community Reinvestment
11 Committee in 1990, when Fleet came to Boston in the
12 demise of Bank of New England. I sat on the
13 Community Negotiating Committee during the Shawmut,
14 BankBoston, BayBank. In 1999 I sat on this stage
15 and appealed to you when Fleet took over BankBoston,
16 and we're here today. In fact, the 1999 testimony
17 was the first time I ever testified in opposition to
18 a merger, and so today would certainly make the
19 second.
20 I also happened to sit in the state
21 senate -- and I am sitting here today as the senate
22 sponsor of our state's predatory lending bill. By
23 way of common interests with my colleague from
24 Georgia, I will tell you that we have not enjoyed
. 0072
1 the support -- in the very small list of our banking
2 financial institutions -- support of that bill.
3 Yet, the Federal Reserve Bank of Boston in the first
4 quarter of last year of 2003 in the quarterly report
5 published an article that said even the Federal
6 Reserve Bank understood that it appeared that the
7 predatory lenders were back. And in fact, I think
8 one of the lines said they appear to be back with a
9 vengeance. In my opinion, they have never gone
10 away. I think that our vigilance against this has
11 waned; and in that void, they are back.
12 We are still in my office on a weekly basis
13 receiving phone calls -- we got one yesterday --
14 from people who were in the throes of foreclosure
15 and about to lose their loans. We are still
16 cleaning up the 1990 mess. You may know that in
17 1990, Boston was the scene of an unprecedented
18 hearing in which the entire congressional delegation
19 convened in Boston over the Memorial Day weekend and
20 sat in Roxbury, in the middle of my district, to
21 hear testimony on the 8,000 homeowners whose homes
22 were destabilized as a result of that second
23 mortgage scam.
24 You may also remember that the major lender
. 0073
1 of the second mortgage scam artist was Fleet Bank.
2 And for the last ten years, we have spent time to
3 clean up their mess, and we are not done yet.
4 So I'm a little concerned when I read the
5 history of Bank of America and I look and I see what
6 they're doing around the country, because I think
7 that the experiences of both of these institutions
8 are relevant as we process going forward. If, in
9 fact, Bank of America had a good record, then we
10 would feel relieved that they were coming in and
11 have some optimism. I don't think that's the case.
12 I think that the statistics speaks for
13 themselves -- not mine, but theirs -- that their
14 mortgages -- the Bank of America, first, they're
15 only doing 16.8 of the mortgages, and the industry
16 did 21 percent. For the fourth largest -- about to
17 be the largest -- that doesn't bode well for a
18 community like ours, where there are only going to
19 be three institutions left.
20 We have small business lending. Bank of
21 America has consistently made less of the
22 under-$100,000 loans than their peers. And we're
23 concerned about the work force reductions, because
24 we do not think that this was an issue that had the
. 0074
1 level of importance and focus by Fleet. So if this
2 merger was to go forward, we would want to see that
3 the work force reductions be done in a way not to
4 further decrease the number of employees of color.
5 The predatory lending issue is real. I was
6 especially cognizant that this whole issue of race
7 and the implication for black and Latino borrowers
8 has, for some reason, not been an issue that people
9 have wanted to address. Even our prior panel, which
10 are people that I respect, our Community Development
11 Corporations, in the testimony, only one person on
12 the panel mentioned minorities.
13 Yet, the Mass. Community Banking Council
14 issued their report last week that we have continued
15 to see a spike in the racial and ethnic disparities
16 in mortgage lending for blacks and Latinos in
17 Massachusetts.
18 So I'm reading about how our current banks
19 are doing, and I'm looking at Bank of America's
20 status, and I'm concerned about that and hope that
21 you would be as well.
22 We submitted a comment letter to the Feds
23 for the December deadline. And in fact, Bank of
24 America sent me yesterday a copy of their response.
. 0075
1 I have not had a chance to review it totally, but I
2 thought the issue on predatory lending was relevant
3 for this panel. We set the stats about Ocwen. I
4 think there's some testimony. They are bad actors,
5 and they get their money from Bank of America. The
6 HMDA data also speaks of the same things we speak
7 to, so it's not just our staff.
8 The response from the Bank of America to
9 this issue that we raised was that the HMDA data
10 should be not determinative of their performance. I
11 don't know what would be, unless they planned to
12 give me a report that they issued to Dianne
13 Wilkerson, because the only thing we have is that
14 data.
15 Ocwen is involved in several lawsuits
16 across this country where they're being charged with
17 unscrupulous lending and loan purchasing activity.
18 As I said, I spoke to the black and Latino mortgage
19 rates -- by speaking to another point -- and I'm
20 going to submit some further testimony in response
21 to the comments letter to this panel, but I want to
22 speak to the comments that were made last week in
23 response to the $750 billion loan commitment.
24 I'm sure that you are more aware of Dick
. 0076
1 Bove than I. I'm learning he is a five-star
2 analyst, considered to be an all-American analyst.
3 Every bank in this country looks to him, because he
4 advises and influences investors.
5 The day after the announcement was made,
6 Mr. Bove said that he wanted to ensure investors who
7 were thinking about investing in Bank of America not
8 to worry, because there is no way that Bank of
9 America could in fact perform a $750 million.
10 Either Mr. Bove is wrong -- and I don't think he
11 could be wrong and have a five-star rating -- or we
12 don't have all the information.
13 So I think one of the things that we need
14 to get is an audit on the performance of the
15 commitment that's already been made. When you have
16 the number one bank analyst in the country -- in the
17 world saying that they can't do what they're
18 promising to do, then I think we have to do more.
19 Finally, the Sunshine Law --
20 PRESIDING OFFICER SMITH: Could we just
21 have those submitted in writing?
22 MS. WILKERSON: We will. We will have many
23 people testifying today. I just want to suggest
24 that we have a right to have it made public that
. 0077
1 anybody who testifies in support of this merger who
2 has an agreement will be getting money that they
3 have to be made public. And if they don't
4 acknowledge it to you, I would ask that you request
5 that they submit it, so we can access it from you.
6 I think it ought to be part of what you would be
7 processing as you process the comments and all the
8 support and data that you would hear today from
9 people who are going to be cashing those checks from
10 Bank of America, who got those checks from Fleet.
11 Even our United States Congress has acknowledged
12 this.
13 Black and Latinos are getting crushed. The
14 access to capital in this market has been
15 decreasing -- it's decreasing the Bank of America's
16 market. It's decreasing Fleet's market. How we
17 could be better off with the two together is really
18 the challenge I think for them to prove to us.
19 And if and when they do, I will stand there
20 and I will support it. But there is no information
21 that we have today that will suggest that we're
22 going to be better off or the credit needs for this
23 community will be met. They are not being met now,
24 and I am appealing to you to make sure that those
. 0078
1 questions get asked and answered, or you have them
2 talk to us, because they have not been very willing
3 to do that either. They don't want to talk to us
4 about the facts and about race. And I'm appealing
5 to you, because this is the only place that we can
6 come for relief.
7 And I think you for your patience.
8 PRESIDING OFFICER SMITH: Thank you very
9 much.
10 Mr. Blumenthal?
11 MR. BLUMENTHAL: Yes. Thank you. I
12 apologize for being a bit late, although I think
13 maybe --
14 PRESIDING OFFICER SMITH: You made it just
15 in time.
16 MR. BLUMENTHAL: I very much appreciate
17 this opportunity to be with you. As you know, we
18 asked -- the treasurer of the State of Connecticut
19 and I, as Attorney General -- asked that a hearing
20 be held in Hartford, and we haven't received a
21 response from the board as yet, so we will convene a
22 hearing of our own that will give citizens there an
23 opportunity to be heard. And we will make a record
24 and forward it to you. But I very much appreciate
. 0079
1 this opportunity to be with you this morning.
2 I want to say right at the very outset that
3 we regard FleetBoston as an enormously productive
4 and important partner in the community reinvestment
5 effort. Whenever each of our major banks in
6 Connecticut has been acquired, whatever its name or
7 identity, we have negotiated community reinvestment
8 commitments, as we did with Fleet in the latest
9 merger that took place. And the partnership with
10 FleetBoston has been really exemplary. We've made
11 enormous progress. The $2.9 billion commitment over
12 a period of years has been profoundly significant.
13 And so we have very mixed feelings about losing that
14 partner through this acquisition. We want to make
15 sure that the community reinvestment is real.
16 We have two concerns. First, the total
17 amount that has been committed, the $750 billion.
18 Of that amount, $100 billion has been committed to
19 the area that FleetBoston covers. We believe that
20 that amount is insufficient. The total amount does
21 not take into account of the fact that 20 percent of
22 the assets and more than 20 percent of the deposits
23 from the merged institution will be from the Fleet
24 footprint area, but only 13 percent of the CRA
. 0080
1 commitment right now, according to what the
2 announcement has been, will go to that area.
3 Equally important, we are concerned about
4 the state-by-state allotments. We recognize that
5 the Bank of America has said that state-specific
6 commitments would be unwieldy, inflexible -- those
7 are the terms they've used -- but we want to know
8 the specifics. We need to know those specifics.
9 And we think that the Federal Reserve Board ought to
10 condition approval on commitments that specifically
11 outline what the allocations will be state by state,
12 region by region, at least in minimum terms.
13 I want to say that I recognize that New
14 England may be regarded nationally as one of the
15 more affluent areas. Connecticut is one of the
16 wealthiest states in the country. It also has four
17 of the poorest cities in the country. The panel has
18 referred to two connectors. And we think that kind
19 of community need on the part of certain of our
20 urban areas really requires those kinds of specific
21 state commitments. And also that there be
22 allocations within communities through advisory
23 boards, through means that respond to communities
24 and provide for a governing structure, a community
. 0081
1 responsive mechanism. Without those kinds of
2 specifics, much of what's been announced may simply
3 be eye candy -- looking good, smelling good, but
4 without the real center known at this point and
5 without also how much real energy and enduring value
6 there is.
7 Finally, let me just say that we have real
8 governance concerns relating to the ongoing
9 investigation by federal and state authorities into
10 improper trading activities. We would require
11 specifically that there be a condition on
12 cooperation with those ongoing investigations. Bank
13 of America has committed to cooperate, but we think
14 as a matter of public policy, this board has the
15 opportunity and obligation to condition approval of
16 this transaction on continuing cooperation. And
17 we've raised in our testimony also the issue of
18 compensation as a matter of corporate governance.
19 We think there needs to be more accountability and
20 transparency on what would happen relating to
21 compensation if this merger is approved.
22 So we are concerned about the unanswered
23 questions. We think the board has a right and
24 responsibility to demand answers. And on behalf of
. 0082
1 the State of Connecticut as Attorney General, I urge
2 that all of these issues be addressed, including, as
3 has been raised before, the issue of employment and
4 layoffs. We want a commitment as part of this
5 merger that there will be a four-year commitment to
6 no layoffs in the State of Connecticut, again,
7 consistent with some of the representations that
8 have been made by Bank of America, but more
9 specific, clear, transparent and accountable under
10 the terms that you will impose.
11 I have submitted written testimony that
12 more fully outlines the concerns that Treasurer
13 Denise Napier and myself wish to bring to the
14 Board's attention.
15 In the interest of time, I will finish here
16 again with my thanks for giving me this opportunity.
17 PRESIDING OFFICER SMITH: Thank you very
18 much. The written testimony will be made a part of
19 the official record.
20 MR. BLUMENTHAL: Thank you.
21 MS. WILKERSON: To the panel members, could
22 I just offer, on behalf of my colleague, State
23 Representative Gloria Fox, who was schedule to
24 testify -- she did submit a letter and ask that I
. 0083
1 present it to you.
2 PRESIDING OFFICER SMITH: Fine. We have no
3 questions from the panel. Thank you very much.
4 We have Panel 4 ready, and we were planning
5 to go ahead and have them make their presentations
6 before the break. We'll go ahead with the break.
7 We'll reconvene in 15 minutes.
8 (Recess)
9 PRESIDING OFFICER SMITH: We'll move to
10 Panel No. 4. You each have five minutes. You will
11 get signals when it's two minutes to go and one
12 minute to go.
13 Please give your name and affiliation to
14 start, for the record.
15 MR. FONFARA: Good morning. For the
16 record, my name is John Fonfara. I'm the state
17 senator representing the First District of Hartford
18 in Wethersfield, Connecticut.
19 Before I begin my formal remarks, I would
20 like to say that in listening to my Attorney
21 General, Richard Blumenthal, I, too, would ask that
22 you give attention to the issue of specifying the
23 community reinvestment that is done by region, as
24 opposed to the way it has been proposed so far.
. 0084
1 I am testifying today in support of the
2 acquisition of FleetBoston Financial Corporation by
3 the Bank of America Corporation. The fact that I am
4 here today speaking in support of this acquisition
5 might surprise a number of my colleagues in the
6 Connecticut legislature.
7 In my former role as senate chairman of the
8 Banks Committee I resisted strongly for two years
9 Fleet's ultimately successful efforts to impose ATM
10 surcharges on non-customers. My opinion of the bank
11 then was that it was an out-of-state giant more
12 interested in serving its own financial interests
13 than it was in serving the interests of Connecticut
14 and its residents.
15 My firmly-held view of Fleet was challenged
16 somewhat about five years ago, when the bank
17 invested $2.5 million to leverage $1 million in
18 state funds for the creation of a loan pool for the
19 Spanish American Merchant's Association, known as
20 SAMA, in Hartford. SAMA, headed by its talented
21 executive director, Julio Mendoza, is the primary
22 advocacy organization for Latino small businesses in
23 Hartford, New Haven, New Britain, Meriden and soon
24 over the entire state of Connecticut.
. 0085
1 Under the leadership of Mr. Mendoza and
2 others who will be testifying today, SAMA has been
3 reversing the tide of urban small business
4 disinvestment that has impacted many Connecticut
5 cities. The most important tool that SAMA has had
6 in this effort has been the ability to provide very
7 low interest loans for small business start-ups and
8 expansion.
9 I believe it is critical for regulators to
10 understand what the resources provided by Fleet to
11 SAMA has meant to my constituents. In many cases it
12 has meant the difference between having a job and
13 being on welfare. Some of my constituents who are
14 on welfare are now small business owners, thanks to
15 the loan pool administered by SAMA and funded
16 primarily by Fleet. I recognize this acquisition
17 involves billions of dollars, but to me the state
18 senator representing one of the poorest cities in
19 America, it is about changing lives and improving
20 neighborhoods. Fleet has happened to do both.
21 This fall, despite having no assurances
22 that the State of Connecticut would commit any
23 additional funds to SAMA, Fleet stepped up again.
24 This time for $3.7 million in a revolving fund for
. 0086
1 Hartford, New Haven, New Britain and other cities.
2 This investment, combined with $3 million from the
3 State, will enable SAMA to continue to help
4 stabilize neighborhoods, create jobs, redirect
5 private investment and give hope to communities and
6 individuals who have not had much.
7 I am here today to tell you why I support
8 Fleet Bank in this acquisition, but also to speak to
9 the regulators and to the Bank of America
10 representatives about the importance of acting
11 locally. To have the Chandler Howards, the Carol
12 Hellers and the Joe Giannis, as Fleet does in
13 Hartford, attending meeting after meeting,
14 celebration after celebration as though their office
15 were right next door makes all the difference.
16 I've learned over the last seven years,
17 since I was chairman of the Banks Committee in
18 Connecticut, it's not about where a bank is
19 headquartered or whether your city is the hub of the
20 banks' financial commitment. I've learned it's
21 about the commitment of the institution to have good
22 people at the local level who understand the
23 difference a bank headquartered hundreds or
24 thousands of miles away can make in the life of a
. 0087
1 Latino welfare mom with a dream in Hartford,
2 Connecticut, or Boston, Massachusetts.
3 While I am in no position today to say
4 categorically how beneficial this acquisition will
5 be ultimately to the communities I represent or the
6 many like it throughout the Fleet service area, I
7 can say to you today that my friends at SAMA and I
8 are sincerely optimistic. We have heard of the
9 substantial resource commitment to community
10 investment made by the Bank of America. We have
11 seen the commitment of Fleet Bank. We believe the
12 joining of these two commitments will provide all of
13 us with an opportunity to affect the communities we
14 serve in ways we could never have thought of
15 previously.
16 I urge you to support the acquisition, and
17 I thank you for your time.
18 PRESIDING OFFICER SMITH: Mr. McCrory?
19 MR. McCRORY: First of all, my name is Pat
20 McCrory. I'm serving my ninth year as Mayor of the
21 City of Charlotte, North Carolina. I'm also proud
22 to serve as Chairman of the Housing and Community
23 Development Committee for the U.S. Conference of
24 Mayors, where I worked very closely with former
. 0088
1 president of that conference, Mayor Tom Menino.
2 Let me just say this in a very clear and
3 statesman-like way about Bank of America. I have
4 never worked with a corporate citizen that doesn't
5 more clearly not only understand, but makes a
6 commitment to city urban centers and community
7 issues, primarily in three areas: One, community
8 development; the second is understanding the
9 economic development efforts in creating jobs; and
10 third, getting involved in community leadership to
11 improve the quality of life for all citizens in
12 every community that they represent.
13 When they make a commitment, their word is
14 their bond. In fact, Mr. Lewis mentioned they have
15 already met 45 percent of their ten-year goal. And
16 Charlotte has felt an impact of that, along with
17 many cities throughout the United States of America.
18 In Charlotte, for example -- I just want to give you
19 a few examples where I have had a very successful
20 relationship with Bank of America during my
21 eight-year tenure as mayor.
22 One example is working with a low income
23 neighborhood, which we used to call a project. It
24 was a blighted project with drugs, with crime, with
. 0089
1 no hope for the future. Bank of America saw this as
2 not helping those residents or helping the
3 community. Instead of building a project, we wanted
4 to build housing and a community all in one.
5 Because building housing wasn't just the answer, but
6 building a community was the answer.
7 Therefore, Bank of America helped us apply
8 for a Hope VI grant. We came to the NationsBank to
9 help us create that vision, and we worked very much
10 in partnership with them in coming up with a master
11 plan for a community, which included multi-family,
12 single and elderly housing. This is in the center
13 of our urban core, which was very important to us.
14 HUD approved this project. In less than five years,
15 this project is a role model for the rest of the
16 nation.
17 It is a vibrant and unique community where
18 I have people who work for the banks and all types
19 of industry in our area, and they're living right
20 next door to people on welfare, and no one knows the
21 difference, because it is now an integral part of
22 our community, and it is now safe with good housing.
23 I am very, very proud of what has also
24 occurred around that development because of this
. 0090
1 vision. 13 acres were acquired by the bank of
2 surrounding land, and we've now redeveloped that
3 surrounding land, where we built a private school,
4 which was a reserved space for poor children, and it
5 is now a very nice developed neighborhood.
6 Not only have they helped everyday citizens
7 who are in need in urban centers, but I've been very
8 impressed with them helping the elderly in poor
9 neighborhoods. Bank of America has also helped us
10 with some incredible developments, one called
11 Sycamore Green, which was a very distressed area in
12 our city.
13 They invested over $5.6 million. We've got
14 190 units, and it's been a very, very successful
15 project. There are many, many more examples I could
16 give you in Charlotte, but it's not just the
17 Charlotte perspective. If you talk to Mayor
18 O'Malley in Baltimore, Mayor Hahn in Los Angeles or
19 former Mayor Hood in Orlando, there are examples of
20 Bank of America making investments -- over $100
21 million in loans and investments -- to build center
22 city, affordable housing in urban areas. And that's
23 what's so impressive about this bank, is that they
24 really understand the urban ordinance issue.
. 0091
1 Very briefly, I also want to say they
2 understand the creation of jobs in economic
3 development. In fact, I'm proud to say, due to Bank
4 of America's assistance in Charlotte, we now have a
5 satellite campus of Johnson and Wales University,
6 which was headquartered in Providence, Rhode Island.
7 And we're very, very pleased to have that
8 partnership, because that is creating new jobs for
9 many people in our communities. There are many
10 examples of that also. And of course, community
11 leadership. No corporation is more involved in arts
12 and science, the United Way, Mentoring, which is a
13 passion of mine, and Habitat for Humanity, in which
14 Bank of America has built over 100 houses in
15 Charlotte. This is leadership and commitment at all
16 levels.
17 I will say without any hesitation that Bank
18 of America is committed to building a community and
19 helping people of all income levels, and this comes
20 from a mayor of a city of 650,000 people within its
21 city limits, a very diverse community.
22 I'll conclude by saying this -- and I have
23 to say this -- and that is that I look forward to
24 meeting Tom Menino in Houston for the Super Bowl,
. 0092
1 when the New England Patriots meet the Carolina
2 Panthers.
3 Thank you very much.
4 PRESIDING OFFICER SMITH: Thank you.
5 Mr. McMahon?
6 MR. McMAHON: Thank you. I'm Michael
7 McMahon. I'm here on behalf of Governor Carcieri,
8 the Governor of Rhode Island. I'm in charge of
9 economic and community development.
10 In a global economy, change is good. And I
11 know change scares people. But if I look at this
12 transaction, the name changes, but the heart stays
13 the same. And as Fleet has demonstrated, in a
14 customer service business, particularly one as
15 intimate as banking, if an organization -- and more
16 importantly, it's people -- hold on to their moral
17 compass of their core values, they will thrive,
18 their communities will thrive, and all of their
19 stakeholders will thrive. And they will stay
20 competitive. And that's what this merger is all
21 about.
22 Given that the core values of Fleet and the
23 core values of Bank of America are so similar, we
24 believe that the merged institution will continue to
. 0093
1 be a driving force for community and economic
2 development in Rhode Island and the region.
3 My friends in Texas taught me that if you
4 tell people what you're going to do, it's bragging.
5 If you tell people what you've done, that's
6 reporting. And if I report on what Fleet has done
7 in our community, it is a very impressive track
8 record. Let me just share with you some of those
9 activities.
10 They have a strong record of contributing
11 to Rhode Island non-profits, $2.5 million to over
12 400 organizations.
13 It's the largest contributor to the United
14 Way of Rhode Island, over $1 million for the past
15 five years.
16 I think what's really extraordinary about
17 Fleet in our community is it is the "go to"
18 organization. When we have a problem, when there is
19 a need, the first call goes to Fleet.
20 During the West Warwick Station nightclub
21 fire, Fleet volunteered right alongside of the Rhode
22 Island Emergency Management to support the victim
23 hotline. They donated $25,000 to the Station Fund,
24 and they served as the collection point for the Red
. 0094
1 Cross donations.
2 For the Rhode Island Community Food Bank,
3 they contributed $500,000 to support a new facility.
4 And this will make Rhode Island the first
5 hunger-free state in the United States.
6 When it comes to Brownfield projects,
7 environmental projects, Fleet is the firm that steps
8 up to write the check time and time again.
9 If you look at small businesses, Fleet
10 serves over 13,000 small businesses in Rhode Island.
11 This is 30 percent of all Rhode Island small
12 businesses. They instituted a financial education
13 program region-wide to help people who are not
14 sophisticated in dealing with finances get
15 comfortable and save for their future. They're an
16 innovative leader. They had the first
17 HomeLink/OfficeLink on line. They have talking ATMs
18 to better serve the visually impaired.
19 So are we concerned that this merger is
20 going to adversely impact our community? Absolutely
21 not. I think that Mr. Lewis and Mr. Gifford
22 mentioned how many people in key management
23 positions are going to be continued to have roots in
24 this community.
. 0095
1 But more importantly, I look at it just
2 from a financial transaction. You don't pay the
3 type of premium for what is in effect a retail and
4 community franchise and not expect to invest in your
5 customer's communities. And so that going forward,
6 there is no doubt in our minds that Fleet will
7 continue to be the leading corporate citizen now
8 that they have changed their name to Bank of
9 America.
10 We have 4,000 employees in Rhode Island.
11 We expect to have at least that many, possibly more.
12 And this is a company that has been around for 210
13 years and has been a pillar of our community, and we
14 expect that to continue.
15 Thank you very much.
16 MR. WAINWRIGHT: Good morning. And thank
17 you for the opportunity to appear.
18 I am William Wainwright, North Carolina
19 State Representative for District 12, comprising the
20 four rural eastern North Carolina counties.
21 I am pleased to speak before this
22 distinguished group to express my support of Bank of
23 America in its proposed merger with FleetBoston
24 Financial Corporation.
. 0096
1 As Chairman of the House Finance Committee,
2 I have had the privilege of working with Bank of
3 America's executives and government affairs
4 representatives. Thus, I am here today to speak in
5 favor of the merger of Bank of America and
6 FleetBoston Bank.
7 I will begin by sharing with you that Bank
8 of America has been and continues to be an
9 outstanding corporate citizen in North Carolina.
10 Bank of America has been a leader in growing jobs in
11 our state. I must tell you that predatory lending
12 is a serious issue in North Carolina, and the North
13 Carolina general assembly has dealt with this issue
14 with due diligence.
15 In 2003 Bank of America officials came to
16 the table and worked diligently with legislative
17 leaders and members of the general assembly for
18 changes in consumer lending practices that added to
19 stronger consumer protection. While agreeing to the
20 many changes in the predatory lending law, it
21 allowed Bank of America to bring its home equity
22 business to North Carolina. This resulted in 350
23 consumer real estate jobs and the creation of 370
24 additional jobs, for a total of 720 jobs at a
. 0097
1 much-needed time.
2 North Carolina's economy is changing. And
3 industries such as manufacturing and agriculture are
4 no longer major players in the state's economy. As
5 you are aware, North Carolina has lost more
6 manufacturing jobs than any other state. We must
7 look at other resources for economic growth. And we
8 have continued to count on the financial services
9 industry to be one of our growth entries in North
10 Carolina.
11 We all understand the importance of
12 financial literacy. Bank of America's Financial
13 Literacy for Life Program has trained more than
14 18,000 teachers and 500,000 students in the area of
15 financial literacy. Financial literacy is a
16 significant factor for the future prosperity and
17 growth of our citizens and our state. Education is
18 a top priority for our legislative black caucus.
19 And Bank of America has consistently supported
20 higher education by providing scholarship
21 contributions to various North Carolina colleges and
22 universities.
23 Annually, our legislative black caucus
24 sponsors a scholarship weekend to support our
. 0098
1 historically black colleges and universities in
2 North Carolina. Bank of America has been among our
3 biggest contributors, and their contributions have
4 allowed us to provide scholarships to many needy
5 students at these educational institutions.
6 Bank of America is considered a premiere
7 leader in the areas of community development. The
8 reasons that the Bank has this distinction are:
9 Bank of America maintains an outstanding CRA rating.
10 Nationally, Bank of America has a $2.5 billion
11 portfolio of low income housing tax credit
12 investments. Bank of America has approved over $100
13 million dollars in single-family and multi-family
14 affordable housing construction loans. Bank of
15 America is not only investing in affordable housing
16 construction loans in urban and metropolitan North
17 Carolina, but it is committed and is investing in
18 affordable housing financing in rural North Carolina
19 also.
20 Bank of America has many success stories
21 working with community groups to provide affordable
22 housing to those in need in North Carolina. I am
23 excited about one of several that they did in my
24 legislative district. Bank of America financed a
. 0099
1 $2.2 million construction loan to create 50
2 much-needed units of housing at Gatewood Apartments
3 in Havelock, North Carolina. This bank has won six
4 affordable housing awards in the Carolinas from the
5 Federal Home Loan Bank.
6 It is my belief that banking in the
7 northeastern part of our nation will be
8 substantially strengthened by this merger.
9 Thank you for the opportunity to speak.
10 PRESIDING OFFICER SMITH: Thank you.
11 Mr. Fowler?
12 MR. FOWLER: Thank you. I am Ned Fowler,
13 E.G. Ned Fowler, founder and CEO of Northwestern
14 Regional housing Authority, headquartered in Boone,
15 North Carolina. I bring you greetings from the
16 beautiful Blue Ridge, where it is also cold and
17 windy this morning.
18 For 25 years my firm has delivered
19 affordable housing opportunities to several tens of
20 thousands of our less fortunate neighbors in the
21 mountain counties of Northwestern North Carolina.
22 You may be interested to know for the first half of
23 our corporate tenure, most of those development and
24 construction activities were funded almost entirely
. 0100
1 by federal dollars.
2 For the most recent 12 years, we have
3 managed to position ourselves as worthy partners for
4 private investment and responsible borrowers for
5 local community lenders, most notably on both counts
6 with Bank of America.
7 We are proud of all of our developments,
8 but it is readily apparent that the newer product is
9 significantly a cut above the older model. In the
10 late 1980s private investment in affordable housing
11 in our region had all but disappeared. The
12 reintroduction of private participation with Bank of
13 America and other institutional investors has
14 resulted in rental and homeownership developments of
15 the highest quality that are marketplace-competitive
16 with long-term feasibility and performance.
17 This has been made possible, not in small
18 part, by the careful underwriting, due diligence and
19 asset management oversight which accompanies these
20 types of public/private partnerships. Our successes
21 have been featured in the Community Development
22 Magazine of the Federal Reserve Bank of Richmond and
23 with Bank of America in the spring edition of the
24 newsletter of the comptroller of the currency.
. 0101
1 What we need in banking partnerships and
2 what has been provided by Bank of America is a
3 strategic banking relationship -- not only direct
4 deposit disbursement accounts, but also advantage
5 construction financing, access to long-term GAAP
6 financing through the bank's membership in the
7 Federal Home Loan Bank system, and even direct
8 investment, as Mr. Wainwright mentioned, in low
9 income and historic credits.
10 Bank of America's community development
11 group has strengthened our development teams, with
12 the benefit of national expertise brought to bear on
13 our local solutions. Their products have been
14 tailored to help us meet housing needs of a rural
15 dispersed population. Strategic alignment with our
16 mission makes the bank a valued source of credit and
17 participation in our initiatives. In our precious
18 little part of rural America, Bank of America,
19 together with us, has been providing affordable
20 housing, which in our corner of the world equals
21 economic development.
22 Our development and management dollars
23 strengthen our mountain communities. As to benefits
24 to clients and individuals, the individuals and
. 0102
1 families, we're proud to say that many are focusing
2 their efforts on educational and employment goals
3 through self-sufficiency initiatives. Each year we
4 are graduating several households from dependency on
5 domestic assistance and using the bank's products --
6 and that's provided by the Fannie Mae Foundation.
7 And many are going on to become first-time
8 home-buyers.
9 We are excited about Bank of America's
10 ongoing commitment to affordable housing. In these
11 tenuous times, we feel like working together with
12 the bank, we are doing our small part for homeland
13 security. Without decent affordable housing, how
14 can we be secure.
15 Thank you very much for your time and
16 attention.
17 PRESIDING OFFICER SMITH: Thank you very
18 much.
19 Questions from the panel?
20 (No response)
21 PRESIDING OFFICER SMITH: We'll start with
22 Mr. Brown. If you will state your name and
23 affiliation.
24 MR. BROWN: Good morning. My name is
. 0103
1 Richard Brown. And I am here on behalf of the North
2 Carolina Fair Housing Center. Let me begin at the
3 end and finish at the beginning.
4 The North Carolina Fair Housing Center is
5 asking the Federal Reserve to require state-specific
6 strategic plans for meeting this ambitious, but
7 ambiguous CRA committee. And we ask that you seek
8 assurance from the Bank of America that it set aside
9 resources to become more competitive in its home
10 state.
11 On July 9, 1998 at a public hearing held by
12 the Federal Reserve in San Francisco, the director
13 of the North Carolina Fair Housing Center gave a
14 spirited speech, raising her concerns about the fate
15 of North Carolinians as a result of the merger
16 between NationsBank and Bank of America. I am here
17 mainly to give to you our assessment of how Bank of
18 America has addressed the issues raised during the
19 earlier hearing.
20 Bank of America continues to have a reduced
21 presence in North Carolina. It has reduced the
22 number of community development specialists to work
23 with local communities to one person to cover the
24 entire Carolina footprint, which includes both North
. 0104
1 and South Carolina. Bank of America has made no
2 effort to increase its market presence in North
3 Carolina and remains No. 4.
4 Our long-term concern is that the expansion
5 of Bank of America into the northeast will sooner,
6 rather than later, lead to the abandonment of the
7 people of North Carolina. We continue to be worried
8 about our future with this bank. How long will it
9 be profitable to remain headquartered in a state in
10 which you are not competitive. Bank of America's
11 $750 billion commitment to the community
12 reinvestment continues to be all smoke and mirrors.
13 The North Carolina Fair Housing Center's
14 other main concern is around whether or not the
15 merger with Fleet is a good fit for Bank of America.
16 The North Carolina Fair Housing Center recently
17 completed testing of FleetBoston in New York as part
18 of a large lending study. We are pleased to report
19 that we have found no evidence of discrimination
20 among black, white and Latino testers. They were
21 all treated exactly the same. And they were all
22 treated horribly.
23 We believe that the management and the
24 leadership of Fleet has significantly underestimated
. 0105
1 the intellectual capital of the Bank of America team
2 and that this will not be a smooth integration.
3 PRESIDING OFFICER SMITH: Ms. Clement?
4 MS. CLEMENT: Thank you for the opportunity
5 to be here today. My name is Brenda Clement, and
6 I'm executive director of the housing network, which
7 is the Rhode Island Association of 25 Non-profit
8 Community Development Corporation.
9 Over 30 years ago I opened up my first
10 savings account with then Industrial National Bank,
11 which was a fine Rhode Island institution, having
12 been established in Rhode Island in the mid-1800s, I
13 believe.
14 Over this period of time over the past 30
15 years, I've watched as Industrial National has
16 changed and grown and become Fleet Bank and the
17 Fleet Bank that it is today; and in fact, have
18 watched many other banks and Rhode Island companies
19 and institutions grow and merge and be acquired by
20 others, but that observation has been with mixed
21 feelings.
22 In Rhode Island -- and we are proud to be
23 the smallest state in the country -- bigger is not
24 always better. During this period of time that
. 0106
1 Fleet was growing and merging and acquiring, quite
2 frankly, we feel that they were not servicing the
3 banking needs and resources -- in providing the
4 resources that were needed by Rhode Islanders,
5 particularly those in the low- to moderate-income
6 neighborhoods in which our members focused their
7 efforts.
8 In 2002, for example, of the 17,673 home
9 purchase loans made in Rhode Island, Fleet's share
10 was only 525. Not very impressive for the largest
11 bank in Rhode Island.
12 It's true that Fleet has been a strong
13 colleague and supporter of charitable giving in
14 Rhode Island, and it's also true that Fleet has made
15 significant improvement over the last couple of
16 years with some strong local leadership, and we look
17 forward to continuing to work at that effort.
18 Our concern, however, is that now that
19 Fleet is being acquired by yet a bigger fish, that
20 we will get lost in that sea. We are concerned and
21 we want to be assured that Rhode Island's unique
22 capabilities and promises in neighborhoods and
23 communities will be met by Bank of America.
24 We have lots of great people in
. 0107
1 neighborhoods and communities, but we also have lots
2 of challenges in Rhode Island. We have one of the
3 oldest housing stocks in the country, many of it is
4 historic housing stock, which presents its unique
5 rehab challenges. We have one of the highest lead
6 levels in the country and have challenges related to
7 that and other environmental issues. We also have
8 the highest escalation of housing prices in Rhode
9 Island that are dramatically impacted by flight from
10 Boston and other places, as people seek affordable
11 housing throughout the region.
12 We want assurances prior to the merger that
13 high-level officials will remain in Rhode Island and
14 have local decision-making authority and resources
15 that they have access to to address these concerns.
16 We want Bank of America not to be in Rhode
17 Island. We want them to be part of Rhode Island.
18 We want a Bank of Rhode Island, a Bank of
19 Massachusetts, a Bank of New Jersey. Bigger is not
20 always better, and we want assurances that local
21 control and local decisions will be made.
22 Thank you.
23 PRESIDING OFFICER SMITH: Thank you very
24 much.
. 0108
1 Mr. Cofield?
2 MR. COFIELD: Good morning. I'm Juan
3 Cofield, President of the New England Area
4 Conference, commonly called "NEAC of the NAACP."
5 The New England Area Conference is the
6 coordinating/governing body for all of the branches
7 of the NAACP in the states of Rhode Island,
8 Massachusetts, New Hampshire, Maine and Vermont.
9 And I'd like for you to know that the executive
10 committee of the New England Area Conference met on
11 Saturday, and there was a unanimous vote to support
12 the position that I've taken here today.
13 NEAC is part of two coalitions that span
14 the Commonwealth of Massachusetts and advocate for
15 people of color and low and moderate income
16 communities. One of the coalitions presented a
17 written proposal to the Bank of America and
18 requested that the Bank enter into a written
19 agreement to guide its banking activities in the
20 Commonwealth of Massachusetts. The Bank has agreed
21 to adopt certain elements of the proposals, and
22 discussions are continuing regarding certain other
23 elements. The Bank is to be complimented for its
24 commitment on the agreed-upon elements of the
. 0109
1 proposal. However, until such time as the
2 discussions have reached a reasonable conclusion,
3 NEAC asserts that the Federal Reserve Bank of Boston
4 should delay and suspend action on the application
5 for approval of the proposed merger.
6 Two requested commitments about which
7 discussions are continuing relate to the Bank's
8 employment level of people of color and women and
9 the procurement of goods and services from
10 businesses owned by people of color and women.
11 Statistics clearly show that the percentage of
12 people of color and women employed by the Bank of
13 America nationally and FleetBoston in Massachusetts
14 are not matched by these categories of citizens'
15 percentages of the population. An even worse
16 disparity is reflected regarding the goods and
17 services purchased from businesses owned by people
18 of color and women.
19 NEAC and the coalition have requested that
20 the Bank set a goal and develop a plan such that the
21 Bank's employment -- and this employment is at all
22 level, including senior and executive level
23 management -- of people of color reflect the
24 percentage of people of color in the general
. 0110
1 population in the Commonwealth of Massachusetts. A
2 similar request has been made regarding the Bank's
3 procurement of goods and services. Other large
4 banks operating in Massachusetts are diligently
5 working to end these disparities. We should expect
6 no less from the Bank of America.
7 These disparities are certainly not unique
8 to Massachusetts. And the Bank of America alone did
9 not create the disparity in our nation. It is a
10 problem of our American society and economy.
11 However, Bank of America must be a part of the
12 solution. The lack of employment in business
13 opportunities have attributed to economic
14 destabilization in communities dominated by people
15 of color.
16 The Community Reinvestment Act begins by
17 reciting Congress' three findings in passing the
18 law. First, banks are required to serve, quote, the
19 convenience and need, end quote, of the communities
20 in which they are chartered to serve. Economic
21 stabilization is a dire need in many communities of
22 color. Adequate employment and business
23 opportunities will greatly attribute to stabilizing
24 these communities. Since Bank of America in its
. 0111
1 normal course of business provides employment
2 opportunities and opportunities for businesses to
3 sell the Bank goods and services, NEAC and the
4 coalition maintain that the Bank has an affirmative
5 obligation under the CRA to provide these same
6 opportunities on an equal basis to communities
7 dominated by people of color. NEAC is willing to
8 work with the bank to achieve these goals.
9 Further evidence of Bank of America's
10 affirmative obligation to provide employment and
11 business opportunities is found in the investment
12 test of CRA regulations for large banks. The
13 investment test evaluates the bank's community
14 development investments. Of the four measures of a
15 bank's investment, two are directly relevant: The
16 bank's responsiveness to community development needs
17 and the degree to which investments are not provided
18 by other private investors.
19 Bank of America can present no reasonable
20 argument that providing equal access to jobs and
21 business opportunities to destabilize communities,
22 dominated by people of color, is not addressing a
23 community need. Also, these investments are not
24 being sufficiently provided by other private
. 0112
1 investors. NEAC and the coalition seek a reasonable
2 investment plan, of employment and business
3 opportunities, from the Bank, to address these stark
4 community needs. At this point, Bank of America has
5 not presented NEAC and the coalition any plan
6 whatsoever.
7 Again, until such time that Bank of America
8 presents such a plan and NEAC and the coalition have
9 an opportunity for comment, the Federal Reserve
10 should defer further consideration of this merger.
11 The application is premature.
12 PRESIDING OFFICER SMITH: Thank you very
13 much.
14 Ms. Cohen?
15 MS. COHEN: Good morning. My name is
16 Nadine Cohen. I am here testifying today on behalf
17 of the Lawyers' Committee for Civil Rights Under Law
18 of the Boston Bar Association, and also the Fair
19 Housing Center of Greater Boston. Both are member
20 organizations of the Community Advisory Committee.
21 We urge the Federal Reserve Board to deny
22 the merger application unless and until Bank of
23 America agrees to implement specific measurable
24 community investment plans that meet the credit
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1 needs of communities of color in Massachusetts, as
2 well as the needs of low and moderate income
3 communities.
4 Bank of America's general community
5 reinvestment and fair lending performance is uneven,
6 at best, and in many areas throughout the country,
7 poor. Bank of America has made substantially fewer
8 home purchase loans to minority borrowers than other
9 lenders in a number of the areas that they serve.
10 While we certainly think it is laudable
11 that the bank has given money to groups such as
12 ACORN, NACA, LARASA and others, that does not
13 relieve Bank of America of their obligation to serve
14 all segments of the community on an equal basis.
15 We call on Bank of America to agree to
16 specific measurable written community investment
17 plans that meet the needs of communities of color.
18 We call on Bank of America to make a commitment to a
19 specific dollar amount of home mortgage and small
20 business lending to communities of color in
21 Massachusetts and to put into place an aggressive
22 program to meet that goal.
23 I want to note that lending to low and
24 moderate income communities is not always the same
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1 as lending to communities of color. And I think
2 sometimes we lose that distinction, and communities
3 of color are severely disadvantaged and underserved.
4 In Boston, the share of home purchase loans
5 that went to black borrowers fell to the lowest
6 level on record. Blacks, who make up 21.4 per of
7 Boston's households, according to the 2000 census,
8 received just 10.3 percent of all loans.
9 African-Americans are the most residentially
10 segregated group in the United States, and they are
11 far less likely to own a home. When they do get
12 mortgages, they often receive far less favorable
13 terms than comparable whites.
14 If Bank of America were to come into our
15 community, they must make specific efforts to
16 increase minority homeownership through the
17 development of new low-cost mortgage products; to
18 ensure equal access to home purchase, home
19 improvement, home equity and refinancing loans for
20 people of color; and to ensure that people of color
21 are not steered to high interest loan products.
22 Unfortunately, Massachusetts has a long and
23 shameful history of redlining and racial
24 discrimination in mortgage lending.
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1 In 1992 the Federal Reserve Bank of Boston,
2 as I'm sure we all know, found that
3 African-Americans and Latinos were 60 percent more
4 likely to be denied mortgages even when factors such
5 as credit history, income and savings were
6 considered.
7 The Feds should ensure that Bank of America
8 addresses its own history of high mortgage denial
9 rates for African-Americans and Latinos and ensure
10 that it will adhere to all non-discrimination laws
11 in mortgage lending before any merger is approved.
12 We also support a work force diversity goal
13 of 20 percent for people of color within all
14 employment levels, including management, and
15 diversity in procurement with a goal of 20 percent
16 from businesses owned by persons of color.
17 Again, it is important to note that by
18 combining statistics for women-owned businesses and
19 women in employment with people of color, we don't
20 always see the real picture. So I would be cautious
21 about that.
22 Bank of America must also stop doing
23 business with subprime lenders who engage in
24 predatory lending practices. And they must
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1 institute safeguards against the purchase of
2 predatory loans. We call on the bank to adopt
3 specific and strict due diligence standards and
4 procedures before adopting any subprime loans.
5 Specifically, there should be no purchasing of loans
6 with little or no income verification, loans with
7 single premium credit life insurance or with
8 mandatory arbitration clauses and prepayment
9 penalties.
10 We cannot rely on goodwill alone. We must
11 see specific written agreements with specific dollar
12 amounts and goals. As our friends in North Carolina
13 and other places have told us, too often, when Bank
14 of America has acquired other banks, communities of
15 color have lost out.
16 As we are about to celebrate Dr. Martin
17 Luther King's birthday, we should keep in mind what
18 he said. "Every person" -- and I would add
19 corporation -- "must decide whether he will walk in
20 the light of creative altruism or the darkness of
21 destructive selfishness." This is the judgment.
22 Life's most persistent and urgent question is, "What
23 are you doing for others?"
24 We call on Bank of America to tell us
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1 specifically what they will be doing for others
2 right here in Massachusetts.
3 PRESIDING OFFICER SMITH: Thank you very
4 much.
5 Ms. Pizer?
6 MS. PIZER: Hi. My name is Hillary Pizer,
7 and I'm here testifying for the Massachusetts
8 Affordable Housing Alliance.
9 Members of the Mass. Affordable Housing
10 Alliance reached agreement yesterday with Bank of
11 America whereby the bank will make 3,000 SoftSecond
12 Program mortgage loan programs over the next ten
13 years.
14 The SoftSecond Program is the state's most
15 affordable mortgage program, so yesterday was an
16 important day for low and moderate income families
17 struggling to achieve the security and safety of
18 owning their own home.
19 In the current environment, where home
20 prices have soared and the share of loans to low and
21 moderate income buyers and to buyers who are black
22 and Latino has been dropping, Bank of America's
23 substantial commitment to the SoftSecond Program is
24 especially important. We are pleased to be
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1 partnering with them to make these opportunities
2 available for the people we serve.
3 Many people know the SoftSecond Program was
4 originally negotiated between the Mass. Affordable
5 Housing Alliance and bankers in 1990 in the wake of
6 a Federal Reserve Bank of Boston study documenting
7 racial disparities in mortgage lending in Boston.
8 We are very pleased to be here and to say
9 that since that time, Boston and across
10 Massachusetts there have been 7,000 low and moderate
11 income households who have been served by the
12 program. In Boston the SoftSecond Program has
13 served almost twice as many low and moderate income
14 buyers in 2002 as the other targeted mortgage
15 programs combined. It has served twice as many
16 borrows of color as the other targeted mortgage
17 programs combined. That was what we set out to do
18 in 1990 with this program.
19 With that said about the SoftSecond Program
20 agreement, we also want to make clear that there are
21 other important community reinvestment issues that
22 impact our members. There are a number of areas
23 that have already been alluded to where discussions
24 with Bank of America are in a much earlier stage.
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1 These include bank branches and services in low and
2 moderate income communities and communities of
3 color, conversion of interstate banking money to
4 equity available to the Mass. Housing Partnership.
5 It's important to us, because the SoftSecond Program
6 is a wonderful program, but we also need more
7 affordable homes constructed. There are issues with
8 diversity in hiring and procurement and with
9 charitable giving.
10 Bank of America has pledged to work with
11 MAHA and other organizations to create a more
12 comprehensive Massachusetts investment plan. We
13 moved forward in a meeting yesterday morning, but
14 there's still a lot of work to do.
15 The agreement we reached on the SoftSecond
16 Program shows that Bank of America can and does make
17 specific state-by-state commitments on community
18 lending. That was something that was in doubt when
19 we started the discussions at the end of November.
20 We hope the Federal Reserve Board will
21 encourage the bank to come to agreement with
22 non-profit partners in Massachusetts on the
23 outstanding issues that we all care about.
24 Further, we hope that the Federal Reserve
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1 Board will encourage Bank of America to develop
2 detailed investment plans with our colleagues in
3 other states who are also seeking specific,
4 measurable commitments.
5 PRESIDING OFFICER SMITH: Thank you very
6 much.
7 Mr. Hamilton.
8 MR. HAMILTON: Thank you. My name is
9 Harmon Hamilton, Pastor of Presbyterian Church,
10 representing the Greater Boston Interfaith
11 Organization. And sitting with me is Reverend Dr.
12 Roberto Miranda, the president of Parks Ministerial
13 Alliance for Latino-Americans that is for the New
14 England region.
15 We, together, with a number of clergy
16 yesterday, represented both organizations, COPANI
17 and GBIO, which together collectively represents
18 about 750,000 people and over $200 million in
19 resources.
20 I met with officials from Bank of America
21 and laid out various areas that have been
22 challenging for the folks we represent. While we
23 commended Gail Snowden and Michael Galivan for their
24 tremendous work in our communities, we outlined a
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1 number of areas that had been deficits from our
2 perspective as it relates to Fleet's services to our
3 communities. These particular areas fell in several
4 categories.
5 First, remittance of products, where
6 immigrant Americans are having trouble sending money
7 back home, being charged high interest rates. The
8 involvement of Latino-Americans in natural banking
9 institutions and the large amount of
10 Latino-Americans who feel cut out and locked out of
11 that institution. After-school programming, the
12 monies that have been invested and the significant
13 amount of dollars that need to be invested,
14 particularly around Latino-American and
15 Haitian-American involvement. Affordable housing,
16 as well as capital investment at lending rates
17 through congregations who are trying to rehabilitate
18 their buildings and to strengthen themselves in the
19 area of environmental accessibility and rehab
20 categories.
21 We were convinced by the representation of
22 those that we met with on yesterday that Bank of
23 America will have a strong commitment to working
24 with us in regards to these issues. As a matter of
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1 fact, they put in place a series of meetings that
2 should lead to significant concessions in these
3 areas. We were also persuaded by their commitment
4 to leave in place Gail Snowden and Michael Galivan
5 and others who locally have developed a significant
6 relationship with us.
7 So we find no reason to oppose this merger
8 at this point. Rather, we look quite favorably on
9 the merger, and our request is that the Federal
10 Reserve Board will pay close attention to the
11 details of these commitments and other commitments
12 that Bank of America has made over the course of the
13 next 30 days to determine the credibility of such
14 efforts as they will happen here in the state and
15 around the country. Thank you.
16 PRESIDING OFFICER SMITH: Thank you very
17 much. Did you have some remarks?
18 MR. MIRANDA: Thank you. I will take the
19 opportunity. Just a couple of concerns I would like
20 to express.
21 Number 1, we were very impressed with the
22 sincerity projected by the members of the Bank of
23 America who were present at the meeting yesterday.
24 One concern that I do have of the Hispanics
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1 is that if Bank of America seeks to establish a
2 relationship with Hispanics here in the New England
3 area, it be very much aware of the diversity of the
4 Hispanic community; that they do not rely on
5 achievements that often relate more to the
6 Mexican-American component of the Hispanic community
7 of the United States -- California, Texas, even
8 Chicago -- and that they really be aware that
9 Hispanics in the northeast are a different
10 composition.
11 We have here a predominant number of
12 Caribbean people, people from central America and a
13 good number of South Americans as well. So this
14 really presents a challenge and an opportunity for
15 Bank of America to engage us in a new, creative sort
16 of way and to see us as something to be acknowledged
17 for what we are, and that we enter into a
18 relationship that recognizes our specificity as a
19 community here. And that therefore Bank of America
20 do not rely on past achievements in that regard.
21 One last thing concerns is our need to hear
22 of a specific, concrete commitment on the part of
23 Bank of America, as it refers to financial
24 investment in this community, that the Bank of
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1 America does not rely again on systems that have
2 been established in other contexts to sort of
3 bolster its image of being altruistic and being
4 engaged in the community, but really that they take
5 a close look at how they can invest here, how they
6 can increase their investments, how they can adjust
7 their investments to the conflicts that they are
8 facing here. So these would be two concerns I'd
9 like to express.
10 PRESIDING OFFICER SMITH: Would you repeat
11 your name for the record.
12 MR. MIRANDA: My name is Roberto Miranda,
13 and I represent COPANI.
14 MS. ROBINSON: I have a question for Mr.
15 Cofield.
16 You said in your meetings yesterday that
17 you had reached agreement on two matters. What were
18 those matters?
19 MR. COFIELD: No. We reached agreement on
20 several matters. There were certainly two that
21 remained outstanding, which I wanted to present.
22 And those two were employment opportunities and
23 opportunities to sell goods and services on an equal
24 basis.
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1 MS. ROBINSON: What matters did you reach
2 agreement?
3 MR. COFIELD: The things you've heard
4 today, the SoftSecond Program, maintaining
5 membership in the Home Loan Bank Board.
6 PRESIDING OFFICER SMITH: Well, thank you
7 very much for coming this morning.
8 MR. BUTTS: Good morning. My name is
9 George Butts, and I'm Director of Housing Counseling
10 for ACORN Housing in Pennsylvania.
11 I wanted to give a quick overview of why we
12 have confidence that the merger between Bank of
13 America and FleetBoston will improve lending
14 opportunities in our communities.
15 In 1991 our leadership sat down with Ken
16 Lewis and his team at NCNB, and we hammered out our
17 first multi-state community reinvestment agreement
18 for low income mortgage lending with what became
19 NationsBank. At the time this agreement was pretty
20 radical, but today no one thinks twice about the
21 appropriate use of low downpayments, non-traditional
22 credit, food stamps as income, voluntarily child
23 support, or cash on hand.
24 In the early days, plenty of lenders talked
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1 the talk, but NationsBank rewrote their mortgage
2 program and within a year we were doing 300 and 400
3 mortgages a year in cities like Houston and Dallas,
4 Texas, where other lenders told us about how low
5 income people could not handle owning a house.
6 Bank of America has recognized that
7 community organizations are the vehicle for real
8 access to the community. We have too many banks
9 which believe that a few loans to a community
10 development corporation or a few small grants mean a
11 partnership. Bank of America has invested in
12 building the infrastructure for non-profit community
13 organizations to grow and to produce. We are now
14 working with them in 17 cities, and the results are
15 there today under Ken Lewis's leadership. We are
16 doing 4,850 mortgages worth over $655 million this
17 year alone. These are overwhelming African-American
18 and Latino, low and moderate income home-buyers.
19 FleetBoston has made its own unique
20 contribution to mortgage lending. The northeast
21 United States housing stock in Boston, Providence.
22 Bridgeport, New Haven, Jersey City, and Paterson is
23 high-priced two- and three-unit houses. Fleet has
24 been a national leader in letting us use the income
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1 from the rental units to subsidize the mortgage
2 payment and make these houses affordable to low and
3 moderate income buyers.
4 And Fleet has gone further than any lender
5 in the country to work with our housing counselors
6 to do exception lending -- common sense loans, which
7 fall outside of the rules, but make sense if you
8 know the full story. These are the loans which used
9 to be done by your neighborhood lender, but in the
10 world of automated underwriting have stopped being
11 done. There are $76 million in loans this year with
12 FleetBoston, and we're confident that Bank of
13 America can help us increase these numbers.
14 We know there's plenty more to be done to
15 keep homeownership affordable to low and moderate
16 income people in the northeast, to increase access
17 for recent immigrants, improving the quality of home
18 equity lending, combatting predatory lending, and
19 meeting the needs of people with credit problems.
20 But we also see that the merger of these two
21 problem-solving institutions improves our chances of
22 addressing these issues.
23 Those were my prepared remarks. My real
24 remarks is that, you know, we've had a relationship
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1 with them for a long, long time. I understand their
2 commitment has been long and deep and real on both
3 sides. I'm excited about this. I've been waiting
4 for them to come to Philly for a long time. So I'm
5 happy, because I know our life is going to be better
6 that they're going to be there.
7 The example with Fleet that we know,
8 because we do some stuff with them in Philly -- I'm
9 going to finish -- is that we have just not the
10 exception pool, but the banks in Philly have a
11 program which help provide alternatives to predatory
12 lending. Fleet is involved in that. They think
13 outside the box. They stepped up when the other
14 banks did not and reduced the amount of credit
15 scores people would have to have to get into the
16 program, which is a viable alternative to predatory
17 lending.
18 PRESIDING OFFICER SMITH: Thank you very
19 much.
20 MS. HURD: Good morning. My name is Maude
21 Hurd. I'm the national president of ACORN.
22 You probably know that when banks are
23 merging, ACORN looks at the record and usually say
24 the banks should do better and usually don't support
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1 mergers.
2 But ACORN and ACORN Housing have a long
3 history of working with both Bank of America and
4 Fleet. And I am here to tell you that we support
5 this bank merger.
6 Bank of America is our largest lender.
7 This year the ACORN Housing Program had done over
8 4,850 mortgages with Bank of America, worth over
9 $665 million dollars. Since 1991, we have done over
10 30,000 mortgages with Bank of America, and these
11 mortgages are worth over $3 billion.
12 This is a real community partnership. Bank
13 of America and our leadership and staff work
14 together in 17 cities. I want to tell you that
15 these are the loans that need to be made. They are
16 loans to single parents, to people without lots of
17 downpayment money, to people in older neighborhoods,
18 to people who just came to this country, to people
19 who are the first people in their family to own a
20 home. And they are not easy loans.
21 For the loans that Fannie Mae and Freddie
22 Mac wouldn't buy, Bank of America put them on their
23 portfolio. For the loans that mortgage insurers
24 wouldn't insure, Bank of America approved the loans
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1 without mortgage insurance. And the best news is
2 that these homeowners pay their mortgage on time.
3 We have less than 2 percent delinquent rate for 60
4 days or greater delinquencies. This is a real
5 success story.
6 I want to talk about our friends at
7 Fleet/BankBoston. Fleet is our second largest
8 lending partner. We have closed 462 mortgages in
9 our ACORN Housing Program with Fleet this year.
10 This is $76 million in loans. We work with Fleet in
11 Massachusetts, Rhode Island, Connecticut, New York,
12 New Jersey and Pennsylvania. As you know, these are
13 high-priced markets with many two or three housing
14 units. Fleet has been the leader in the mortgage
15 market in making these homes affordable to low and
16 moderate income home buyers.
17 This is a proud tradition, which for us
18 dates back to 1995, when Fleet and ACORN signed our
19 first agreement. Both Fleet and Bank of America are
20 lenders who have proven that they can do the loans
21 that need to be done and work with community groups
22 to get where they can't reach. So I would like to
23 thank you for that.
24 PRESIDING OFFICER SMITH: Thank you very
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1 much.
2 Mr. Hagan?
3 MR. HAGAN: My name is James Hagan. I have
4 been the president of the Greater Providence, Rhode
5 Island, Chamber of Commence for the past 16 years.
6 We represent 3,400 businesses throughout Rhode
7 Island for the purpose of creating and maintaining a
8 healthy economic atmosphere in our region.
9 Fleet Bank has been a major partner in
10 creating investment and strengthening the cultural
11 and social infrastructure of our community. They
12 have been a leader on affordable housing issues,
13 minority business lending, and community
14 development. They have provided key leadership and
15 financial and human resources in the creation of the
16 Business Development Company of Rhode Island, the
17 Gordon Avenue Business Incubator, the Minority
18 Investment Development Council of Rhode Island, the
19 Options for Working Parents Program, the
20 Hispanic-American Chamber of Commerce and Leadership
21 Rhode Island, all programs or affiliates of our
22 Chamber, with the exception of the Gordon Avenue
23 Business incubator.
24 During my tenure with the Chamber, two
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1 former Fleet executives have served as Chairman of
2 the Chamber, and the current chairman of Fleet,
3 Rhode Island, serves as chair-elect. Literally
4 hundreds of other Fleet employees have volunteered
5 their time, energy and expertise on a myriad of
6 Chamber community improvement projects.
7 In my opinion, Fleet has made an enormous
8 economic, cultural and social impact on our
9 community. I do indeed support the merger of these
10 two fine organizations because of my past experience
11 with Fleet and because of the strong reputation of
12 Bank of America and their commitment to the
13 community. I have talked with my colleague in
14 Charlotte regarding this matter, and he also
15 expressed the same high degree of enthusiasm for
16 Bank of America that we feel towards Fleet. I am
17 confident the combined companies will bring about
18 tremendous benefits to our region.
19 Grow Smart Rhode Island, a statewide public
20 interest group representing a broad coalition of
21 partners fighting sprawl and leading the charge for
22 better-managed growth, also recently reported that
23 they were encouraged by the commitment of Bank of
24 America to the smart growth movement.
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1 Through community development lending,
2 contaminated properties redevelopment, growth
3 management and inner city revitalization, Bank of
4 America has demonstrated a commitment to sustainable
5 development initiatives in partnership with the
6 Urban Land Institute, according to Grow Smart Rhode
7 Island.
8 Also, the recent announcement by Bank
9 America that they would be lending and investing
10 $750 billion for community economic development over
11 the next ten years is further evidence of the impact
12 this merger will have on delivering a greater access
13 to capital and credit to low and moderate income
14 individuals, families and communities.
15 And lastly, the United Way of Southern New
16 England reports that between the combination of
17 Fleet's corporate giving and their employee giving,
18 Fleet contributes over $1 million a year to the
19 annual United Way campaign. This has been a
20 long-standing practice of Fleet that far surpasses
21 the activity of any other major Rhode Island
22 corporation and evidences a tremendous commitment to
23 the many social service agencies funded by the
24 United Way.
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1 And on my way up here this morning I just
2 happened to notice that just yesterday Fleet
3 received the Governor's Housing Heroes Award sought
4 to raise awareness about the need for affordable
5 housing by hosting a housing forum for business
6 leaders and commissioning a study on the connection
7 between housing and economic development.
8 PRESIDING OFFICER SMITH: Thank you very
9 much.
10 MS. GERECKE: Good morning. My name is
11 Sarah Gerecke. I am the interim executive director
12 and chief operating officer of Neighborhood Housing
13 Services of New York City.
14 NHS of New York City was founded in 1982
15 and is a not-for-profit housing organization whose
16 mission is to promote investment in underserved
17 communities throughout the five boroughs.
18 In 2003, NHS of New York City was directly
19 responsible for an investment of over $215 million
20 in underserved neighborhoods and educated more than
21 13,000 New Yorkers in pre-purchase and post-purchase
22 homeownership classes. About 80 percent of those
23 were people of color. I have a more detailed
24 background report in your package.
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1 My organization does not generally testify
2 on merger applications. We work with coalitions,
3 several of whom are here today, to represent us, and
4 they do a excellent job. However, we felt strongly
5 that the experience that NHS of New York City has
6 had with both Fleet and Bank of America was
7 important to put before you directly as you review
8 this merger application. We're testifying in
9 support of the merger application at our own
10 initiative and without any payment or reimbursement
11 of expenses from either bank.
12 NHS of New York City does its work in
13 partnership with the financial industry, government
14 and residents. Both FleetBoston and Bank of America
15 have played key and unusual roles in helping us
16 reach underserved New Yorkers.
17 Since 1996, FleetBoston has been one of our
18 staunchest and most reliable partners in investing
19 in these neighborhoods. We're also pleased to note
20 that the Bank of America through its mortgage
21 banking business in New York City has been a steady
22 partner to NHS since 1991. I would like to
23 highlight just a few examples of our partnership for
24 the purposes of this hearing.
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1 FleetBoston's partnership with NHS allows
2 us both to reach minority and new immigrant
3 homeowners throughout the city, especially in
4 developing our innovative financial fitness literacy
5 education program. Their charitable commitment has
6 been over $1 million. In addition, when NHS of New
7 York City first engaged in real estate development
8 activities, FleetBoston and their team in real
9 estate finance worked closely in creating the
10 Storeworks Program, an innovative real estate
11 program to develop commercial space below
12 residential units that were donated by the City of
13 New York.
14 Fleet continues to partner with us in new
15 pilot programs for first-time home-buyers. Not only
16 have both banks financially supported NHS programs,
17 but they also have extensive and unusual depth of
18 expertise that they have contributed to our
19 organization, permitting NHS to remain at the
20 cutting edge of community development and
21 investment.
22 FleetBoston volunteers include Jay Sarles,
23 who serves on our advisory board, and Bill McCahill,
24 who is the vice president of the NHS Board of
. 0137
1 Directors and serves as the chair of several of our
2 committees. Susan Retzky of the Bank of America has
3 been a member of our Resource Development Committee
4 for a decade. Many other members of both banks
5 serve on various committees that affect our nine
6 locations throughout New York City.
7 Our relationship has been strong and we
8 find their commitment to be genuine. It is critical
9 to increase -- their large investments help us reach
10 our goal of serving low and moderate income families
11 throughout New York City.
12 PRESIDING OFFICER SMITH: Thank you very
13 much.
14 MR. SCHLEY: Good morning. My name is
15 Stephen J. Schley. I'm the Executive Director of
16 Richmond Economic Development Corporation, also
17 known as REDC. We are located in the state of
18 Richmond, Virginia. I speak in support of the
19 merger between FleetBoston and Bank of America,
20 because we feel that such a merger will benefit the
21 small businesses and low income communities that
22 Fleet Bank -- FleetBoston is presently serving.
23 Our support is based upon the experience
24 and relationship that we have had and enjoyed with
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1 the bank since the inception of our lending
2 activities in 1996.
3 By way of information, REDC is a licensed
4 financial intermediary of the U.S. Small Business
5 Administration's microenterprise development loan
6 program. Under that program, we can provide
7 financing up to $35,000. We also provide training
8 and ongoing technical assistant services.
9 Bank of America provided initial seed
10 funding to REDC back in 1996 in support of that
11 program, which essentially facilitated us obtaining
12 the license through the SBA.
13 In 2000 REDC became a certified community
14 development financial institution, which facilitated
15 the establishment of our second loan pool, that we
16 call the Business Enterprise Zone Loan program.
17 Under that program, we provide financing up to
18 $100,000. Again, it targets businesses that lack
19 accessibility to traditional bank financing. Bank
20 of America also is participating in a bank
21 consortium that provides about $1.7 million in
22 funding for that program.
23 The support that we have received from Bank
24 of America and others over the years has facilitated
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1 the growth of REDC into an organization with assets
2 exceeding two and a half million dollars. We have
3 lowered our standards by $2 million. We manage
4 another $4.8 million in community develop loan
5 programs for the City of Richmond. It's because of
6 that support that we receive from the Bank of
7 America that has provided to the REDC and other
8 community development entities in the City of
9 Richmond -- if that support is indicative of what
10 can be expected in the northeast area, I would
11 support -- encourage the merger of Fleet, and it
12 should have significant impact on small businesses
13 located in this market and the low income
14 communities that they operate.
15 Therefore, I would encourage the Boston
16 community to support and embrace the proposed merger
17 between the two banks.
18 MR. SERVAIS: Good morning. I'm Mike
19 Servais with the Salvation Army in Nashville,
20 Tennessee, testifying in support of the Bank of
21 America.
22 I know absolutely nothing about mergers.
23 Thank you, by the way for today. I admire all of
24 you who are helping us make this possible. The
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1 Salvation Army -- its greatest assets have always
2 been, since 1965, faith, trust and stewardship.
3 Those aren't just words. Those are corporate
4 behaviors and belief systems. And we are
5 faith-based.
6 We have no economic relationship with the
7 Bank of America that's on your radar screen at all.
8 We're not here because of a merger or an economic
9 relationship with the bank. We're here because of
10 Willy's margin. I do know a little bit about
11 margin. I understand margin. And Willy, one of our
12 best customers in Nashville, Tennessee, understands
13 margin, too, because it's because of Bank of
14 America, among other partners of ours, that he's
15 going to have a margin that's going to have a
16 profound impact on himself and his three children
17 very shortly.
18 Bank of America's impact and the Salvation
19 Army's promise to you, in our opinion, are as
20 follows: One, Bank of America has provided the
21 economic stimulus to redevelop the dignity and
22 self-worth -- I heard those words earlier today --
23 to redevelop the dignity and self-worth of our
24 community that we serve.
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1 The Salvation Army, on the other hand, but
2 in partnership, is going to guard that dignity and
3 self-worth religiously -- and we mean that
4 literally -- as we continue our relationship with
5 Bank of America and with all of our community
6 partners and our 20,000 community customers. We are
7 very serious about that accountability, and we will
8 hold a bank account for it, at least by prayer.
9 I want to paint a quick picture, to get
10 back to Willy's margin. I want us to see this
11 through Willy's eyes for a change -- just a little
12 break in the rhythm of things. The mother of these
13 three children is a crack addict, and we don't know
14 how much longer in her life she'll continue to be a
15 crack addict, but she has been for six solid years.
16 Willy is working really hard on a second
17 shift at Vanderbilt University in maintenance as a
18 supervisor. That was a big community celebration;
19 that Willy makes supervisor. And he is now
20 positioned, because of the community
21 redevelopment -- it's not the bank giving him any
22 money; it's community redevelopment, the stimulus
23 that the bank helped bring in, that is empowering
24 Willy to take his three girls out of foster care,
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1 with their permission, and move from a slumlord
2 apartment next-door literally to a completely new
3 home, three-bedroom. And that's going to happen
4 within a few weeks. I'm here to protect that margin
5 and that possibility.
6 Thank you very much.
7 PRESIDING OFFICER SMITH: Ms. Bourdon.
8 MS. BOURDON: My name is Sister Mary
9 Bourdon, and I'm the administrator of a small middle
10 school for girls in the Anacostia section of
11 Washington, D.C.
12 I am very happy to have this opportunity to
13 tell you about the important contributions that the
14 Bank of America has made to our school. The
15 Washington middle school for girls is 100 percent
16 African-American population. It is housed in the
17 Washington View Apartment Complex, a property owned
18 and renovated by the Bank of America.
19 The entire building, which is called the
20 Make a Difference Center, has been dedicated by the
21 bank to provide services needed by the residents of
22 this complex and others in the neighborhood. Not
23 only does the bank contribute this school space
24 rent-free; they had it constructed to our own
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1 specifications.
2 The executive officers of the Bank of
3 America have become our very good friends. They
4 often come by to encourage and support our students.
5 They show up at our rehearsals, our recitals, our
6 basketball games. They are there with us in this
7 very important journey for these young girls.
8 Their support is especially remarkable
9 because the Anacostia section of Washington, D.C. is
10 the most troubled and least prosperous area of D.C.
11 Most of our students come from
12 single-adult-family-headed households living below
13 the poverty level. Children growing up in this
14 neighborhood experience problems of wide-spread
15 unemployment, substance abuse, teen pregnancy,
16 street and domestic violence. The test scores for
17 students in this section of Washington, D.C., are
18 the lowest.
19 With the help of Bank of America, we are
20 trying to provide quality education to girls who are
21 at risk of dropping out of school prematurely. None
22 of our work would be possible without the assistance
23 of the Bank of America. If it were necessary for us
24 to pay rent, we simply could not do the work that we
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1 are doing.
2 We are very privileged, also, to be part of
3 a neighborhood that has been renovated by the Bank
4 of America. Some years ago the bank purchased this
5 large apartment complex which was run-down and
6 poorly supervised, high crime rates. Each of the
7 residential units has been renovated, and the
8 complex is now a pleasant, quiet place for tenants
9 and their families, with a mixed income. We have
10 found student families in this neighborhood. We
11 have also found volunteers and mentors for our
12 students.
13 In short, we couldn't do any of our work
14 without the Bank of America. Tomorrow our school
15 will be receiving the Martin Luther King Day Award
16 in Washington, D.C., and the Bank of America
17 deserves a part of this.
18 PRESIDING OFFICER SMITH: Thank you very
19 much.
20 Mr. Guenther?
21 MR. GUENTHER: Good morning. My name is
22 Bill Guenther. I'm president of Mass Insight
23 Corporation and also president of the Mass Insight
24 Education and Research Institute. The corporation
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1 is a think tank focused on Massachusetts. And the
2 Education and Research Institute is the major
3 statewide group working on raising student
4 achievement using new statewide standards and MCAS
5 tests here.
6 We support the merger of these two
7 important institutions and are confident that the
8 critical role of Fleet and its CEO, Chad Gifford,
9 will play in education reform here will be carried
10 on by the merged institutions as partners with us
11 and many others in the state, two bookends for ten
12 years of education reform here in Massachusetts. In
13 1993 a small group of business leaders went up to
14 the State House, met with legislative leaders and
15 the governor. Jack Rennie, unfortunately deceased
16 now, was the leader of that effort on behalf of the
17 business community. Chad Gifford and his
18 predecessor bank, BankBoston, were there as part of
19 that group in helping to lead the effort, as they
20 had done for educational reform in Boston in the
21 prior decade.
22 Just this last fall, the Class of 2003 --
23 for all of you here from Massachusetts, as you know,
24 the Class of 2003 graduated, as the first class that
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1 had to meet the MCAS English and math standards and
2 exit tests in high school, with more than 95 percent
3 of the class graduating on schedule.
4 That was an extraordinary achievement, and
5 many in Massachusetts deserve credit for it. But
6 Fleet and its leadership, along with a few others,
7 deserve special recognition. Soon thereafter, our
8 state leaders group -- that interestingly, Cathy
9 Minehan from the Federal Reserve Bank here hosts and
10 has done twice a year over the last six years -- met
11 this fall. Fleet hosted that meeting, announced a
12 major new initiative focused on math achievement, of
13 which we are one of the many partners they will have
14 around the state. So they have not forgotten the
15 promise to students in schools around the state.
16 While we finished the first decade of
17 education reform, Fleet and their other partners are
18 focused on the next decade and the next challenges.
19 The key attributes that have made a difference is
20 bipartisan leadership, strong presence from the
21 business community, sustained support -- and that
22 means financial support, but it also means
23 personal commitments of leadership -- and a focus on
24 community and schools, because in education, all
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1 things are local in the end. The states can only
2 play so much of a role.
3 Several quick examples of important
4 initiatives Fleet has partnered with us on -- a
5 parent information newsletter that went out twice a
6 year over the last five years to one million parents
7 across the state working with the Department of
8 Education; an Effective Schools Program to document
9 what effective schools are doing and how to
10 translate those practices to other schools; and
11 finally, to keep the promise initiative, focused on
12 helping the class of 2003 with extra help programs,
13 assuring they're funded, and a three-year effort to
14 research effective practices; what's working and
15 what's not.
16 We look forward to partnering with the new
17 institution over the next decade. And again, I'm
18 confident that the same leadership will be there
19 that we have been so pleased to proceed with over
20 the last decade.
21 PRESIDING OFFICER SMITH: Thank you very
22 much.
23 We have a subgroup from the same panel.
24 Mr. Marks was on Panel 6. He asked to have three
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1 people join him, plus a translator. I see that the
2 group has expanded somewhat, but the time has not.
3 So you have ten minutes in total.
4 MR. MARKS: I can't say it's good to be
5 here, because there's been too many mergers and
6 acquisitions in the past and we've been here too
7 often.
8 But given that, my name is Bruce Marks.
9 I'm the CEO of the Neighborhood Assistance
10 Corporation of America, NACA. I think it's best
11 that we would have a major institution based in New
12 England, based in Boston, but that's not the
13 reality.
14 Given the reality, the best possible
15 circumstance would be that Bank of America comes
16 here, because we have had and we've seen them over
17 the ten years. They are an institution that is good
18 to their word. Let me not read the written piece.
19 Let me speak from our experience.
20 Our experience is that they do what they
21 say they're going to do. And when they said that
22 they were going to respect working people, they not
23 only say it, but they put it into practice. So they
24 put together a mortgage product that is the best in
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1 America; that working people, some of whom are here
2 today as the homeowners, can get a mortgage with no
3 downpayment, with no closing costs. Bank of America
4 pays all the closing costs, pays all the fees.
5 There's no PMI. You don't need perfect credit. And
6 the interest rate is 1 point below market. So
7 today's interest rate is 4.875 percent fixed, 30
8 years APR. You can't beat it. Bank of America does
9 it. They do $6 billion worth of that that has been
10 committed. That's a huge amount of money. And that
11 says -- and we hear today about, Where are the
12 specifics. That's as specific as you can get.
13 So with that, let me turn this over to Iris
14 Mathias, who is the Lawrence director for NACA. And
15 she and her staff have transformed Lawrence with
16 over 2,500 loans and with being a community that
17 Fannie Mae said they would not lend in, Bank of
18 America and Fleet have and have changed that whole
19 city.
20 Iris, why don't you introduce some of the
21 home-buyers who are going to speak for just a few
22 minutes, because we keep hearing from the leaders.
23 Let's hear from the results of what's going on out
24 there on a community level.
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1 MS. MATHIAS: Hi. My name is Iris Mathias.
2 I have some of the homeowners that we helped buy
3 them homes.
4 The first person that is going to speak is
5 Fiabola Camilo.
6 MR. CAMILO: (Through Ms. Mathias,
7 Interpreter) My name is Fiabola Camilo. I bought
8 my house through the NACA program. I bought a house
9 for $330,000, four-family house. And it was very
10 good, because I didn't have to pay no downpayment or
11 closing costs. I got an interest rate of 5.5 -- I'm
12 sorry, 5.25.
13 MR. MARKS: When did you buy your house?
14 MS. MATHIAS: She just closed on December
15 1, '03.
16 MR. MATALU: My name is Eddie Matalu. I
17 have five kids. I always had big problem with the
18 kids because I had no room. I was with two-bedroom
19 for $1,500 every month. Then I go to NACA and I
20 talk to -- I only had $1,000 in my account. I said,
21 I don't have no money. NACA said, Okay, we're going
22 to help you.
23 When I go there, they give me credit for
24 $358,000. I said, "How can I buy the house for
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1 350,000 when I have only $1,000?" He said, "Okay,
2 I'm going to take care of you." They said, "You're
3 going to go and buy any house you like. I'm going
4 to help you." They give me the house with no
5 downpayment and no closing costs. I am glad for
6 that. Thank you.
7 Mr. Burgos: (Through Iris Mathias,
8 Interpreter) My name is Raymond Burgos. I bought
9 my house through the NACA program. It has been a
10 year. I pay -- I got the house for $360,000,
11 four-family house, with an interest rate of 5.50,
12 with no downpayment, no closing costs. NACA helped
13 me to resolve everything, and I am being very
14 grateful to NACA. I am very happy with my family,
15 and I thank God because NACA helped me in
16 everything. Thank you.
17 MS. CABRERA: (Through Iris Mathias,
18 Interpreter) My name is Gilmar Cabrera. I bought a
19 house one year ago. It cost me $260,000. NACA
20 helped me a lot, because I didn't qualify in other
21 programs. I bought a three-family house without a
22 downpayment and the closing costs. I'm very happy,
23 and I thank God because I have my house now and
24 thank you to NACA. And God bless you all. And this
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1 is my testimony.
2 MS. OLIVO: (Through Iris Mathias,
3 Interpreter) My name is Angel Olivo. I bought my
4 house through the NACA foundation, three-family
5 house for $275,000 with no closing costs and no
6 downpayment. I am very happy in my house. The
7 interest rate was 5.85. And I hope that everybody
8 can get their house through the NACA program. Thank
9 you and God bless you all.
10 MR. MARKS: Because of what Bank of America
11 has done over ten years, because when they committed
12 $350 billion, people said it's the largest
13 commitment that was ever made. And people said,
14 Well, we want to see the specifics. Well, they've
15 shown me specifics over the last number of years and
16 they've exceeded what they said that they were going
17 to do.
18 So when they say they're going to commit
19 $750 billion, we take that to the bank. So we
20 strongly support the merger. But when you hear from
21 the Bank of America officials, when you hear from
22 the Ken Lewises and you hear from those -- they have
23 a staff that's as dedicated as the NACA staff is and
24 is as dedicated as the other community group staffs
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1 are around here. A lot of the NACA staff is here.
2 And a lot of the Bank of America staff is here. And
3 they are led by a person who the Bank of New England
4 will meet and who they'll respect and whose word is
5 golden, and that is Kathy Bessant. She will be
6 here. The first time we met with Bank of America
7 people said, this is the lady who's going to make it
8 work. She made it work in other parts of the
9 country, and she will make it work in New England.
10 Thank you.
11 PRESIDING OFFICER SMITH: Let's go ahead
12 and start with Mr. Fishback.
13 MR. FISHBACK: Good morning. First of all,
14 thank you very much for sponsoring this hearing. I
15 hope that this better informs your decision-making
16 about this merger.
17 I'm from the Rhode Island Community
18 Reinvestment Association. We take a great interest
19 in this merger, because we're about to lose our
20 oldest bank in the state to a very large bank, and
21 that very much worries us in Rhode Island.
22 Our opposition to this merger is largely
23 based on Fleet's track record, because we've
24 witnessed our home-grown bank grow bigger and bigger
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1 and bigger and forget about us more and more and
2 more as time goes by. We're particularly concerned
3 also, because we've seen other states -- community
4 groups in other states have conversations with
5 financial institutions about developing programs to
6 meet credit needs for low- and moderate-income
7 communities. And that process has yet to begin in
8 Rhode Island. And this reflects our concern that we
9 are being lost in an ever-growing, growing
10 footprint. As everyone knows, Rhode Island is a
11 small state. As the footprint gets bigger, we
12 become more of a spec, and that is very problematic.
13 There have been some meetings in our state
14 with people from Fleet. And when we asked Fleet to
15 bring Bank of America to the table, Fleet tells us
16 that that will happen when there's something new to
17 report to us. Well, this merger is a process. And
18 these hearings are going on. And we're waiting for
19 the news. And we don't want the news to come after
20 the fact.
21 So we would hope that the Federal
22 Reserve -- in fact, we would urge the Federal
23 Reserve to defer acting on this application until a
24 process that's occurred elsewhere occurs in the
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1 state that's the home base of the institution that's
2 about to be bought up.
3 We have also some specific concerns that
4 relate to Fleet's record. For one thing, we are
5 concerned that their record has been overstated.
6 There have been projects that Fleet has done that do
7 nothing to serve low- and moderate-income people and
8 yet, they're counting that in their $14.6 billion.
9 A second concern we have has to do with
10 refinancing rejection rates and also home
11 improvement rejection rates for people of color,
12 which tends to be at times double that for white
13 people. And this is a concern that the Feds should
14 be looking at in New England, because the rates for
15 all the banks don't look that great, but Fleet
16 stacks up even worse than the banks do generally.
17 Finally, we do have one concern relating to
18 Bank of America as it relates to their scoring
19 community reinvestment points at the expense of very
20 low income public housing tenants.
21 Bank of America has participated in the
22 Hope VI program. And through its participation,
23 there's been a net loss of scarce public housing
24 units. This is very problematic in Rhode Island,
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1 because there are very few housing opportunities for
2 very low income people. And if the bank is going to
3 use its community reinvestment record at the expense
4 of public housing tenants and Section 8 tenants,
5 that causes us much concern.
6 We've been told that we will be getting a
7 meeting soon with Bank of America, which we look
8 forward to, and we hope to be able to discuss our
9 concerns with them some more.
10 Thank you.
11 PRESIDING OFFICER SMITH: Thank you.
12 The panelists have five minutes each on
13 this panel, but do keep an eye on the timer.
14 MS. KEEFE: My name is Kirsten Keefe. I'm
15 a lawyer with the Greater Upstate Law Project in
16 Albany, New York, and I'm here on behalf of the
17 Capital Region Community Reinvestment Task Force.
18 I thank you for this opportunity, and I'd
19 like to limit my comments to two points regarding
20 Bank of America's continued involvement in predatory
21 lending.
22 First, Bank of America's application to
23 acquire FleetBoston Corporation should be denied,
24 unless Bank of America displays that they have
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1 sincerely stopped the securitization of predatory
2 loans.
3 Bank of America's written and oral
4 commitment not to securitize predatory loans is
5 insincere. Bank of America claims to conduct due
6 diligence prior to purchasing loans from third party
7 mortgage lenders, as well as for each pool of
8 mortgage loans purchased by BOA. BOA refuses to
9 reveal, however, what exactly the due diligence is
10 that they conduct. They have asked for confidential
11 treatment, as if due diligence were some sort of
12 trade secret that needs to be protected. BOA should
13 make public what steps it is taking to ensure that
14 they are not capitalizing predatory loans.
15 We do know that BOA uses the narrowest
16 possible definition of what it considers to be a
17 predatory loan. In response to a California
18 community reinvestment group's comment letter, BOA
19 stated that it will not securitize, quote, high cost
20 mortgage loans as defined by the Home Ownership and
21 Equity Protection Act or subprime loans with terms
22 that would trigger similar state lending laws."
23 Congress never intended HOEPA to be the
24 complete definition of predatory lending. If Bank
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1 of America is sincere in its commitment not to
2 securitize predatory loans, Bank of America must
3 expand its definition of predatory lending. For
4 example, Bank of America should not securitize loans
5 which have high points and fees, regardless of
6 whether they meet the high HOEPA threshold; loans
7 that include mandatory arbitration agreements; loans
8 that contain prepayment penalties, especially when
9 those prepayment penalties are coupled with
10 adjustable interest rates; loans that have high
11 debt-to-income ratios, especially when made to
12 low-income folks; loans that leave homeowners with
13 substandard residual income; and loans that have
14 been flipped within at least the last 12 months.
15 Despite rhetoric from the industry, it is
16 not difficult to determine whether a loan is
17 predatory. An investor can tell from the documents
18 whether a loan is high cost. BOA has easy access to
19 FICO scores, loan-to-value ratios, and
20 debt-to-income ratios on loans. BOA can readily
21 track the default rates of loan originators. They
22 can identify notoriously bad brokers, track hot
23 zones for predatory lending and look at other signs
24 that a loan may be predatory. BOA can seek the
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1 advice of state attorney generals regarding problem
2 lenders and of advocacy organizations such as the
3 National Consumer Law Center.
4 Second, bank of America's application to
5 acquire FleetBoston should be denied because Bank of
6 America fails to provide a responsible subprime
7 lending product. By this I mean a subprime lending
8 product to the public, not just a subprime lending
9 product to an organization such as NACA, as we just
10 heard.
11 Bank of America has no subprime product
12 currently and has no plans to develop a responsible
13 subprime lending product. On December 15 BOA
14 acquired an equity interest in Oakmont Mortgage
15 come. The HMDA data on Oakmont shows Oakmont's
16 lending practices to be questionable at best,
17 predatory at worse. Oakmont is a broker-driven loan
18 model, similar to EquiCredit corporation, BOA's
19 former subprime subsidiary and a notorious predatory
20 lender.
21 With the acquisition of FleetBoston, BOA
22 will become the second largest bank in the country.
23 With such a huge market share, BOA must develop a
24 responsible subprime product. Broker-driven models
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1 for subprime lending leads to great abuses.
2 Vulnerable homeowners are targeted by unscrupulous
3 brokers. Brokers who make their living based on a
4 percentage of the loan amount steer borrowers into
5 loans based on the amount of equity in their home,
6 not on the amount they requested. It becomes
7 impossible for a homeowner to get a loan for minimal
8 home improvements. I have heard too many predatory
9 lending victims repeat the ironic statement: "The
10 broker told me I wouldn't qualify for a $8,000 loan,
11 but said I could get a $40,000 loan." Homeowners
12 with below perfect credit must be able to get loans
13 directly through Bank of America loan officers,
14 rather than be pushed off to poisoned subprime
15 products pedaled by brokers through a subsidiary
16 company.
17 Bank of America must offer home repair
18 loans that don't mortgage all the equity in the
19 home. Bank of America must offer a second mortgage
20 loan product that does not require the homeowner to
21 refinance their first mortgage at a higher interest
22 rate, just so that they can get $5,000 to weatherize
23 their home.
24 Bank of America needs to let borrowers know
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1 what kind of credit history leads to what kind of
2 rate and give folks who qualify for prime loans
3 prime rate loans.
4 Bank of America needs to refinance subprime
5 loans with prime rate loans once a homeowner
6 exhibits a regular payment history.
7 I have spent the better part of the last
8 five years litigating predatory lending cases on
9 behalf of low income homeowners against Bank of
10 America and its subsidiary, EquiCredit. Although
11 the doors of EquiCredit were closed in 2001, the
12 opening of Oakmont frightens me and makes me think
13 that the same nightmare is going to come back for
14 low income homeowners.
15 PRESIDING OFFICER SMITH: Thank you very
16 much.
17 Ms. McNeilly?
18 MS. McNEILLY: My name is Louise McNeilly.
19 I'm a neighborhood organizer in the City of Albany.
20 I also work for a community development financial
21 institution. I'm also here on behalf of the Capital
22 Region Reinvestment Task Force, which is a coalition
23 in our area of community development groups. And I
24 want to share those community development groups'
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1 concerns about the pending merger with Fleet Bank
2 and Bank of America.
3 Fleet is currently one of the largest
4 financial institutions in our market by far. Their
5 strength has been in their local presence, their
6 ability at a high level to make local decisions and
7 have that authority locally, and the involvement of
8 a locally-based CRA officer, who has been a good
9 partner to community development groups in our area.
10 Fleet Bank invests in local community development
11 financial institutions like mine, supports small
12 business development programs, and is a strong
13 contributor to housing groups in my area.
14 Bank of America has not had a presence
15 locally. And representatives so far have declined
16 to meet with us and have not disclosed plans of what
17 to expect in our market. Before approving a merger
18 of this size, regulators should require that Bank of
19 America hold meetings in New York's Capital District
20 with community groups. While our market will be a
21 very small one for the new entity -- we're feeling
22 like Rhode Island in this -- the merged institution
23 will be a very significant financing institution for
24 us. As banks in our area have merged, our community
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1 has been increasingly abandoned. The new larger
2 entities have not had the same interest in our
3 community, and their local practice has been
4 lacking. We are very concerned about Bank of
5 America's ability to be responsive to local capital
6 needs, considering that pre-merger, they're already
7 too big to meet with us.
8 We have been told by Bank of America
9 representatives that a community reinvestment
10 business plan will be developed for upstate New
11 York. A pre-merger commitment to including
12 representatives of these important non-profit groups
13 in Albany, Schenectady and Troy in this business
14 plan task force would be an important first step and
15 would make the plan much stronger.
16 We are also concerned that Bank of America
17 continues to -- has not yet committed to having
18 locally-based decision making CRA managers. Before
19 approving the merger, regulators should insist that
20 Bank of America commit to the preservation of local
21 CRA-officer position with meaningful authority to
22 develop community relationships and be responsive to
23 community needs. We need Bank of America
24 decision-makers that live in our community, care
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1 about our neighborhoods, understand our low-income
2 neighborhoods and market and are easily accessible.
3 Local decision-making is one of our greatest
4 concerns in our area.
5 We cannot evaluate Bank of America's
6 lending in our area, but we do know that Fleet could
7 do better in home purchasing lending in Upstate New
8 York. According to HMDA data, Fleet's distribution
9 of loans to underserved communities is lower than
10 that for other financial institutions in our area.
11 Fleet's market share in underserved communities and
12 among communities of color was lower than its total
13 market share in the Albany MSA. And at the end of
14 my written testimony are some of the details on
15 that.
16 So there is room for improvement by Fleet
17 Bank as well. The acquisition by a bank
18 headquartered far from Upstate New York raises
19 concerns about their knowledge in meeting our credit
20 needs in underserved communities and providing
21 needed services to low and moderate income people
22 and minority populations.
23 On behalf of the low and moderate income
24 populations that we serve in the task force, we
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1 request that Bank of America prepare clear and
2 acceptable multi-year community development plans
3 for the capital region, which builds on and improves
4 on Fleet's investment performance, and that this
5 plan be in place before the proposed merger moves
6 forward.
7 In my written testimony I've also outlined
8 the community development needs in our area. I
9 won't go into all of those, but just in the
10 following area the needs are in affordable
11 homeownership and housing. There are some specific
12 products that we lack and require.
13 Under community revitalization and
14 financial services and banking services. There is
15 much that can be done in micro enterprise and small
16 business lending; community development loans and
17 investments in our areas; there's opportunities for
18 improvement in commercial lending; and then of
19 course under maximize local decision-making control
20 and accountability.
21 We hope that the Federal Reserve Board will
22 take our task force concerns into consideration, and
23 we appreciate the opportunity to be heard here
24 today. Thank you.
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1 PRESIDING OFFICER SMITH:
2 MS. SALOWE-KAYE: My name is Phyllis
3 Salowe-Kaye. And for the last 19 years I've been
4 the Executive Director for the New Jersey Citizen
5 Action, the state's largest consumer watchdog
6 organization. We have 60,000 dues-paying family
7 members and over 120 organizations affiliated with
8 us; labor, senior, community, environmental,
9 religious and -- a variety of groups.
10 We're a multi-issue organization, but we
11 spend a great amount of time working on housing and
12 community development issues.
13 My testimony has been rewritten a million
14 times in the last four days. It's sort of
15 schizophrenic, as we've had discussions with the
16 banks and other community groups. However, what
17 hasn't changed and what isn't schizophrenic is our
18 belief that as banks get bigger, they must get
19 better.
20 Since Bank of America is a really big bank
21 that is buying New Jersey's biggest bank, we believe
22 that they have an obligation to become the best bank
23 in New Jersey.
24 Over the past 19 years we've negotiated 28
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1 community reinvestment acts with 28 different banks,
2 totalling more than $25 billion that's been pledged
3 in below market rate mortgages, discounted home
4 improvement loans, construction of permanent
5 financing targeted for non-profits, community and
6 economic development loans, tax credits and grants
7 and a variety of other products and services.
8 When banks come into New Jersey, they know
9 that they are going to negotiate an agreement, a
10 memorandum of understanding, write a letter, a
11 business plan, call it whatever you want, with
12 citizen action. Some do it because they want to.
13 Some do it because they feel they have to. Most do
14 it willingly and a few need additional
15 encouragement.
16 Fleet Bank did it when they came to New
17 Jersey and purchased NatWest. They did it when they
18 purchased Summit. They have become a really good
19 community partner in New Jersey, perhaps the best
20 that we deal with.
21 Part of that is a result of the
22 Fleet/BankBoston merger, which changed our
23 relationship with the bank, but this did not happen
24 by magic. It happened because we had a specific
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1 document that we could refer to with specific
2 monetary commitments, product descriptions and
3 lending criteria that we came back to four and five
4 times a year to measure improvement, to set goals,
5 to reevaluate, if necessary.
6 This would be the point where I would read
7 a few sentences from the Governor of New Jersey,
8 Governor James McGreevey, who has submitted
9 testimony to the board.
10 "Since Fleet's takeover of Summit Bank in
11 2000, Fleet has made substantial commitments to New
12 Jersey. Fleet has committed $1.2 billion in
13 community reinvestment agreements with tailored
14 products through March 2005.
15 "We have 430 branches in New Jersey, with
16 47 branches in major urban areas, representing 18
17 percent of the branches in these areas. Fleet
18 employees thousands and represents a considerable
19 investment in New Jersey. It is this level of
20 commitment that Bank of America should be required
21 to continue should the board approve this
22 transaction. Indeed, we respectfully request as a
23 condition of approval of this merger that Bank of
24 America honor and extend the existing Fleet CRA
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1 agreement that they have in New Jersey."
2 That's what the governor has to say. Now
3 we're back to me.
4 Fleet's $750 billion mega-pledge is quite
5 impressive, but its lack of specificity is
6 disappointing, to say the least. The bank has
7 agreed to develop a state-specific business plan for
8 New Jersey, but only after the merger is completed.
9 There will be some product specificity.
10 However, specific product goals, lending goals have
11 not been committed to, nor is it our ability to make
12 those public if they were. So what we've learned
13 over the past 19 years is that good intentions don't
14 count. And we are urging the board to require that
15 a specific document be put in place in each state.
16 The $100 billion dollars set aside for
17 states in the Fleet footprint falls far short --
18 about $80 billion dollars short -- of being a fair
19 allocation, since only 13 percent of the total
20 commitment will go to states that will eventually
21 hold 24 percent of the combined bank deposits after
22 the merger. While we have had several meaningful
23 discussions with Bank of America -- and like Mr.
24 Lewis said earlier, the people that we have met with
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1 have been diligent, honest, likeable, even charming,
2 and some of them quite sincere. What they haven't
3 been is specific in terms of committing to what they
4 are going to actually do in New Jersey.
5 We need Bank of America to provide us with
6 straight answers and prove that when they enter New
7 Jersey, they will have a stronger commitment to
8 consumer service, community and economic
9 development, and corporate citizenship.
10 MS. WOLFRAM: I'm Tanya Wolfram from the
11 Community Reinvestment Association of North
12 Carolina. And I'm here to tell you that bigger is
13 not better.
14 Since the 1980s, NCNB has grown from a
15 one-state bank with 172 offices in North Carolina to
16 Bank of America, which will have 5,700 branches in
17 29 states after its acquisition. But while Bank of
18 America executives strive to make it America's bank,
19 they have left the community behind. Bigger is not
20 necessarily better for the community.
21 Bigger is not better for access. Bank of
22 America now has 209 branches in North Carolina. But
23 Bank of America's gain is North Carolina's consumers
24 net loss. Since 1986, Bank of America has closed
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1 147 branches in North Carolina, leaving many markets
2 altogether. What happened in Murfreesboro,
3 Lillington and Harmony, North Carolina, sets
4 precedent for places like Orange, Turners Falls and
5 Fiskdale, Massachusetts, and I'm afraid it doesn't
6 bode well. $750 billion dollars is a big number;
7 but like my colleague up in North Carolina Fair
8 Housing Center said, it is ambitious, but ambiguous.
9 Without state and local commitments, the
10 number has no meaningful impact on the community.
11 What does it mean in Jacksonville, North Carolina,
12 where the bank has closed four branches since 1992,
13 and the only Community Development Corporation in
14 the area has no relationship with Bank of America.
15 Indeed, it is difficult to cultivate
16 relationships on a local level when there is one
17 community development officer for all of North and
18 South Carolina. Bigger is not better. Bigger is
19 not better for lending. Bank of America's size does
20 not translate into more loans for small businesses
21 or more loans for low and moderate income borrowers
22 in North Carolina.
23 In its own hometown of Charlotte, North
24 Carolina, where it has the largest bank presence,
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1 Bank of America is only the ninth largest lender in
2 lending to businesses with less than a million
3 dollars in gross annual revenue. In fact, in
4 mortgage lending, in every North Carolina MSA, Bank
5 of America underperformed the market in lending to
6 low and moderate income lending borrowers. Bigger
7 is not better. Bigger is not better when it fosters
8 predatory lending.
9 Bank of America sold NationsCredit and
10 EquiCredit, only to participate in predatory lending
11 under a different guise. Bank of America is buying
12 subprime loans on the secondary market without
13 screening them for predatory lending. Predatory
14 loans destroy communities. CRA-NC pledges to fight
15 Bank of America on predatory lending.
16 What does it profit a man if he gains the
17 whole world, but loses his soul? Can Bank of
18 America avoid losing its soul? Only if the bank
19 makes a commitment to stay committed to the
20 community by developing state and local CRA
21 commitments that are meaningful; committing to
22 improve lending to small businesses and minority
23 borrowers; engaging regional managers in community
24 economic development issues; in screening subprime
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1 loan portfolios to ensure that they are not
2 purchasing predatory loans that are destroying
3 communities.
4 Therefore, we petition the Federal Reserve
5 to deny the merger until Bank of America
6 meaningfully fulfills these commitments. Because as
7 it stands now, I can tell you, bigger is not better.
8 MR. BEAULAC: Thank you very much. My name
9 is Lee Beaulac. I'm the Senior Vice President for
10 Housing and Economic Development for Rural
11 Opportunities. We're based in Rochester, New York.
12 We're a 34-year old rural regional development
13 organization. We have been directly responsible for
14 almost three-quarters of a billion dollars of
15 investments into rural communities in the form of
16 affordable mortgages, small business lending,
17 services to farm workers, and other residents of
18 disinvested rural communities.
19 Last year we served 102,000 people in the
20 states of New York, Pennsylvania, Ohio, Indiana and
21 Puerto Rico. We are a CDFI. We are also an
22 intermediary for the U.S. Department of Agriculture,
23 a lending intermediary, as well as an intermediary
24 for the U.S. Small Business Administration.
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1 Our first-time home buyer program has put
2 over 2,000 folks into first-time homeownership, and
3 we have financed over 260 small business
4 enterprises.
5 Access to credit and capital is critical to
6 the health of any community. And I'm talking today
7 from the perspective of a Community Development
8 Corporation. And my remarks are really directed to
9 the need to have an ongoing relationship with a bank
10 wherein there are predictable sources of resources,
11 there are products that are ongoing that are
12 dependable and aggressive and meet the needs of the
13 local communities.
14 The creation of individual wealth depends
15 upon the credit and capital that is required to
16 finance assets. Private financial institutions play
17 a key role. Notwithstanding the fact that we have
18 resources through the CDFI Fund and SBA and the
19 USBA, we could not do anywhere near what we have
20 done without the direct involvement of commercial
21 banking institutions.
22 Banks that are seriously committed to rural
23 revitalization, community development, that approach
24 communities with the understanding that these are
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1 important markets for them as an institution and are
2 prepared to be inventive and flexible and responsive
3 to local conditions are our best partners.
4 It's with this in mind that we greeted the
5 news of this merger with a fair amount of anxiety.
6 At the start, let me say that I have never really
7 ever met a merger that I liked, with the possible
8 exception of one, and I won't tell you what that one
9 is.
10 So I'm not taking a position in favor or
11 against this particular merger. My experience in
12 general has been that mergers don't usually result
13 in improved levels of service to local communities,
14 particularly where the bank that is serving that
15 local community is merged into something larger and
16 from out of state. I'm not here to talk about my
17 experience with Bank of America. I don't have any
18 experience with BOA.
19 I've heard from others from the west that
20 they've been unhappy with the coverage from their
21 community development professionals in the field
22 working with community development corporations.
23 And that's of concern to me.
24 On the other hand, I'm aware of their
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1 substantial rural commitment, which I think is
2 probably one of the largest rural commitments that
3 any bank has made to date. Fleet, on the other
4 hand, I know very well. I will tell you from the
5 perspective of a full disclosure, I'm on the Fleet
6 COC, Community Oversight Committee. I'm also on the
7 committee that advises Fleet folks in Rochester.
8 It's been a great experience, but it's not
9 a bowl of roses or whatever the expression is. I
10 can't think of it. I mean, we've worked for a year
11 and a half to try to get Fleet to disaggregate their
12 CRA data, so folks could better understand what the
13 performance was at the local level. That issue was
14 resolved along with other issues. And I think it's
15 because that Fleet has been listening to other
16 members of the committee that there is a COC. I
17 don't know if BOA has a similar group. But I think
18 one of the things that Fleet has really done well is
19 listen to the community.
20 Fleet's been very important to us. We have
21 cash advance, cash management. We have operating
22 lines of credit, equipment lines of credit, grant
23 support. We've got folks sitting on their boards
24 and they're sitting on our boards.
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1 Two initiatives that I want to talk about:
2 One is Fleet's commitment to the affordable lending
3 alliance, which we have put together in conjunction
4 with a secondary market, private mortgage insurance
5 industry and rural development and the banks.
6 This is a terrific system, we think, where
7 ROI -- and now we're bringing other groups into the
8 fold -- are originating, processing, underwriting
9 loans for the banks. We deliver the loans to the
10 banks and they fund it. Fleet is making available
11 the affordable advantage loan product, which is I
12 think the only below-market product in the Rochester
13 region I think to date; no PMI, one point below
14 market, so on and so forth. We want BOA to
15 recognize that this product is appropriate for the
16 local community, and we'd like them to continue it.
17 The other thing is, we understand that BOA
18 does not do this, and Fleet has just agreed to
19 become a part of the rural home loan partnership
20 program, which blends rates from rural development
21 with their 502 product, with commercial lending
22 products. We're getting blended rates as low as 3
23 percent. So we'd like to encourage BOA to join that
24 program as well.
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1 My final remark is that we've been working
2 with Fleet. They expressed their desire to join the
3 Federal Home Loan Bank of New York. The Housing
4 Finance Board has put up some roadblocks to that.
5 They're in line to do that, and we encourage BOA to
6 essentially pick up where they have left off, if
7 this merger does go forward, and join the Federal
8 Home Loan Bank of New York.
9 PRESIDING OFFICER SMITH: Ms. Maker?
10 MS. MAKER: Good afternoon. My name is
11 Ruhi Maker. I'm presenting testimony on behalf of
12 Matthew Lee, who could not be here today.
13 This is the testimony of Inner City
14 Press/Fair Finance Watch, in opposition to the Bank
15 of America's applications to acquire FleetBoston
16 Corporation.
17 Inner City press and its Fair Finance Watch
18 have submitted five detailed written comments
19 opposing Bank of America's application. Among other
20 things, these comments have demonstrated that Bank
21 of America is deeply involved in problematic
22 subprime lending. For example, it purchases and
23 securitizes subprime loans from Option one, New
24 Century, Accredited Home Lenders, and Wells Fargo,
. 0179
1 whose subprime loans are being criticized,
2 correctly, in many states. Even more directly, Bank
3 of America on December 15, 2003 -- less than a month
4 ago -- bought a controlling equity state in the
5 California-based subprime lender Oakmont Mortgage.
6 Significantly, Bank of America is working with the
7 same ma'am that was at First Franklin, a subprime
8 lender BofA owned from 1996 to 1999, before selling
9 it to National City corporation. Bank of America
10 made big claims about getting out of subprime, but
11 the reality is that it is still involved, simply
12 under other names -- the Oakmont purchase was
13 through Bank of America subsidiary CIVC, or
14 Continental Illinois Venture Corp. -- and in other
15 ways. Most of Bank of America's securitizations of
16 subprime loans are done through Bank of America
17 subsidiaries with a misleading generic-sounding
18 name: "Asset Backed Funding Corporation" or "ABFC."
19 Here's a quote from a press release issued
20 by the rating agency Fitch on August 20, 2003
21 concerning ABFC, Asset-Backed Certificates in 2003:
22 "The mortgage loans will be sold to the depositor by
23 Bank of America N.A., an affiliate of the depositor
24 and one of the underwriters, which acquired the
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1 mortgage loans from Option One, the originator."
2 This is significant, particularly in terms
3 of the Comptroller of the Currency's announcement,
4 the same day as BofA's pledge, to which we'll turn
5 in a moment, that it would preempt all states'
6 anti-predatory lending laws, because supposedly no
7 national bank or operating subsidiaries is involved
8 in predatory lending in any way.
9 From Fitch's press release and the
10 underlying SEC filings, it's clear that Bank of
11 America, N.A., the national bank, buys subprime
12 loans from Option One. Consider, as to Option One,
13 that this subprime lender applied for a savings bank
14 charter, but was unable to obtain one due to
15 compliance issues that arose, and ultimately
16 withdrew its application. ICP knows this because it
17 commented to the OTS and FDIC in opposition to
18 Option One's applications, including evidence of
19 predatory lending.
20 Regarding Wells Fargo, for the record, the
21 Prospectus Supplement for ABFC Mortgage Loan
22 Asset-Backed Cert., Serial No. 2003-WF1, states that
23 the pool consists of subprime mortgage loans secured
24 by first liens on residential real properties, 91.42
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1 percent of which have the consumer trapped in
2 subprime loans by means of prepayment penalties.
3 Bank of America, hiding behind its subsidiaries
4 Asset Backed Funding Corporation and CIVC, plays a
5 predatory lending name-game.
6 BofA's most recent subprime purchase, it's
7 now clear, was made without even the most cursory
8 due diligence review of Oakmont Mortgage Company and
9 its HMDA data.
10 Oakmont's 2002 data shows that 50 percent
11 of loans nationally originated to homeowners were to
12 minority homeowners. Another 20 percent had a race
13 unknown next to them, and only 30 percent were in
14 fact to white homeowners, a very different disparity
15 as compared to a prime lender.
16 Oakmont's 2003 HMDA data shows that in the
17 Detroit MSA, Oakmont reported 130 applications for
18 conventional home purchase loans from
19 African-Americans, all approved and originated, and
20 48 applications from whites, all approved and
21 originated.
22 Oakmont targets a protected class with
23 higher-cost credit, whereas BofA redlines, with
24 normal cost credit, having made in this MSA in 2002
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1 fully 38 such loans to whites for every one loan to
2 an African-American, while subprime Oakmont made 2.7
3 times more loans to African-Americans than to
4 whites.
5 BofA's responses about its relationships
6 with subprime lenders and its supposed due diligence
7 must be released under the Freedom of Information
8 Act and otherwise, and the comment period must be
9 extended until that is done.
10 Bank of America would clearly like this
11 process to become a referendum on its $750 billion
12 announcement. Is it a big number or not? Well,
13 it's a big number, but it doesn't mean. Even the
14 Federal Reserve says that the focus in this process
15 is supposed to be on the bank's actual record, not
16 on future projects.
17 Bank of America's spin machine, or which
18 the pledge is only the most recent example, allows
19 these disparities to fester and grow worse. On past
20 experience, when BofA and NationsBank made their
21 mega-pledge in 1998, it turned out that they counted
22 toward the pledge loans that have nothing to do with
23 CRA, such as small business loans.
24 Finally, the 10 percent deposit cap. Using
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1 the official numbers from the FDIC, the pro forma
2 institutions would go over 10 percent.
3 And in summary, ICP would request that this
4 merger be denied. Thank you.
5 PRESIDING OFFICER SMITH: Thank you very
6 much.
7 MS. MEIZHU: My name is Meizhu Lui. We're
8 concerned with the growing economic divide in this
9 country and the damage that it does to our
10 democracy.
11 We're opposed to this merger, because we
12 think it will contribute to increasing economic
13 inequality in general and to racial economic
14 inequality in particular.
15 The wealth gap between whites and blacks is
16 still a yawning chasm, more than a century and a
17 half after the end of slavery. In 2001, the typical
18 black household had a net worth of just $19,000,
19 including home equity, compared with $121,000
20 dollars for whites.
21 38 percent of whites would run out of
22 savings in three months, which is bad enough. But
23 79 percent of African-Americans would last less than
24 three months without income.
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1 These disparities did not happen by
2 accident or due to the poor saving habits of
3 African-Americans or other peoples of color. They
4 are rooted in government policies and practices,
5 some of which have allowed U.S. banks to make money
6 from the exploitation of African-American labor and
7 the expropriation of the assets of hard-working,
8 low-income people and particularly of people of
9 color.
10 Fleet's predecessor company, the First
11 National Bank of Boston, was built on profits from
12 loans used to finance the highly lucrative slave
13 trade. The sons and daughters of slaves are still
14 paying the price, and the inheritors of those who
15 invested in slavery are still reaping the benefits.
16 Both wealth and disadvantage have cumulative effects
17 over generations, and we're still seeing those
18 effects today.
19 Now that we're in the 21st century, we can
20 choose to either continue the process or to
21 interrupt the process of growing the economic
22 divide.
23 While FleetBoston has provided some
24 community benefits, as we've heard over the more
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1 recent years, its vast wealth rests on the legacy of
2 profiting from the buying and selling of humans as
3 property.
4 Institutions should be and have been held
5 liable for human rights and human health violations.
6 Fleet has dismissed the reparations lawsuits as
7 immaterial.
8 If we think back a couple of decades, we
9 will recall that cigarette and asbestos
10 manufacturers took a similar view to suits facing
11 them. In the ensuing years, many firms in both of
12 these industries have been bankrupted by the
13 lawsuits.
14 In the case of this proposed merger, the
15 assets of Bank of America are put at risk by the
16 liabilities faced by the reparations lawsuit against
17 Fleet. A successful suit could absorb all of the
18 assets of the combined banks.
19 The Federal Reserve's job is to protect the
20 financial institutions, their depositors, but also
21 all of us as taxpayers. Because in the end, it is
22 U.S. taxpayers that will be stuck bailing out these
23 banks. Sound public policy would not expose
24 taxpayers to the risks involved in such a merger.
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1 Our tax dollars would be much better spent on
2 programs designed to close the wealth gap rather
3 than to perpetuate them.
4 Thank you.
5 MR. SAMPSON: My name is Reverend Al
6 Sampson. I am pastor of Fernwood United Methodist
7 Church located in Chicago, Illinois. I am also
8 Economic Commissioner of N'COBRA, the National
9 Coalition of Blacks for Reparations in America, the
10 premiere organization fighting for slavery
11 reparations today; co-chair of the ministerial
12 commission of a coalition of over 100 organizations
13 working on reparations with Dr. Conrad Worrill,
14 Chairman of the National Black United Front, and
15 Minister Louis Farrakhan, leader of the Nation of
16 Islam, also personal friend and advisor to Chicago's
17 Alderwoman Dorothy Tillman, who authored the Slavery
18 Disclosure Ordinance of Chicago.
19 And since we are on the eve of Dr. Martin
20 Luther King Jr.'s birthday, I must add that I am the
21 only person from the Southern Christian Leadership
22 Conference that Dr. King ordained in the ministry.
23 Esteemed panel, I come to you today to
24 express concerns about the merger of FleetBoston
. 0187
1 Financial Corporation and Bank of America. Of
2 particular concerns are reports of FleetBoston's
3 history of financing the transatlantic slave.
4 It is widely noted that the Providence Bank
5 of Rhode Island, a key predecessor bank of
6 FleetBoston, played a significant role in the
7 financing of the transatlantic slave trade through
8 its exclusive banking relationship with United
9 States Customs in Rhode Island. This was done at a
10 time when the slave trade was illegal under Rhode
11 Island and United States law.
12 Historical documentation shows that the
13 economy of Rhode Island was so dependent on the
14 transatlantic slave trade, that it was virtually
15 impossible to launch effective prosecution against
16 violators of slave trade prohibition laws.
17 Indeed, shareholders of the bank came from
18 some of the largest slave trading families in the
19 United States. Some of these shareholders, such as
20 Charles DeWolf, were known for engaging in acts of
21 terrorism against American citizens to prevent
22 prosecution under the prohibition laws. In an
23 effort to thwart a trial against Charles DeWolf of
24 Rhode Island's largest slave trading family, a
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1 private Attorney General was attacked by thugs who
2 visually attacked him, cutting off one of his ears.
3 Many shareholders of Fleet's earliest bank
4 were also notorious for the murder of enslaved
5 people on ships they owned or commissioned for the
6 transatlantic slave trade. One example is the case
7 of James DeWolf whose, ship Captain tied an enslaved
8 African woman to a chair and discarded her into the
9 Atlantic Ocean alive because she was suspected of
10 having smallpox. Later he only regretted the loss
11 of the chair.
12 The number of illegally enslaved Africans
13 by the DeWolfs and other slavetraders of Rhode
14 Island exceeded over 41,000, covering periods when
15 the bank was the exclusive collector of customs
16 duties for ships engaged in trade -- including the
17 illegal slave trade. According to the slave
18 prohibition laws, the bank could have been fined
19 substantially if ever brought to justice.
20 The African-American community has engaged
21 FleetBoston to answer for their crimes against
22 humanity -- to account for wealth they inherited
23 through past mergers as a result of the destruction
24 of African families, forced immigration and brutal
. 0189
1 exploitation of African men, women and children
2 solely for economic gain.
3 We have asked that the bank atone by
4 apologizing and paying reparations. Certainly it
5 can afford to pay this debt. To date, the bank has
6 not acknowledged any apology nor shown any remorse
7 for this shameful behavior.
8 We ask that the board consider the fact
9 that the African-American community has not
10 forgotten what this bank did to our ancestors or
11 recognize any successor in interest to the assets of
12 this bank is the successor in liabilities of the
13 bank.
14 With each day that passes, another person
15 learns of Fleet's ties to slavery and is outraged,
16 and a new law is passed to serve as ammunition to
17 rectify the injustice.
18 As it stands, the City of Chicago requires
19 that companies that do business with it disclose any
20 connection they or their predecessors have to
21 slavery, or risk losing lucrative contracts with the
22 City. As you know, Bank of America merged with the
23 Continental Illinois National Bank and Trust. Now
24 Bank of America has a significant presence in
. 0190
1 Chicago and services the African-American community.
2 Certainly, if the merger goes forward, Bank of
3 America will become tainted with the crime of
4 enslavement that presently looms over FleetBoston
5 and will inherit the growing disdain many Americans
6 have for Fleet. The bank will be forced to publicly
7 disclose this deplorable history as its own or lose
8 lucrative business with the City of Chicago.
9 Before FleetBoston is allowed to launch a
10 new era in its banking history, we implore them and
11 Bank of America to convince African-American slave
12 descendants, and you -- the regulators -- that they
13 will do everything in their power to rectify the
14 great injustice from the past, or it will continue
15 to haunt them from the courtrooms to the boardrooms,
16 from the streets to the suites.
17 And the question before you as regulators
18 is, are there any blacks on either Fleet Bank's
19 board or Bank of America's board, because we haven't
20 been able to find any.
21 Thank you very much for your time.
22 MR. BARBER: Madam Chairman, before I
23 start, I have a special request of your staff,
24 because I was sitting in the back and I've been
. 0191
1 observing this public hearing. I'm a Baptist
2 deacon; and for the little fellow holding those
3 signs, one or two minutes is not sufficient time to
4 address this issue. So I would like to have anyone
5 for the rest of the day yield at least a minute or
6 two for me, so I can finish my testimony.
7 PRESIDING OFFICER SMITH: Well, there's no
8 way to get them to yield in advance. Why don't we
9 give you five minutes.
10 MR. BARBER: That's fine. Before I start,
11 I want to invite all of you to New Jersey and to
12 visit one of my great philosophers. There's a
13 museum on the campus of Montclair State University,
14 and it's the Yogi Berra museum. Yogi's one of my
15 great philosophers. There's a Yogi-ism that says
16 basically that you can see a lot just by observing.
17 And I've been observing for a long time
18 now, and I just want to finish these remarks,
19 because I didn't get a chance to get it completed
20 until about four this morning.
21 My website, first of all, is
22 reparationsgroup.com.
23 Good morning, Madam Chairman and Members of
24 the Board. I'm very happy to be here. My name is
. 0192
1 Richard E. Barber, Sr., President of the United
2 States ReparationS group.
3 The group was organized as a not-for-profit
4 corporation in the State of New Jersey in August of
5 2002. Our primary mission is to conduct initiatives
6 to improve the economic, educational and social
7 status of the descendants of enslaved Africans.
8 This historic undertaking challenges the
9 black community to embrace our self-help philosophy
10 and work ethics and to achieve these objectives. I
11 welcome the opportunity to address you today and add
12 my voice to the many others who have and will
13 provide testimony on the proposed merger of
14 FleetBoston and Bank of America. I surmise that
15 many may speak on the financial viability of this
16 merger and its potential positive or negative
17 impacts on the global or domestic economy.
18 Madam Chairman, I will do neither. But
19 rather, I would take you on a journey to inform you
20 as to how I came to sit before you this morning and
21 why I am here, why I came up to Boston on what I
22 call a Moses mission. I came up -- and also, I'd
23 like to remind this group that I am a senior
24 citizen.
. 0193
1 I hope to challenge and encourage you to
2 not only focus on the potential mega economic force
3 of this proposed merger, but also to consider the
4 history of Fleet Bank and how they, too, got here.
5 I think the question must be answered as Reverend
6 Sampson just indicated, What road did Fleet travel
7 to get to this point in time today.
8 I will take you on a journey that has taken
9 me from the tobacco fields of North Carolina,
10 through the capitals of Europe as a military officer
11 with a NATO unit, through the private and public
12 sectors, and through urban areas with Dr. Leon
13 Sullivan's OIC, trying to implement economic and
14 community development initiatives for communities.
15 In far too many cases along this journey I
16 have encountered those with the power, the authority
17 and the abundance of financial resources to change
18 the status quo, and create a climate for self-help
19 and progressive community development opportunities,
20 but they chose not to do so.
21 In the spirit of several characters in that
22 Biblical story of the "Good Samaritan," they looked
23 the other way from the real needs and pressing
24 community problems and passed on the other side of
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1 the road.
2 50 years ago this year, I was a 14-year-old
3 student down in a rigidly segregated and so-called
4 separate, but equal school in Jones County, North
5 Carolina. My school was very much separate, but in
6 no ways equal. A school with hand-me-down books,
7 broken chalk, outdated educational materials,
8 outdoor toilets and a school board with members who
9 looked the other way and passed on the other side of
10 the road when it came to providing not equal, but
11 just meager resources so that we could get a decent
12 education.
13 Notwithstanding the Supreme Court 1954
14 ruling on Brown versus the Board of Education, many
15 school officials in the south closed schools or
16 offered firm and stiff resistance, rather than abide
17 by this new law of the land. For me, the Brown
18 versus Board of Education decision offered new hope,
19 new vision and promise for a brighter future.
20 I am the grandson and the great grandson of
21 slaves who worked without a payday, and full
22 employment was the official labor policy of that
23 peculiar institution called "slavery."
24 My father was a sharecropper, which was a
. 0195
1 new and improved version of slavery. Loan officials
2 of the Farm and Home Administration of the United
3 States Department of Agriculture did not even have
4 to give him a reason for rejecting his loan
5 application, even though he owned his own farm at
6 that point on my journey.
7 By now you must be getting the picture and
8 beginning to understand that for me, life has not
9 been a crystal stair. So I sit here before you
10 today with both a plea and a request. But before I
11 present either one, let me remind you that my
12 colleague from New Jersey, Phyllis Salowe-Kaye, gave
13 the many compelling reasons that if the merging is
14 to be, it must come firmly committed with an
15 agreement, state-by-state, and with sufficient funds
16 for affordable housing, economic and community
17 development initiatives in Jersey City, New Jersey,
18 Patterson, New Jersey, Trenton, New Jersey, and the
19 other communities across this nation. Phyllis knows
20 all too well of our battles in New Jersey over the
21 last two years with the mortgage banking industry as
22 our coalition for fair lending sought to get
23 meaningful anti-predatory lending legislation
24 enacted.
. 0196
1 Deadria Farmer, a fellow plaintiff, my
2 colleague from New York, will provide data and
3 information on the reparations movement, I hope, and
4 hopefully her journey from South Carolina to New
5 York, through law school libraries in search of
6 historical records to prove that many American
7 corporate entities stand today on economic
8 foundations created by the blood, sweat and tears of
9 enslaved Africans. Lest we forget and look the
10 other way, many of those economic foundations were
11 built with the wealth created by enslaved Africans
12 who worked for 246 years without a payday.
13 On my way here on my journey, I stopped by
14 Washington in the late '80s, and I marched on a
15 picket line when there was the South African
16 divestiture movement going on. During this journey,
17 I resided in Pittsburgh, Pennsylvania, for 12 years,
18 founded New World National Bank and used that
19 institution to leverage financial resources from
20 Melon Bank, Pittsburgh National Bank, and the Small
21 Business Administration into the Hill district and
22 Homewood communities of Pittsburgh. On this journey
23 I've seen banks with numerous Community Reinvestment
24 Act violations and much, much too high CRA ratings,
. 0197
1 yet bank regulators looked the other way and passed
2 on the other side of the road.
3 Now, Madam chairman, I will very quickly
4 present my plea.
5 Subsequent to the acquisition of Summit
6 Bank in New Jersey by FleetBoston, when the
7 financial health and future independence of Fleet
8 was being questioned by Wall Street stock analysts,
9 when this newly merged Fleet Bank could not
10 seemingly get its economic traction, in short, it
11 seemed that Fleet Bank management and the board of
12 directors had lost its way. I remember a statement
13 by Michael Mayo, an analyst at Prudential Securities
14 and a critic of Fleet's corporate governance, and I
15 quote -- if you had to pick a song to go with Fleet,
16 it would be Bob Seger's, "We felt the lightning, and
17 we waited on the thunder." We felt the lightning
18 and we waited on the thunder.
19 Madam chairman, part of the reason that
20 Fleet Bank never seemed to get productive --
21 PRESIDING OFFICER SMITH: Could you sort of
22 wind it up?
23 MR. BARBER: One minute?
24 PRESIDING OFFICER SMITH: Half a minute.
. 0198
1 MR. BARBER: Fine.
2 Members of the Board, I hope you understand
3 and reflect on my journey over the last 50 years.
4 You may understand the real message that I am
5 conveying to you today. And that message is that a
6 financially viable merger of Bank of America and
7 FleetBoston, coupled with a truly committed and
8 productive community partnership, will enable future
9 travelers to live their lives with greater economic
10 stability and social well-being. We seek a
11 partnership so that investors from Wall Street to
12 the main streets of urban, suburban and rural
13 communities will truly reap tremendous economic
14 benefits and an improved quality of life.
15 Thank you very much.
16 PRESIDING OFFICER SMITH: Thank you very
17 much. I know that the time we have allotted you is
18 very short. Where you have written statements,
19 those statements will be part of the written record,
20 so all of your records will be in the record. If we
21 don't have a chance to hear them, we will have a
22 chance to read them. So thank you very much.
23 MS. FARMER-PAELLMANN: Thank you for this
24 opportunity to testify. My name is Deadria
. 0199
1 Farmer-Paellmann. I'm Executive Director of the
2 Restitution Study Group, a not-for-profit
3 organization that examines approaches to securing
4 restitution for injuries inflicted upon oppressed
5 people. I am also lead plaintiff in class action
6 litigation pending against FleetBoston Financial
7 Corporation and 18 other corporations due to their
8 historical roles in the enslavement of Africans.
9 This testimony is being given on behalf of
10 the Restitution Study Group and the National Black
11 United Front, a coalition made up of individuals and
12 organizations working together for the benefit of
13 all people of African descent.
14 I come before you today to inform you about
15 the dangers of allowing the merger of FleetBoston
16 Financial Corporation with Bank of America, if Fleet
17 does not adequately address the reparations demands
18 of slave descendants.
19 The pending lawsuit sets forth that
20 FleetBoston Financial Corporation is the successor
21 in interest to the Providence Bank of Rhode Island
22 that was founded by Rhode Island businessman John
23 Brown. Brown owned ships that embarked on several
24 slave-trading voyages during the time the bank was
. 0200
1 in existence. Brown was one of very few people
2 prosecuted in federal court for participating in the
3 international slave trade after it had become
4 illegal under federal law. Just prior to John
5 Brown's death he prepared an estate inventory that
6 indicated that Fleet's early bank lent him
7 substantial sums of money at a time that he was
8 engaged in the illegal practice of slave trading.
9 That document is attached to the testimony.
10 Through its earlier bank, FleetBoston also
11 collected custom fees due from ships transporting
12 slaves and earned profits maintaining bank accounts
13 of people who acquired their wealth in the slave
14 trade. Well over 41,369 Africans were enslaved
15 during the time that FleetBoston's early bank
16 collected customs duties and fees on ships engaged
17 in the illegal slave trade.
18 In the Year 2000, I approached Fleet with
19 this information and asked that they verify it with
20 documents from their corporate archives and atone by
21 apologizing and paying restitution on their unjust
22 gains. They chose not to take responsibility for
23 their history. Instead, they issued vague public
24 statements distancing themselves from their early
. 0201
1 bank, or denied a connection to the earlier bank and
2 John Brown. All this, while their own company
3 literature boasted about their connection to the
4 earlier bank and identified John Brown as a
5 respected Rhode Island business leader and founder
6 of FleetBoston's earliest predecessor. That
7 document is also submitted to the record as an
8 exhibit.
9 Equitable liability and moral
10 responsibility for the kidnap, forced immigration,
11 slave-ship rape, murder, and torture and the
12 subsequent forced uncompensated labor and forced
13 breeding of African people will survive any merger
14 FleetBoston may undergo. Slavery reparations
15 lawsuits will follow Fleet wherever it goes.
16 This reality presents factors the Federal
17 Reserve Board is required to consider under the Bank
18 Holding Company Act -- such as the financial and
19 managerial resources and future prospects of the
20 companies and banks involved in a merger proposal.
21 The prospects for this merger are clear --
22 news reports indicate that high profile litigation
23 teams are preparing new reparations lawsuits against
24 companies, including FleetBoston, and will file them
. 0202
1 if justice does not prevail in the pending lawsuit.
2 The new Bank of America will be stuck fighting
3 expensive legal battles that FleetBoston could
4 resolve right now. The prospect is that their
5 financial resources will be adversely affected by
6 this litigation.
7 In addition to the litigation, there is the
8 prospect of more financial woes due to actions by
9 state and local governments. Laws are being passed
10 around this country requiring disclosure of ties to
11 slavery. Los Angeles and Chicago have slavery
12 disclosure laws, and New York City and Cleveland,
13 Ohio, have pending disclosure bills. Disclosure
14 laws are making life more difficult for companies
15 that are trying to hide their tainted histories.
16 The laws force them to tell the whole truth about
17 their connections to slavery. When a company
18 reports, it becomes exposed to more reparations
19 lawsuits. If a company is found to have failed to
20 disclose the truth, they could lose lucrative
21 contracts with state and local governments.
22 One example of a company caught in the
23 cross-hairs of Chicago's slavery disclosure law is
24 Lehman Brothers. Alderwoman Dorothy Tillman
. 0203
1 introduced the slavery disclosure bill that became a
2 city ordinance in October of 2002 and took effect in
3 the beginning of 2003. Consequently, Lehman
4 Brothers was forced to disclose its connection to
5 slavery, or forego a $145 million contract with the
6 City. Last week, just one month after the media
7 reported on the disclosure filing, a new class
8 action lawsuit for reparations was filed against
9 Lehman Brothers. In addition, an investigation is
10 underway to determine whether or not the disclosure
11 was incomplete. If Lehman Brothers is found to have
12 distorted their history, they could lose their
13 contract with the City.
14 In October, the Providence Journal reported
15 that, if allowed, the FleetBoston merger with Bank
16 of America would create the fourth largest company
17 in the world. If this is true, FleetBoston and Bank
18 of America's financial exposure to ongoing slavery
19 reparations litigation and disclosure laws could
20 have a profound impact on the nation's banking
21 system and the national economy. These are key
22 areas of the Federal Reserve Board's mandate.
23 Considering these factors, this merger should not be
24 allowed to go forward until the reparations issue is
. 0204
1 properly addressed.
2 Reparations now.
3 PRESIDING OFFICER SMITH: Thank you very
4 much.
5 MR. FARASH: Hello. I'm Isidior Farash,
6 and I'm the guy who had two separate accounts
7 purchased by Fleet. The first time the incoming
8 bank management froze over half million dollars of
9 our company's cleared assets without a reason. It
10 took over six weeks to obtain a court order
11 releasing the funds. The stress created by this
12 event contributed to the early death of one of our
13 company's partners.
14 The second time Fleet acquired our account,
15 they disregarded long-standing contracts and revoked
16 lending commitments without a reason. Numerous
17 families have lost jobs due to this event. I have
18 not cashed a paycheck in months. I should also note
19 that a large number of the bank's management was
20 replaced upon acquisition by Fleet. This makes it
21 extremely difficult to continue any long-standing
22 bank policies, as the new managers use such an
23 opportunity to crack their collective whips and, in
24 fact, renegotiate written agreements.
. 0205
1 The incoming management also makes it a
2 point to tell the acquired customers of their deep
3 desire to continue with the policies and methods of
4 the old bank. We were told that Fleet greatly
5 valued its acquired borrowers, when in fact, that
6 was never true. Fleet had intended to liquidate a
7 portion of its acquired borrowers, or in the
8 alternative, to squeeze them through a variety of
9 techniques for changes, making these accounts more
10 lucrative for the bank.
11 Fleet's legal firms, in my case, have based
12 their claims on documents that do not exist and
13 asserted that existing signed documents inherited
14 from their predecessor banks are somehow invalid.
15 They actually expect us to pay their ridiculous
16 legal expenses; and accordingly, have been on a
17 litigative spending-spree.
18 Fleet's strategy is to drive its
19 adversaries into bankruptcy and thereby run them out
20 of resources to continue the litigation. Fleet also
21 overstates any reasonable cause of action they might
22 indeed have to portray their adversaries as
23 criminals.
24 As a documented September 11th victim, my
. 0206
1 company has received no help from the government,
2 and Fleet has actually officially accused us of
3 committing fraud against Uncle Sam by attempting to
4 borrow SBA disaster relief funds, which were made
5 available specifically for that purpose.
6 I would also ask the Federal Reserve to
7 consider the practical reality that local bank
8 monopolies are bad for business in general.
9 While the federal antitrust provision may
10 not apply to local monopolies, banks are somewhat
11 unique, in that everyone needs them. And also,
12 people make the majority of their market choices
13 based on geography. Therefore, since the basis for
14 antitrust laws in general is to promote market
15 choices, I would ask the Federal Reserve to consider
16 that three semi or many regional bank monopolies has
17 the same practical effect as a single, giant
18 monopoly. If the bank saturates communities, as has
19 been Fleet's practice, they have succeeded in
20 limiting market choices; and thus, have gotten
21 around the intent of the antitrust rules.
22 Lastly, while most Massachusetts people are
23 kind and decent, there is a core group of Fleet
24 executives -- and they know who they are -- whose
. 0207
1 primary interest in this merger is to prevent having
2 done to them and their communities what they did to
3 other jurisdictions in the northeast. And to these
4 people, I would join in harmony with my fellow New
5 Jersey brothers and sisters in saying, Let my people
6 go.
7 To the Federal Reserve Board, I would
8 kindly mention that any borrower who can afford to
9 litigate with a bank as big as Fleet does not need
10 to borrow money. And that would only go more so for
11 any merged entity which would be far larger than
12 Fleet.
13 Thank you and thank everyone for listening.
14 PRESIDING OFFICER SMITH: Thank you very
15 much.
16 MR. TARE: My name is Ramkrishna Tare. I'm
17 informally representing those who are affected by
18 Fleet's previous merger with Summit. I think Mr.
19 Farash provided some information on that, and I
20 think I have a lot more to amplify on that.
21 Accordingly, my testimony today focuses on
22 my firsthand experience involving Fleet's
23 acquisition of Summit Bancorp that affected me and
24 thousands of other customers like Mr. Farash. I
. 0208
1 hope that by discussing my findings on that merger
2 will avoid a repeat of a similar catastrophe going
3 forward.
4 Since we are told that a large portion of
5 Fleet's management will remain in place, Fleet's
6 track record in regulatory compliance and managing
7 mergers -- or rather, the lack of it -- is also
8 important.
9 My experience and findings come from
10 litigation in which Fleet prematurely put in
11 default, as a result of a chaotic merger, an alleged
12 $5 million credit in the Year 2001, barely three
13 months after the signing of the credit agreement
14 with Summit. Later, the loan officer was terminated
15 and subsequently deposed and confirmed that the loan
16 was not in default at the time alleged. Yet, the
17 new officers at Fleet put the loan in default three
18 months retroactively, after they took over the
19 management of the loan.
20 During litigation, numerous former officers
21 of Summit testified that there was total chaos and
22 turmoil during the merger with Fleet. Employees
23 were terminated mass-scale, transition of loans was
24 not done in an orderly fashion to new loan officers,
. 0209
1 and record retention regulations were systematically
2 violated as important loan documents and brokerage
3 complaint records were destroyed. All this is
4 confirmed by multiple officers during official
5 deposition and/or by other evidence found during
6 litigation.
7 The most important adverse impact of this
8 chaos during that merger was that numerous loans
9 were put into default prematurely. It is unclear if
10 this was the result of the chaotic merger alone or
11 if it was an intentional policy of the newly formed
12 entity to restructure its customer base.
13 In any event, the period after the merger
14 saw the shutdown of hundreds of businesses and left
15 numerous broken families in its destructive path.
16 Litigating with Fleet -- and I have to add I concur
17 fully with Mr. Farash on that -- in New Jersey for a
18 small business, is almost an impossibility, because
19 not only of its size, but because Fleet resorts to
20 every possible tactic, including flagrantly
21 concealing conflict of interests with trustees,
22 receivers and adversary attorneys.
23 I do not make these statement in a vacuum.
24 At least for New Jersey, I can back my statements
. 0210
1 with solid data. I extracted litigation data from
2 New Jersey from a system called the Automated Case
3 Management System, maintained by the New Jersey
4 State Courts, and came to some shocking statistics:
5 In the quarter immediately after the previous
6 merger, the number of litigations initiated by Fleet
7 had increased eight-fold.
8 Fleet had filed literally thousands of
9 lawsuits after the merger. Even on a per branch
10 basis, Fleet had the largest number of litigations
11 per branch in New Jersey. Thanks to Congressman
12 Dingell's interests very recently, this matter, as I
13 understand it, is now under investigation by the
14 OCC, based upon evidence that I have been presented
15 with.
16 I have contacted numerous customers of
17 Fleet affected during the merger and have heard many
18 sad stories. I'm here to request that if this
19 merger is to be approved, at the minimum, a thorough
20 investigation be undertaken of those affected by the
21 previous merger and an adequate compensation plan be
22 put into place for those victimized by it.
23 Beyond the antitrust issue of offering
24 banking choices to customers, an issue that has been
. 0211
1 approved by the antitrust division already, there
2 are other ways in which a bank can exert its market
3 power as it expands. For example, an analysis of
4 Fleet's litigation statistics and the law firms that
5 represent Fleet, at least in New Jersey, indicates
6 that Fleet has established strong ties with all of
7 the major law firms in New Jersey and particularly
8 those law firms whose attorneys work as bankruptcy
9 trustees or receivers.
10 While concealing such conflict of interest
11 is itself illegal, let alone unethical, Fleet
12 practices it with impunity, because most customers
13 are simply not aware that the very trustee or
14 receiver assigned to this case also represents
15 Fleet.
16 If this merger is approved, the new entity,
17 now a larger one, will have more power to expand
18 such conflicts at the serious detriment to the
19 customers. This is therefore a very important issue
20 that should be addressed before the merger is
21 approved. The newly formed entity should be asked
22 to publicly, and at regular intervals, disclose the
23 list of law firms with which it maintains a
24 relationship or disciplinary actions should be
. 0212
1 initiated to prevent this abuse. Small businesses
2 simply do not have the resources to litigate such
3 issues.
4 Fleet also has total disregard to
5 compliance and banking rules and regulations. In
6 fact, one senior vice president, who was also senior
7 in-house counsel for Fleet in New Jersey, when asked
8 if Fleet had a compliance department, he answered he
9 did not know. The word "compliance" sounded like a
10 foreign word to him.
11 The issues I've discussed today also fall
12 under the statutory requirement of adequate
13 management and compliance for approving a merger.
14 Therefore, I respectfully request that these issues
15 be addressed before the new merger is approved.
16 Thank you.
17 PRESIDING OFFICER SMITH: Mr. Edwards?
18 MR. EDWARDS: Good afternoon. Before I
19 start, I want to note that I am acutely aware that I
20 am the last speaker before lunch, so I'm going to
21 try to make my remarks brief. And I would note that
22 I'm submitting written testimony to back up my oral
23 testimony today.
24 Thank you for the opportunity to be here.
. 0213
1 I'm Bill Edwards. I'm Executive Director of the
2 Association for Enterprise Opportunity, AEO, and
3 AEO, our national association. We are submitting
4 testimony based on our role as the national trade
5 and membership association for over 500
6 microenterprise organizations across the United
7 States.
8 Our organization and our members work hard
9 to provide low and moderate income entrepreneurs
10 with the opportunity to work their way out of
11 poverty and towards economic stability and
12 prosperity. Our position in polling our members and
13 our background is that the Bank of America has
14 failed to meet the microenterprise credit needs of
15 low and moderate income individuals.
16 I'm here to request that the needs of
17 microenterprise -- not small business; it's a subset
18 of small business -- that the needs of
19 microenterprise be put on the table at this hearing.
20 I'd like to acknowledge a good meeting that
21 we had with senior Bank of America officials at our
22 office on December 18, 2003 in Arlington, Virginia,
23 where we discussed the needs of microenterprise and
24 how Bank of America can make a forward commitment to
. 0214
1 the microenterprise needs in the nation and in their
2 banking area. But I just wanted to take a minute
3 and make a clear distinction between microenterprise
4 and small business.
5 Let's first understand that when the Small
6 Business Administration defines "small business" in
7 the United States, they're talking about businesses
8 of 500 and fewer employees, with capitalization
9 sometimes in the millions and hundreds of millions
10 of dollars.
11 Now, when we talk about microenterprise,
12 we're talking about a business with five or fewer
13 employees, we're talking about capitalization that
14 generally is $35,000 in most markets. It's more in
15 a market like Manhattan or some of the urban areas.
16 We were amazed this year to work with some
17 researchers at the University of Vermont, who did a
18 study on a 2000 census data that showed that over
19 16.9 percent of employment in the United States
20 comes from microenterprise. So we're not talking
21 about some small negligible niche. We're talking
22 about a solid part of the American economy.
23 Microentrepreneurs that we serve and our
24 members serve tend to be low to moderate income
. 0215
1 individuals with relatively limited credit
2 histories. Thus, the approach to developing jobs
3 and working in microenterprise is for the private
4 sector and non-profit organizations to collaborate
5 together.
6 As a national trade association for
7 microenterprise, we're not in a position to refute
8 the claims of Bank of America in their small
9 business lending. We're also not here to talk about
10 Bank of America in their work in community
11 development and affordable housing. Again, what we
12 want to focus in on is microenterprise.
13 Unfortunately, our research shows that BofA has
14 failed to meet the microenterprise needs in the
15 nation.
16 Many of our member organizations have
17 voiced great concerns over Bank of America's past
18 record of acquisitions and mergers, which show a
19 decline in the bank's activity in the
20 microenterprise development communities.
21 Conversely, our members in the Fleet Bank
22 footprint are especially worried about this, as it
23 would damage some of the very positive and
24 constructive relationships that currently exist
. 0216
1 between Fleet Bank and microenterprise.
2 In California, many of our members mark
3 what they call a pattern of abandonment after a
4 merger between Bank of America and other banking
5 institutions. And California, of course, is the
6 original home of Bank of America. Our state member
7 in California says, quote, a "...significant
8 decrease has been noted in Bank of America's
9 contributions and sponsorships to non-profits that
10 help low and moderate income individuals start their
11 own businesses."
12 And we have several members who will be
13 testifying on the needs of microenterprise at the
14 San Francisco hearing on Friday.
15 Absent a forward commitment to
16 affirmatively meet the obligation to address these
17 microcredit needs, AEO expressly opposes the merger
18 of Bank of America and FleetBoston; however, I noted
19 the meeting that we had with Bank of America on
20 December 18th. We look forward to working with Bank
21 of America to cooperatively develop microenterprise
22 in the United States. An investment in
23 microenterprise development can be an excellent
24 business strategy for Bank of America, just as this
. 0217
1 has been found to be an excellent business strategy
2 for Fleet Bank.
3 Thank you all very much. I hope we all
4 have a good lunch.
5 (Lunch Recess)
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
. 0218
1 AFTERNOON SESSION
2 PRESIDING OFFICER SMITH: We try to use
3 whatever flexibility we have on the timing, and
4 given the size of the group, what we'll do is give
5 you four minutes instead of three. We'll be a
6 little behind schedule, but I think we'll be okay.
7 Were you here this morning for the
8 introduction? Basically what we're asking is that
9 if you have -- that you do have the opportunity to
10 supplement your oral comments by submitting written
11 testimony if you brought it with you.
12 If you didn't, we are giving you one week
13 to submit your testimony or any additional comments
14 you may have. The registration desk has the
15 information about where to send it or fax it. And
16 your deadline is five o'clock a week from today,
17 Wednesday -- if this is Wednesday -- the 21st. So
18 it's five o'clock, Eastern Daylight Time.
19 With that, we'll go ahead and start. The
20 timekeeper will give you signals when you have two
21 minutes level and when you have one minute left and
22 when your time has expired. So with that, we're
23 ready to start.
24 MR. FORTE: Thank you. My name is Dan
. 0219
1 Forte. I'm President of the Massachusetts Bankers
2 Association, which represents all the banks in
3 Massachusetts, 220 banks, including some throughout
4 New England, primarily community banks, 95 percent
5 of which are under $2 billion in size, as well as
6 all of the regional banks in the area.
7 From the industry perspective, while we
8 hate to lose another member, we are supportive of
9 the merger and do welcome B of A to Massachusetts
10 from a retail perspective, as they have been up here
11 for a number of years from the lending side.
12 I guess the general consensus of the
13 industry has been that this is really an
14 evolutionary part of the banking business as it
15 evolves into the financial services industry. And,
16 yes, competition will increase for the banking
17 industry itself, but that also brings with it a lot
18 of benefits for consumers as well as small business
19 customers.
20 We may be unique here in Massachusetts, but
21 we've never really or at least seldom have seen
22 issues that have come up as far as big banks and
23 small banks. The competition that we've often been
24 very concerned about are the nonbank competition
. 0220
1 which often doesn't have the same type of regulatory
2 platform that the banking industry does.
3 We often point to -- right now we're
4 working on a legislation for CRA for mortgage
5 companies, which do predominant lending in many of
6 the local communities. And you often hear us talk
7 of credit unions that now have even gotten into
8 business lending. The competition has gotten so
9 great that the top 40 credit unions in Massachusetts
10 now make more profits than the entire cooperative
11 banking industry here, which is twice in number and
12 size as far as institutions are concerned.
13 The consolidation will continue, but we do
14 believe here in Massachusetts and New England it
15 will be somewhat retarded in the sense that the high
16 concentration of mutual banks here -- 65 percent of
17 all the institutions are not stock-owner owned here,
18 and that really compresses the consolidation. I
19 think we're going to have a large number of
20 community banks for a very long time to come going
21 forward.
22 Despite the consolidation, I guess one
23 point that's often made is, as the number of banks
24 have gone down, the actual number of branches has
. 0221
1 increased, giving consumer access for retail and
2 commercial business as well.
3 From a product standpoint, I think Graham-
4 Leach-Bliley has been a big help. We still have our
5 squabbles with the insurance agents and now the
6 realtors. But the banking industry has truly grown;
7 it has become more financial services oriented.
8 And for community banks there have been a
9 number of joint ventures, some of which have been
10 initiated by Mass. bankers, including the SUM ATM
11 program, where we have over 200 banks and credit
12 unions that offer surcharge-free access to over 1800
13 machines, and that's been a good competitive balance
14 in the marketplace as well.
15 I think in technology, Y2K has been a great
16 equalizer for many of the banks, and I think that's
17 allowed institutions to provide not only a high-
18 touch performance on customer service, but also
19 high-tech in giving them more convenient access and
20 services.
21 As was pointed out today, it's very
22 unlikely that any divestitures are anticipated.
23 That would make it very easy for consumers. They're
24 not going to have to switch branches at all.
. 0222
1 We have advocated in the past and we have
2 been very supportive of the model that was created
3 by Fleet/BankBoston, when there are in-market
4 mergers, that smaller institutions, local
5 institutions, do get a shot at those branches, and I
6 think that worked very well the last time. It's
7 going to be very convenient for consumers in this
8 consolidation. We have no concerns.
9 From the B of A perspective, with B of A
10 and Fleet getting together, we see them as a very
11 good competitor. They've had a strong history of
12 consumer-oriented products, a solid reputation for
13 customer service. And I think the fact that they're
14 headquartering their asset management group here in
15 Massachusetts really solidifies Boston as the
16 capital city for that type of business in the
17 future.
18 And last but not least, I think their
19 commitment to community, to their investments, and
20 to the market itself is evidenced in their past
21 history, as well as the industry have seen in the
22 past that doing business with the local community is
23 not only the right thing to do, but it's also good
24 for business. And we look forward to supporting
. 0223
1 them as they move forward here.
2 Thank you.
3 PRESIDING OFFICER SMITH: Thank you.
4 Mr. Washington.
5 MR. WASHINGTON: Good afternoon. My name
6 is Joseph Washington, and I'm Chairman of the Board
7 of Directors and also CEO of the Organization for a
8 New Equality. We are a 20-year-old organization,
9 and our work is primarily in financial literacy and
10 asset building.
11 We have our national headquarters here in
12 Boston, Massachusetts, with offices in Queens, New
13 York, and Myrtle Beach and affiliates in Kansas
14 City, Missouri, and Washington, D.C.
15 The history of financial institutions
16 merging in the United States of America leaves
17 community leaders and nonprofits understandably
18 skeptical and fearful. Boston knows too well the
19 cost of mergers and acquisitions, BankBoston,
20 BayBank, and now Fleet Bank. We as community
21 leaders are now striving to ensure that low-to-
22 moderate-income communities and communities of color
23 do not bear the full weight of these mergers and
24 their costs.
. 0224
1 Over the past few months, many concerns
2 regarding Bank of America's commitment to
3 Massachusetts have been expressed. However, since
4 the announcement of the merger, ONE has seen a
5 strong commitment from Bank of America to
6 communities in Massachusetts, especially communities
7 of color. Over the past few months, Doug Woodruff,
8 Cathy Bessant, Gail Snowden and Michael Glavin have
9 been working closely to meet with community groups
10 and leaders throughout the State of Massachusetts.
11 While mergers have presented challenges for
12 ONE and other nonprofits and the community as a
13 whole, ONE believes that this merger could be good
14 for the communities of colors and communities
15 throughout Massachusetts for several reasons.
16 First and foremost, Bank of America has
17 shown a strong commitment to working with community
18 groups throughout Massachusetts and a willingness to
19 address the concerns of the community.
20 Bank of America has reinforced their stated
21 commitment to maintaining employment and charitable
22 giving levels by naming several senior leaders among
23 Fleet's top leadership to join the ranks of senior
24 management within Bank of America. They have also
. 0225
1 committed to lend and invest $750 billion for
2 community economic development over the next ten
3 years, and $100 billion of this new goal will be
4 achieved through lending and investments in Fleet's
5 markets.
6 Bank of America has also committed
7 $6 billion to Boston-based Neighborhood Association
8 Corporation of America and another $500 million for
9 3,000 local mortgage loans to low-and-moderate-
10 income residents.
11 Thirdly, in terms of philanthropic grants,
12 Bank of America has committed $1.5 billion over the
13 next ten years, which is a 40 percent increase for
14 both banks.
15 I have also had personal relationships with
16 Fleet and Bank of America, and while it has been
17 challenging at times with Fleet, we have maintained
18 a strong and solid relationship over the last
19 several years. Both banks have committed to
20 financially empowering communities of color through
21 financial literacy and asset development, an
22 integral part of economic and community development.
23 Bank of America also is a national
24 diversity leader. According to Diversity,
. 0226
1 Incorporated, Bank of America was ranked ninth on
2 the Top 50 Companies for Diversity list. Also, Bank
3 of America was ranked fifth on the Top Ten Companies
4 for African-Americans and ranked seventh on the Top
5 Ten Companies for Latinos.
6 Additionally, as a national bank, Bank of
7 America has the ability to bring more resources to
8 our communities. Also, our community agencies have
9 the opportunity to work with a national bank and use
10 our best practices across the nation as a whole,
11 which could give rise to making local
12 initiatives scale to a national level.
13 With these mergers the banks can never do
14 enough for our communities, but it is important to
15 maintain a relationship with these institutions. We
16 have a relationship with FleetBoston Financial, and
17 it has sometimes, as I said, been quite a challenge.
18 But nonetheless, Fleet continued to work with us and
19 we continued to work with them to address the needs
20 of the community.
21 We've also had a relationship with Bank of
22 America and strongly look forward to building a
23 stronger relationship with them. We are certain
24 that they too will be responsive to the needs of the
. 0227
1 community and continue to work with community
2 leaders to ensure that this merger will benefit the
3 community.
4 Lastly, we believe that Bank of America
5 will stand by its financial commitments to low-
6 income communities of Massachusetts and the
7 remainder of New England, and for these reasons ONE
8 supports the merger.
9 Ken Lewis stated that the Bank of America
10 is determined to be the number one community leader
11 and the bank of choice in our growing ethnically and
12 culturally diverse markets. In order to do this,
13 Bank of America must work in collaboration with the
14 community organizations of Massachusetts and the
15 entire nation as well.
16 Thank you.
17 MS. COMPERE: Good afternoon. My name is
18 Lauren Compere. I'm the Chief Administrative
19 Officer at Boston Common Asset Management, a social
20 investment firm here in Boston. I appreciate the
21 opportunity to express our concerns about the
22 proposed merger of FleetBoston with Bank of America.
23 I've been following personally both banks
24 since the mid-1990s as a social researchers. Boston
. 0228
1 Common filed resolutions with FleetBoston and Bank
2 of America, asking for a detailed report on the
3 impact of the merger on director and executive
4 compensation, job losses, charitable giving and
5 community reinvestment initiatives. We were joined
6 by a broad-based coalition of our colleagues within
7 the social investment community in asking these
8 questions.
9 The members of our colleagues include the
10 Interfaith Center on Corporate Responsibility, a
11 coalition of faith-based institutions with assets of
12 almost $100 billion, mutual funds like Domini Social
13 Investments and Ethical Funds, and other social
14 investment firms, such as Trillium Asset Management
15 and Walden Asset Management also here based in
16 Boston.
17 I would like to submit for the public
18 record a copy of the shareholder resolution we filed
19 with the Bank of America and a letter that we
20 jointly wrote with Domini and Walden asking for more
21 information on the impact of the merger on all
22 stakeholder groups.
23 In addition to significant financial risks
24 posed by large mergers, mega-mergers like this one
. 0229
1 with Bank of America may pose broad risks to
2 society, the environment and the economy. Boston
3 Common and our colleagues in the social investment
4 community are specifically concerned about the
5 impact of the merger on three critical stakeholder
6 groups: employees, communities and customers.
7 In terms of job losses, while Bank of
8 America officials have stated they expect to save
9 almost $1.6 billion in cost savings from the merger,
10 some of it will come from job cuts. Boston Common
11 is concerned that these job cuts will mostly hit
12 back-end employees, the lowest paid and least
13 equipped to deal with layoffs. We would like more
14 detailed information about the company's plans for
15 those layoffs and any plans to mitigate the impact
16 of these layoffs on its employees.
17 Executive compensation: We're interested
18 in understanding what incentive structures are in
19 place for the successful completion of the merger,
20 most particularly what bonuses and other financial
21 benefits will accrue to senior management and
22 directors at both companies.
23 In terms of the community, Fleet has been a
24 leader in everything from volunteerism to community
. 0230
1 reinvestment. Losing this leadership will be a blow
2 not only to Boston but all the communities served by
3 the newly merged bank.
4 Fleet has won accolades for the work of its
5 subsidiary First Community Bank, under Gail
6 Snowden's leadership, who we really see has an
7 innovative approach to serving multicultural and
8 multilingual customers. We would hope that Bank of
9 America would maintain the First Community Bank
10 post-merger and build on this unique model
11 everywhere Bank of America does business.
12 In terms of charitable giving, Fleet's
13 annual $25 million in regional philanthropic giving
14 makes it the most generous locally. Chairman
15 Gifford has committed to maintaining Fleet's current
16 level of charitable giving. However, we remain
17 concerned that the charitable giving will lose its
18 regional focus post-merger.
19 We would encourage Bank of America to
20 maintain the FleetBoston Financial Foundation or
21 similar entity to ensure the continuation of Fleet's
22 strong legacy of civic leadership, community
23 service, and enduring community partnerships.
24 We are encouraged by the advertisements
. 0231
1 from the banks stating that that merger will benefit
2 the banks' customers, employees and communities. We
3 believe that positive relationships with all
4 stakeholder groups are essential to a company's
5 long-term prosperity.
6 Through constructive dialogue, Boston
7 Common and others in the social investment community
8 look forward to hearing specifically how the bank is
9 planning to improve relationships with these
10 stakeholders by means of the merger and how the bank
11 is working to mitigate any potential damage to these
12 critical relationships.
13 PRESIDING OFFICER SMITH: Thank you very
14 much.
15 Mr. Harvey.
16 MR. HARVEY: Thank you. I'm Bart Harvey,
17 Chairman and CEO of The Enterprise Foundation, which
18 is a national nonprofit that has invested over
19 $5 billion to help produce 155,000 homes for very-
20 low-income people across the country and helped put
21 to work into entry-level jobs over 40,000 people and
22 improve neighborhoods through a network of 2,400
23 nonprofits in 850 cities or localities across the
24 country.
. 0232
1 We support this merger. We have had a ten-
2 year relationship with Bank of America, starting
3 when it was NationsBank and Hugh McColl was running
4 it and Cathy Bessant was the principal community
5 investment officer.
6 I think some principles are important here.
7 Their commitment -- this was Hugh's and Cathy's --
8 was to find every possible profitable way to meet
9 the needs of the underserved in NationsBank's
10 service area in order for the bank to be able to
11 grow at a rate that exceeded the population growth
12 of that service area.
13 They put two important principles to work
14 at NationsBank. The first was that community
15 reinvestment was to be an integral part of the
16 normal services of the bank, that it was to get
17 extra attention in order to be implemented, and that
18 it would be field-tested. This commitment was
19 communicated from the CEO down throughout the bank.
20 Secondly, NationsBank wanted to get an
21 Outstanding CRA rating, and NationsBank would
22 support community reinvestment as a critical part of
23 its mission and at a level that would result in an
24 Outstanding rating reflective of full implementation
. 0233
1 of community reinvestment throughout the bank.
2 These two principles have been at work over
3 the last ten years, and we have worked with
4 NationsBank when it became B of A and with the
5 change of the CEO from Hugh McColl to Ken Lewis.
6 Enterprise has found a continuing willingness by
7 Bank of America to lend people, resources, capital,
8 innovation and the persuasion of its most senior
9 executives to carry out its community reinvestment
10 principles.
11 We have worked with B of A and have
12 committed over $800 million of B of A's resources --
13 that's equity, lending, grants -- to meet the needs
14 of very-low-income people in neighborhoods across
15 the country. And the recent announcement of an
16 extremely large, $750 billion commitment for
17 affordable housing and community development, and a
18 substantial increase in the merged companies'
19 combined charitable contributions, is merely the
20 latest reaffirmation of B of A's commitment to
21 communities.
22 Furthermore, it should be noted that this
23 acquisition is of two financial institutions with an
24 Outstanding rating for community reinvestment.
. 0234
1 I am certain, from the printouts that I get
2 of the ratings of B of A's CRA performance on a
3 state-by-state basis, that there are areas where
4 improvements in aspects of community reinvestment
5 can be made and should be made. There is no
6 question that advocates need to be vigilant in
7 keeping such a large institution operating at a high
8 level across each state and each area it serves.
9 At different times, improvement in specific
10 places is necessary, and Bank of America should be
11 accountable to its own goal of excellence in
12 community reinvestment. Such advocacy serves an
13 important role that allows a very large institution
14 to carry out its CRA mandate across all of its
15 markets.
16 Bank of America has the same information I
17 do. The key question for us is whether there is the
18 will, capability and talent to rectify situations
19 that may arise. From our experience with Bank of
20 America's senior management, there certainly has
21 been a long track record of will, capability and
22 performance, and that is why we -- with that
23 outstanding performance, that is why we are
24 supportive of this merger.
. 0235
1 Thank you.
2 PRESIDING OFFICER SMITH: Thank you.
3 MR. STITH: My name is Charles Stith, and I
4 was intimately involved in crafting the first
5 comprehensive CRA agreement in the country, which
6 was done right here in Boston. And among the other
7 jobs that I've had since then, I formerly worked
8 for -- I was employed by the organization that Mr.
9 Washington now heads.
10 At the onset, let me say I support the
11 merger. In a perfect world, as has been said by a
12 number of my colleagues on the dais, FleetBoston
13 would continue to exist as a separate entity. When
14 you lose a flagship institution like that, it
15 impacts on a community in a sundry of ways.
16 But having said that, I know the record of
17 all the institutions involved. I've known
18 intimately the top level leadership in all of the
19 institutions, from Dick Rosenberg and Terry Murray
20 to Hugh McColl and Chad Gifford. And I think that
21 we can expect, as a result of this merger, to see
22 comparable commitments to those that we've seen in
23 the past.
24 As was mentioned earlier, that Bank of
. 0236
1 America has committed to maintain the asset
2 management group here in Boston is a plus; that Bank
3 of America had no substantial franchise in the
4 region also probably means that there will be less
5 in terms of jobs loss.
6 But that a merger of this consequence would
7 cause some anxiety is to be expected. The
8 unprecedented numbers of individuals and
9 institutions offering testimony is a reflection of
10 this fact. And herein lies the challenge for this
11 merger to be deemed a success.
12 The biggest challenge will not be in
13 merging systems or consolidating product lines. The
14 biggest challenge is in reassuring the community and
15 the market that this bigger bank will be responsive
16 to the extent that it's always been. The fears and
17 apprehensions in this region and the broader market
18 will only be assuaged if this new and improved bank
19 continues to do what it has done well over the
20 years, and that is communicate clearly its
21 commitments to service and then follow through.
22 The bank must demonstrate that it's
23 sensitive enough to hear the varying communities'
24 needs and savvy and nimble enough to develop product
. 0237
1 consistent with those needs. The bank also needs to
2 articulate that the economies of scale that come
3 from a merged and efficient institution do not
4 result in, quote-unquote, economies of options and
5 opportunities. Folks need to be reassured that the
6 sum of the parts will not be less than the whole
7 they've come to rely on relative to their banking
8 needs.
9 Given what I know about these institutions,
10 I have no apprehension that it will pass the test.
11 Given what I know about these institutions, in the
12 final analysis, I feel like this merger will be an
13 asset to the region.
14 PRESIDING OFFICER SMITH: Thank you very
15 much.
16 MR. GUZZI: Good afternoon. My name is
17 Paul Guzzi, and I'm president and CEO of the Greater
18 Boston Chamber of Commerce. Let me try to summarize
19 written testimony to move the process along. We
20 represent more than 1700 businesses in the Greater
21 Boston area, and I testify in support of the merger
22 essentially for four reasons.
23 First, the record of leadership of Fleet in
24 the entire community and in this business community
. 0238
1 has been and continues to be significant. My
2 understanding of Bank of America is of the same
3 caliber of leadership. And the fact that Chad
4 Gifford and others in the senior management team
5 will continue here over a predictable period of time
6 is significant. That record and that capital is
7 important.
8 Second, employment. There is a commitment
9 to maintain levels of employment within our region.
10 The fact that there is not duplication of branches
11 essentially within this area is very significant.
12 It has been noted, obviously mergers and
13 acquisitions result in some downsizing. I think
14 this is a better model in terms of employment.
15 Third, it's already been referenced,
16 commitment to community. It's very important to
17 have a healthy community. It's very important for
18 major institutions to be involved philanthropically,
19 to spend time as well as money in the community.
20 And it's already been noted, there has been and
21 continues to be a significant commitment to
22 community, including philanthropy.
23 And lastly, let me mention the area of
24 housing. It may sound somewhat strange that a
. 0239
1 Chamber of Commerce is very committed to and
2 understands that housing is a competitive issue.
3 The commitments that Fleet and the new entity have
4 made are very significant. They will help us
5 maintain a competitive advantage.
6 For these and other reasons, I testify in
7 support of the merger, and we look forward to having
8 another world-class financial services institution
9 here within Boston.
10 Thank you.
11 PRESIDING OFFICER SMITH: Thank you very
12 much.
13 Mr. Jones.
14 MR. JONES: Thank you. My name is Dewitt
15 Jones, and I'm the Chief Operating Officer of Boston
16 Community Capital and the President of its affiliate
17 Boston Community Loan Fund. On behalf of Boston
18 Community Capital and Elyse Cherry, our CEO, who is
19 out of town today, I'm here to support the merger of
20 FleetBoston Financial and Bank of America.
21 Boston Community Capital is a community
22 development financial institution whose mission is
23 to help build healthy communities where low-income
24 people live and work.
. 0240
1 Our lending has focused on loans and
2 projects that are unbankable, nonconforming, or
3 otherwise difficult to get financing from
4 conventional institutions. Throughout
5 Massachusetts, we have financed over 4500 units of
6 affordable housing, child care facilities and
7 schools that now serve 1300 low-income children, and
8 450,000 square feet of inner-city commercial space.
9 In addition, our equity investments support
10 businesses across the Northeast and have helped
11 create or preserve more than 1300 jobs in low-
12 income communities.
13 Boston Community Capital has grown from a
14 tiny Boston-focused nonprofit, capitalized with just
15 $3500 of religious money, to a regional organization
16 able to operate at a scale sufficient to have a real
17 and positive impact on the communities we serve.
18 Moreover, although our immediate focus is
19 the Northeast region of the United States, our
20 interests are national. Together with our peer
21 institutions across the country, we work to create a
22 national industry, now with more than $10 billion
23 under management, capable of effectively serving
24 low-income communities and of helping those
. 0241
1 communities harvest the benefits that can emerge
2 from increased access to commercial capital markets.
3 Our growth at Boston Community Capital and
4 the growth of our industry would not have been
5 possible without the firm and unwavering support and
6 partnership of many institutions and individuals.
7 Banks have particularly been important partners, and
8 within that larger banking community, Fleet's
9 support has been significant, timely and innovative.
10 For example, Fleet was the lead investor in
11 our two community development venture capital funds,
12 and its early commitment encouraged investments from
13 other banks and investors. Fleet has also been an
14 important and innovative partner in our affordable
15 housing lending.
16 For example, Fleet committed funds for a
17 first-in-the-nation secondary market transaction
18 that reduced interest costs and generated
19 substantial equity for two nonprofit organizations
20 providing housing for homeless and low-income
21 families on Cape Cod.
22 Fleet partnered with us in an innovative
23 structure that provided a low interest rate, an
24 interest rate cap and reduced transaction costs for
. 0242
1 low-income housing projects in Mattapan and Mission
2 Hill. And working with Fleet, we have been able to
3 provide early stage financing for construction of
4 new homes in both Holyoke and Roxbury, projects that
5 have turned large, long-vacant sites into vibrant
6 new residential communities.
7 In addition, through the development of
8 First Community Bank under Gail Snowden's
9 leadership, Fleet has created a national model for
10 the effective distribution of banking services in
11 low-income and minority communities. In short, by
12 partnering with CDFIs and other community
13 institutions, Fleet has effectively extended its
14 reach and ours to the benefit of the communities we
15 serve.
16 Mergers of large banks create uncertainties
17 for low-income communities and for the institutions
18 that serve them. Questions inevitably emerge about
19 the ongoing commitment of the newly merged and
20 substantially larger institution about whether
21 investment promises will be made and kept, about
22 whether decision makers will continue to be
23 available in the local market.
24 In this instance, however, we believe the
. 0243
1 proposed merger of Fleet and Bank of America
2 presents an opportunity for two strong financial
3 institutions to join together to commit new
4 resources to finance underserved and low-income
5 communities, to enhance support for the innovative
6 financial products we seek to develop, and to
7 generate access to capital markets and create strong
8 and effective partnerships with CDFIs regionally and
9 nationally.
10 We look forward to an expanded relationship
11 with a much larger institution with far greater
12 means that can expand the resources and
13 opportunities available to its community development
14 partners. Indeed, as our industry grapples with the
15 challenge of growing to scale within a vastly
16 changed economic landscape, access to the strongest,
17 largest and most sophisticated bank partners is
18 critical to ensuring that the low-income communities
19 we serve are not left further behind.
20 We believe that the merger of Fleet and
21 Bank of America will provide new and expanded
22 opportunities, as we continue to build a national
23 industry of effective CDFIs, and we are therefore
24 pleased to support the application.
. 0244
1 Thank you.
2 PRESIDING OFFICER SMITH: Thank you very
3 much. Thank you for coming this afternoon.
4 This panel has been allocated four minutes
5 each, and so with that, we'll start with Mr.
6 Phillips.
7 MR. PHILLIPS: Thank you very much. My
8 name is Ron Phillips, and I'm President of Coastal
9 Enterprises in Maine, and I came down here from some
10 cold weather to get this warmer weather, and so I
11 appreciate the opportunity to talk to you.
12 I'm a founder of this organization, which
13 is a community development corporation and a
14 community development financial institution. I'm
15 also on the Board of Directors of the National
16 Community Capital Association and the National Board
17 of Directors of the Local Initiatives Support
18 Corporation, and also part of LISC's Rural Advisory
19 Council.
20 So I have been quite active with this field
21 for many years, in fact for 25 years, and I have
22 here a storybook of our organization which
23 chronicles the rise and growth of our entity to
24 finance small businesses, micro-enterprises,
. 0245
1 affordable housing, community facilities such as
2 child care, and a number of other projects,
3 particularly the natural resource industries in the
4 State of Maine.
5 Fleet Bank has been a major supporter of
6 Coastal Enterprises. Bank of America has not been
7 in this region. I have tried to get them there, but
8 they have not been. This will be an opportunity for
9 us to try to induce them to be involved in our
10 organization.
11 Fleet Bank and CEI are in a strong
12 partnership. They serve on our Board of Directors.
13 Currently a commercial loan officer, Suzanne Dargie,
14 chairs our investment committee. There is a lot of
15 hard work and volunteer work that goes into that, to
16 put out the millions of dollars we put out annually
17 in targeted social investing. So this is very
18 helpful.
19 Before I came here, I calculated the level
20 of Fleet Bank's involvement in CEI. I was quite
21 surprised. Out of $100 million worth of community
22 investing, of socially directed investing, Fleet
23 Bank has participated in something like $25 million
24 worth of that.
. 0246
1 And without their leadership, and without
2 their involvement in anything from our venture
3 capital funds, which they have helped start up --
4 and by the way, we're also doing venture capital
5 outside of Maine, in other parts of New England --
6 they have also been involved with our
7 micro-enterprise programs.
8 They have also supported our work with
9 refugees, new immigrants. They have even supported
10 our efforts to help the Native Americans in Maine.
11 I don't know how much you have been aware of the
12 fact that the Native Americans in Maine tried to get
13 a casino established to create some economic
14 opportunity for their tribes, and that failed in the
15 referendum in the State of Maine.
16 But outside of that, institutions like
17 Fleet, the Governor, all of us are trying to find
18 ways to do major development projects, and we think
19 Fleet has been stepping up in that regard.
20 Now, a couple of things I want to say if I
21 could about rural markets and rural regions, because
22 one of the things we're more experienced with in
23 community development is rural development and the
24 challenges we face there.
. 0247
1 We have aging populations. We have out-
2 migration of youth. We face real challenges in
3 liveable-wage jobs. For example, in the State of
4 Maine alone, which has experienced, like the country
5 as a whole, a rapid decline in manufacturing jobs,
6 probably 25 percent of the net new jobs created,
7 mainly in the service sector, pay a liveable wage.
8 There is rural sprawl, there is
9 encroachment on farmland, there is acquisitions of
10 waterfront properties for other development other
11 than access for fisheries or other traditional uses.
12 The State of Maine has a coastline, I think, of
13 something like 3,500 miles. Only 25 miles of that
14 are currently involved in working waterfront
15 activities.
16 Fleet Bank, by the way, is looking at
17 helping us to capitalize and expand our
18 capitalization of a working waterfront loan fund.
19 So that gives you an example of at least that
20 institution's interface with an important rural
21 development strategy.
22 Micro-enterprises in the small business
23 sector are vital to the rural economies, and the
24 smaller size of the spectrum creates much more of
. 0248
1 the employment opportunities than the larger
2 businesses. And this continues to be a challenge
3 for all of us, including Fleet Bank, and it will be
4 for Bank of America.
5 Let me try to conclude with the points I
6 want to make here. There are several things that we
7 think would be important to go forward with this
8 merger. We're not actually taking a position for or
9 against it, but believe, if it goes forward, the
10 Federal Reserve Board should make sure that state
11 plans are developed with the specific types of
12 measurable outcomes that have been listed here, and
13 I won't go into those for lack of time. But they
14 can include such things as micro-enterprise
15 development, commercial real estate, support for
16 community groups like the Native Americans and so
17 forth. We can work very closely with them.
18 Another point that I think would be
19 important is that the Bank of America or Fleet Bank
20 take a good hard look at the Federal Home Loan Bank
21 membership they would have in New England and see
22 what they can do to create a type of an economic
23 development initiative similar to the affordable
24 housing program. This is a leadership question that
. 0249
1 these banks like Fleet or a merged bank can step up
2 and do something more innovative within that system.
3 The next thing they can do is talk about
4 specific goals around the capitalizing of the
5 revolving loan funds, micro-funds, and those sorts
6 of things. And that's a very important part of the
7 work we do to create new ventures and jobs in these
8 rural communities.
9 Finally, let me say one more thing. There
10 is one federal program that is currently active
11 called the New Markets Tax Credit Program. You may
12 have heard about it. This is a $15 billion
13 initiative. Fleet Bank is now and Bank of America
14 are getting involved with that. We think it is very
15 important that they get involved in that through the
16 CDFI and CDC networks that initiated that program
17 and that are targeting those kinds of investments
18 and can bring those to the table.
19 And last but not least, I would like to
20 mention that we're doing a little bit of research
21 now about predatory lending in Maine. I've been
22 listening to some of the comments here. We've been
23 discussing this issue with the Attorney General's
24 Office in the State of Maine.
. 0250
1 We have been doing some work on it, and we
2 have seen already a surge in sub-prime lending. We
3 don't know a lot of the details behind all of this,
4 but we think it's a very important issue to keep
5 track of, and we would like to help Fleet Bank and
6 Bank of America come up with policies or apply
7 policies that are not going to violate people's
8 opportunities in that area.
9 Thank you very much.
10 PRESIDING OFFICER SMITH: Thank you.
11 Mr. Taylor.
12 MR. TAYLOR: Thank you, Madam Chair.
13 Before I begin my remarks, I want to recognize that
14 this may be the last or second-to-the-last such
15 hearing that you will preside over, because after a
16 very distinguished career with the Federal Reserve
17 Bank, you are retiring. And I wanted to recognize
18 you for the commitment and the stand you have made
19 for community development in that capacity.
20 PRESIDING OFFICER SMITH: Thank you.
21 MR. TAYLOR: I want to thank the Federal
22 Reserve Bank in general for hosting this incredibly
23 important event, this discussion about the merger
24 between an important regional bank, Fleet Bank, and
. 0251
1 the Bank of America.
2 I am the President of the National
3 Community Reinvestment Coalition, which is a
4 coalition of 500 community organizations. We've
5 come together actually for this kind of purpose.
6 We've been around since 1990, and our purpose is
7 economic justice, to see to it that traditionally
8 underserved communities are not overlooked by the
9 private financial sector.
10 So this hearing is precisely what the
11 National Community Reinvestment Coalition is all
12 about. The fact is, though, probably most citizens
13 in this Commonwealth and New England actually have
14 very little interest in this merger, ironically.
15 But for those of us who would testify today and
16 later in California, we know the profound
17 significance of this merger.
18 We also know that in the future, those
19 average citizens, who really aren't following this
20 as closely as many people in this room, will be
21 greatly impacted depending on the quality of forward
22 commitments and performance of the Bank of America
23 as it absorbs this incredibly important financial
24 institution from this area.
. 0252
1 What the average citizen may realize
2 probably not too much later, is that Boston and this
3 State in New England is increasingly becoming a
4 banking colony, not uncommon for a lot of states.
5 But by this I mean that one more of the
6 ultimate decision makers, the people who run these
7 institutions, are going to be people who no longer
8 live or reside in the states where the institution
9 has branches, and this will be no exception for the
10 Fleet Bank. While there will be obviously people in
11 management capacities, for the most part, the
12 ultimate decision makers will be from outside of
13 Massachusetts and outside of New England.
14 In Massachusetts we call ourselves a
15 Commonwealth. And make no mistake about it, much of
16 our common wealth, of our assets, our capital, will
17 now be managed by new stewards who at the highest
18 levels, as I mentioned, will be from other areas of
19 the country.
20 As regional economies ebb and flow, these
21 new financial stewards will determine how much risk
22 tolerance they have for New England and elsewhere,
23 and such tolerance must relate to the Bank of
24 America's national business model and strategies.
. 0253
1 What will be the commitment to invest in
2 Boston, Worcester, Hartford, Concord, Newark, New
3 Jersey, and Portland, Maine? What will be the
4 commitment when the micro-economies of these
5 communities are challenged? What about the rural
6 areas in our New England states? Will Bank of
7 America be there through thick and thin? What will
8 be their commitment to underserved communities?
9 As you know, there is a law that
10 affirmatively obligates this institution to serve
11 the credit needs of low-and-moderate-income
12 communities. What can we expect to be their
13 commitment to small businesses, affordable
14 multifamily housing, to operate full service bank
15 branches that employ people and make basic banking
16 services available to the people in this
17 Commonwealth and throughout New England?
18 To give credit, the Bank of America has
19 made an incredible announcement that represents the
20 single largest financial commitment in the history
21 of this country from a financial institution. They
22 are to be applauded for this.
23 That commitment, though, lacks details and
24 specific targets for individual loan geographies.
. 0254
1 Not having these clarities is like having an all-pro
2 athlete without a team or a city to play in. We
3 know his commitment is great, but without a forward
4 commitment of what city and team he intends to play
5 for, it's hard for us to get excited.
6 In the case of the Bank of America's
7 commitment, they have put forward a whole team of
8 super-athletes, but we don't know what sport they
9 will be playing and what towns will benefit from
10 that athleticism. Enough of the sports analogy.
11 Congress gave the Federal Reserve Board the
12 responsibility to ensure that our capitalist system
13 works for all citizens. The Federal Reserve Bank
14 has been given the specific charge with ensuring
15 that all our citizens have fair and equal access to
16 credit and capital.
17 The decision here today is simply not a
18 matter of considering the approval of this merger,
19 but to provide direction, oversight and guidelines
20 to the banks in this merger as it relates to the
21 interests of consumers in this Commonwealth, in New
22 England, New York, New Jersey, and the rest of the
23 Bank of America's footprint.
24 This decision by the Federal Reserve Bank
. 0255
1 will have a pervasive and historic impact on the
2 future of community development, affordable housing,
3 small business lending and overall bank lending, not
4 only in New England, but for us as a country as
5 well. The decisions you make or don't make
6 regarding the forward commitments of this financial
7 institution will be the future standard for other
8 banks that will undoubtedly merge.
9 The Federal Reserve Bank must encourage and
10 support these community efforts that seek clarity
11 and forward commitments from the bank. Bank of
12 America must make clear and quantifiable lending
13 commitments to serve the credit needs of those
14 cities and towns currently served by Fleet Bank.
15 There must be a detailed commitment to serve
16 minority and low-and-moderate-income geographies in
17 all of Bank of America's footprint.
18 Some nonprofits, community organizations
19 today have applauded the Bank of America for what
20 they have done and what they have done through those
21 organizations, and they should do that. NCRC
22 recognizes the Bank of America and Fleet for their
23 commitment to these partnerships and the resulting
24 good that has come from it.
. 0256
1 But we must keep in perspective that
2 serving the credit needs of underserved communities
3 is more comprehensive than simply making grants or
4 loans to intermediary organizations. We are just
5 that, we are intermediary organizations that are
6 there to serve and to assist the lender in serving
7 low-and-moderate-income consumers.
8 But it continues to remain the
9 responsibility of the bank to in fact successfully
10 provide the needed loan products and banking
11 services to underserved populations. It remains the
12 responsibility of the bank regulatory agencies to
13 ensure that the actual volume and types of loans to
14 low-and-moderate-income borrowers meet the
15 respective credit needs of the various geographies.
16 Grants to nonprofits organizations are but
17 one measurement in this effort. The ultimate
18 measurement is the percentage of mortgage and small
19 business loans, the presence of full service bank
20 branches, the amount of community development
21 lending and investment that this bank makes in
22 traditionally underserved communities.
23 NCRC urges the Federal Reserve Bank to
24 support the community calls for two things: One, a
. 0257
1 substantial community reinvestment plan; and two, a
2 commitment from the Bank of America that ensures
3 that it will put safeguards into place to ensure
4 that any of their sub-prime purchasing doesn't
5 contain any predatory lending practices.
6 Let me close -- I'll finish by saying, it's
7 in this building that 20 years ago I challenged the
8 First Bank, and it was then called Somerset Savings,
9 on the very top floor, with then an employee, who is
10 still an employee of the Federal Reserve Bank of
11 Boston, Bill Spring, sitting there with the bank and
12 myself discussing what needed to be done in the City
13 of Somerville, that I had my first experience.
14 And it was a good experience, because the
15 Federal Reserve then, and I hope now, really got the
16 import of what these hearings mean and what these
17 discussions mean, and the fact that a forward
18 commitment, clarity on what that commitment is --
19 and we've heard bits and pieces of it. I don't mean
20 to say that there's been nothing. There certainly
21 has been. And I can speak to the character of many
22 of the people involved, in both banks. And, you
23 know, if that was the only measurement for me, I
24 think things would look terrific.
. 0258
1 But the fact of the matter is, employees in
2 banks change, boards of directors change, things
3 change as time goes on. And to the extent that you
4 have a written document that commits very
5 specifically to underserved communities by
6 geographies, by loan products, by amounts, we can be
7 assured that that commitment will be followed
8 through. That's what happened when I met with this
9 bank.
10 I know that some of the bank personnel kind
11 of -- it's kind of difficult for them to hear some
12 of this criticism, but they need to understand that
13 it is difficult for us, as we work in underserved
14 communities, with all the people who are trying to
15 create their own dream of home ownership, of
16 starting small businesses, of having the kind of
17 quality of life that they deserve as hard-working,
18 tax-paying Americans, that all banks, not just Bank
19 of America, are incredibly important to that dream
20 and that goal.
21 So that is what this is all about, it is
22 about fairness. So NCRC urges the Federal Reserve,
23 when the hearings are over and the doors are closed,
24 to the extent that you can get as much detail about
. 0259
1 that forward commitment, I really applaud you and
2 urge you to do that.
3 Thank you very much.
4 PRESIDING OFFICER SMITH: Thank you.
5 Mr. Anderson.
6 MR. ANDERSON: My name is John Anderson,
7 and my company is called The Real Estate Analyst,
8 and I have a couple of caveats first. I'm going to
9 use a couple of examples speaking, and there is more
10 information in the text which is submitted to the
11 Fed. And so you can look at it and read more about
12 it, or you can use it to line the birdcage or
13 whatever the case is.
14 Two is the fact that one of the things that
15 I concentrate on is not, for example, the $9 billion
16 that Bank of America gave to Bruce Marks and his
17 organization, NACA, but I look at how that money
18 transfers down to the individuals who are buying
19 houses and what the results of that money are. So I
20 would like to go on from there.
21 Unlike a lot of people who support this
22 merger, I think the merger should not be allowed.
23 As some of you know me, eight years ago at the
24 Fleet/Shawmut hearings, I pointed out that convicted
. 0260
1 felons and others were buying and flipping real
2 estate in Dorchester, Roxbury and Mattapan, using
3 the targeted loan products of Fleet.
4 The Fed required Fleet to look at a very
5 small subset of the data that I gave them, and they
6 corrected far fewer. I've been told they only
7 corrected three. In the past year, two homes of
8 that subset were sold before the foreclosure auction
9 because prices have gone so high, and a third
10 property was refinanced before the second scheduled
11 foreclosure auction.
12 For this reason alone, the merger should
13 not be allowed, but of course the Fed did nothing
14 then, and the Fed will do nothing now. So let's
15 move on to another issue.
16 There is much in the news on targeted loan
17 programs. There is much about the amount of money
18 being loaned, the number of loans, the racial and
19 ethnic makeup of the buyers, but very little on the
20 results of home ownership.
21 Several years ago I pointed to out to Dr.
22 Jim Campen over at UMass Boston that it was common
23 to see homeowners with targeted mortgages in
24 foreclosure or bankruptcy or borrowing from
. 0261
1 predatory lenders. He acknowledged that it happens,
2 but asked, "How often?" I told him, "Every day,"
3 from what I could tell, and started a little e-mail
4 list to send out examples of how often this was
5 taking place.
6 I could give you lots of examples, but I
7 decided to let the Boston Globe pick an example for
8 me. Nine years ago the Boston Globe ran an article
9 that showed an Ana Martinez and the home that she
10 purchased through Fleet with the assistance of Bruce
11 Marks's UNAC, now NACA. She was ecstatic at the
12 time she purchased her house, which should be
13 wonderful. But it's a different story after the
14 last eight years.
15 After initially borrowing additional money
16 from Fleet and from other prime lenders, she turned
17 to sub-prime lenders. Her principal now is three
18 times what it was when she purchased her home. Is
19 this a success story? Does anybody know this is
20 taking place, and does anybody look at it?
21 Then I would like to -- skipping over a few
22 other examples for the Fed that the Fed has, I would
23 like to give you an example combining some of the
24 elements I've been talking about, which is
. 0262
1 speculators who are using targeted loan programs to
2 get minority and other low-income buyers to pay far
3 more for their homes than they're worth, and two
4 elements that the Fed likes to pretend they care
5 about, which is sub-prime and predatory lending.
6 A few years ago, at the hearing the Boston
7 Fed held on predatory lending, I testified that
8 while I was working with Bay State Banner reporter
9 Yawu Miller, we stumbled upon an 82-year-old woman
10 who was losing her home to the second of two
11 sub-prime loans she received. Nobody stepped
12 forward to help her, and she lost her house.
13 That should be bad enough, but the buyer of
14 the home at the auction was a speculator who doubled
15 the price of the property and sold it again to a
16 buyer with a NACA-originated Fleet loan.
17 But the bad news doesn't stop there. The
18 owner starts borrowing additional money from Fleet
19 before starting to borrow sub-prime money. The
20 principal on the latest mortgages is now more than
21 twice what the original mortgage was, and that's in
22 a three-year period.
23 While activists and others are wringing
24 their hands over the lack of equity in the black
. 0263
1 community, just look at that property. Equity is
2 removed when the woman loses her home of 48 years.
3 Then equity is lost when the buyer pays twice what
4 the speculator paid for it a few months earlier.
5 And then more equity is lost when the homeowner
6 borrows against the value of his property. That's
7 how you lose equity in the black community, and
8 there is NACA and Fleet right in the middle of it.
9 But it's not just NACA. One more example
10 I'll bore you with. There is a group of people who
11 are -- I'm supposed to be finishing, so I won't give
12 you the last example.
13 I'll simply finish by saying I've been
14 bringing this to the Fed's attention for the last
15 eight years, several people here have had to put up
16 with me, and still nothing has been done about it,
17 and it's happening now. We do know one thing: The
18 only good thing that will definitely come out of
19 this merger is that we'll no longer have to waste
20 our time in these hearings.
21 PRESIDING OFFICER SMITH: Thank you very
22 much.
23 MS. PSORAS: Hello. My name is Andrea
24 Psoras, and thank you also for having this forum to
. 0264
1 address this proposal between FleetBoston and Bank
2 of America.
3 Although I'm not an urban activist, I am
4 here to oppose this proposed merger, this proposed
5 acquisition of FleetBoston Financial by Bank of
6 America, based materially out of North Carolina, a
7 non-New England state.
8 I am here as an expert of sorts who has
9 provided bank and thrift consulting services not
10 exclusive to business combination advice and
11 recap/bailout work for sick banks and thrifts, with
12 that work often having engaged New-England-based
13 banks and thrifts in the late '80s and '90s. One of
14 my former employers actually was owned by Advest
15 Group, a regional broker/dealer based in Hartford,
16 an area where FleetBoston provides its banking
17 services and products.
18 While engaging in our advisory services to
19 the financial community throughout New England, I
20 observe that its economy had and has suffered more
21 deeply and more broadly during economic slowdowns
22 than virtually any other region in the United
23 States.
24 One can look at the headlines of a lot of
. 0265
1 the community investment and/or merger-related
2 contributions into community reinvestment activity.
3 A recent one, "Bank of America pledges $756 billion
4 for affordable housing," and another, "Communities
5 benefit from bank partnerships."
6 Since the Community Reinvestment Act of
7 1997, and more frequently of late, when community
8 activists have pressured bank management and the
9 Federal Reserve Bank to withhold approvals for
10 mergers unless banks and similar depository
11 institutions committed to reinvesting in the
12 communities from which the banks are looking to
13 obtain business of any sort, we regularly have been
14 seeing headlines describing community development
15 assistance to improve those neighborhoods that had
16 suffered from bank redlining and other forms of
17 discrimination, flawed federal, state and local
18 policies, and urban planning that have produced
19 urban battlefields and scorched earth, some areas
20 which still bear these scars.
21 I coincidently live in Harlem, and I can
22 attest to the fact that that area of the city still
23 reflects the redlining, in spite of all of the
24 contributions with regard to community reinvestment
. 0266
1 and merger activity.
2 Despite these nice proposals for more
3 banking welfare, and this particular from Bank of
4 America, formerly North Carolina National Bank,
5 perhaps because Acorn and a number of these other
6 community groups have relied heavily on these CRA
7 proceeds, they are dependent and biased, you know,
8 by the financial influence that the banks have.
9 You know, without Wall Street merger
10 experience, however, many of these activist groups
11 are looking at the seemingly large ransom they can
12 leverage from these banks -- to which they would
13 have access anyway, even without the merger, under
14 the current Community Reinvestment Act -- but their
15 ignorance of the law promotes their thinking that
16 they need to get the proceeds from bank mergers.
17 Although some would laud, on behalf of New
18 England, the sort of business headlines that I had
19 mentioned, and it would augur well for any bank to
20 commit to broad and deep community development in
21 its market area, these shallow proposals and
22 well-meaning endeavors remain insufficient to
23 address the deeper needs of the New England region,
24 and arguably throughout the economy around the
. 0267
1 United States.
2 This scorched earth, the banks themselves
3 have contributed to this, and CRA, although it has
4 really helped improve the situation, I can't see
5 that, unless these banks address some of the other
6 practices that have promoted -- I wouldn't go quite
7 so far as to say urban decay, but have somewhat
8 impaired the thriving economies, one of which had
9 been New England.
10 I attribute these serious problems in part
11 to, although this is not a forum for this particular
12 subject, to free trade. Anyone well informed on the
13 commercial fraud of free trade understands the only
14 benefactors of it are the corporate management, the
15 lobbyists and the politicians receiving the campaign
16 contributions in order to get access to imported
17 goods without tariffs.
18 New England's economy was based on various
19 sorts of value-added manufacturing and primary
20 manufacturing, which has been seriously eroded and
21 negatively impacted by things like free trade.
22 If you follow the argument that I
23 described, the domestic market for which we produce
24 disintegrates when our neighbors feel that what we
. 0268
1 produce and what they in turn will be charged for
2 our work is perceived to be too expensive.
3 Since my time is at an end, I'll submit the
4 rest of my comments, already having added that.
5 Although today I'm here to oppose this
6 proposed acquisition of FleetBoston by Bank of
7 America, I will further condemn the offenders who
8 are looking to benefit from it, as well as
9 condemning the perpetrators of the economic
10 deterioration in New England due in part to the
11 things I've described, I believe again one of which
12 would be Bank of America, which I think would ignore
13 the real needs of the New England economy.
14 I think too-big-to-fail has enabled large
15 institutions to engage domestically and globally in
16 marginal commercial and banking practices. Both
17 Fleet and Bank of America have practiced this, based
18 on an ability to have protection with regard to the
19 doctrine of too-big-to-fail.
20 As an expert, I worked on bank and thrift
21 recap work. Many of the little banks were just
22 severed, closed, whatever the rest of the lingo, but
23 the large banks were given largesse. And although
24 not directly on the taxpayer's wallet,
. 0269
1 unfortunately, it weakened the banking environment.
2 I think FleetBoston's investment and
3 banking/stock strategies had its costs, and I could
4 go on with regard to its forays into what eventually
5 deteriorated with the bubble.
6 But I would propose either fire the board,
7 you know, which you can do. You don't have to sell
8 the bank in order to get the bank to, you know,
9 operate in a more efficient way. But by selling the
10 bank to another potentially more harmful competitor
11 would be a serious misstep for the other
12 stakeholders, one of which is the New England
13 economy. The price is too low to give up such a
14 strategic position in this region.
15 Management should be more cautious than to
16 reveal their glee at the thought of getting their
17 pot of gold at the end of the rainbow, while
18 shafting many of the other stakeholders not enjoying
19 the millions that the FleetBoston senior management
20 and Bank of America management will enjoy with
21 regard to the exercising of their golden parachutes.
22 I believe we see an agency problem
23 dramatized in this acquisition proposal. And since
24 that is the case, it would also disserve so many if
. 0270
1 the Fed permitted this merger. Management has
2 everything to gain with little to lose, while
3 virtually everyone else in two regions in the
4 Eastern U.S. have more to lose with little upside
5 gain under the Bank of America banking model.
6 As we ignore the root of the problem that
7 acts as an undertow on which the sale of the bank is
8 predicated, selling FleetBoston to the Bank of
9 America would maintain the dysfunctional status quo,
10 and this we must oppose.
11 Thank you.
12 PRESIDING OFFICER SMITH: Thank you.
13 Mr. Cole.
14 MR. COLE: Thank you very much. My name is
15 Chris Cole. I am Regulatory Counsel for the
16 Independent Community Bankers of America. It is a
17 trade association representing approximately 4600
18 banks nationwide, at 17,000 locations. We represent
19 many of the community banks in New England, and in
20 particular many of the mutual thrift associations in
21 the New England area.
22 ICBA is very concerned with the continued
23 concentration of banking assets in the U.S. and the
24 effect that concentration has not only on bank
. 0271
1 competition, but on consumers, on small businesses,
2 and on communities. This merger will catapult Bank
3 of America into the second largest bank holding
4 company in the United States, in terms of assets,
5 and will mean that the top eight financial
6 institutions in this country will control
7 approximately 51 percent of total U.S. banking
8 assets.
9 Unfortunately, the evidence shows that
10 increased concentration in the banking industry has
11 not benefited bank customers and has not had a
12 positive effect on the convenience and needs of the
13 communities served by the acquired banks.
14 For example, large bank mergers often have
15 an adverse effect on consumer deposit pricing and
16 often result in higher fees to consumers. We have
17 several studies to support that. We therefore urge
18 the Federal Reserve Board to examine closely the
19 effect that this merger will have on deposit pricing
20 and on fees in the New England area.
21 Since large bank mergers often have an
22 adverse effect on small business lending, we urge
23 the Board to look at the impact that the merger will
24 have on small business lending in the New England
. 0272
1 area.
2 Along with consumers and small businesses,
3 it is often the case that local communities are
4 adversely impacted when statewide banks are acquired
5 by large national bank franchises located outside of
6 the state.
7 ICBA notes that Bank of America has pledged
8 $750 billion for community economic development over
9 the next decade, and that $100 billion of that is
10 earmarked for loans and investments in Fleet's
11 markets in the New England area.
12 However, the details of this commitment are
13 unclear, as everybody has been bringing up. In this
14 regard, ICBA thinks that the large national banks,
15 like Bank of America, should be examined locally,
16 under the CRA, as community banks are examined right
17 now, instead of simply at the main office of the
18 bank.
19 During the first two CRA exams following
20 the merger, we would urge bank examiners from the
21 OCC to review Bank of America's commitment to the
22 New England community, to see if they are indeed
23 spending the money they have pledged to spend, and
24 to compare their actual community spending in New
. 0273
1 England with Fleet's programs prior to the merger.
2 Finally, we note that Bank of America has
3 interpreted the Reigle-Neal Act very broadly to
4 comply with the 10 percent cap in that statute,
5 which prohibits a merger if the resulting bank would
6 control more than 10 percent of the total deposits
7 in this country. ICBA is not convinced that it was
8 Congress's intention to interpret that statute that
9 broadly.
10 In any case, consumers, small businesses
11 and local communities often suffer when large
12 national banks merge and dominate the banking
13 industry. That is why community banks will resist
14 any attempt to increase the 10 percent cap imposed
15 by the Reigle-Neal Act or to try to broaden the
16 definition of deposits under that statute.
17 Thank you very much for this opportunity to
18 testify.
19 PRESIDING OFFICER SMITH: Thank you.
20 MR. MARSICO: Good afternoon. My name is
21 Richard Marsico. I'm substituting for Jim Campen,
22 who could not be here this afternoon. I will be
23 presenting Professor Campen's testimony.
24 PRESIDING OFFICER SMITH: Four minutes or
. 0274
1 less.
2 MR. MARSICO: In four minutes or less.
3 Professor Campen is Associate Professor of
4 Economics at the University of Massachusetts Boston
5 and a member of the Boards of Directors of the
6 Massachusetts Affordable Housing Alliance and the
7 Fair Housing Center of Greater Boston.
8 Although the proposed merger raises many
9 issues, this testimony will address just one of
10 them, the very dramatic decline of home purchase
11 mortgage lending in Boston and in Massachusetts by
12 Fleet since its merger with BankBoston in 1999.
13 On July 7th, 1999, Professor Campen
14 testified at the public hearing on the Fleet/
15 BankBoston merger that was held here. The previous
16 month he had released a report entitled "Does One
17 Plus One Equal More Than Two or Less Than One: A
18 Study of Mortgage Lending Before and After Recent
19 Mergers by Fleet and BankBoston."
20 The main finding of this study was that,
21 both in the City of Boston and in all of
22 Massachusetts, lending to African-American, Latino,
23 and low-and-moderate-income borrowers by Fleet in
24 1998 was approximately half of the total lending to
. 0275
1 these borrowers by Fleet and Shawmut combined in
2 1995. That is, the result of the Fleet/Shawmut
3 merger was one plus one equals one.
4 Fleet's performance, but not that of
5 BankBoston, fell far short of meeting the criteria
6 of one plus one is greater than two that was
7 emphasized by CEOs Murray and Gifford at their March
8 15th, 1999, press conference announcing the proposed
9 merger.
10 In his testimony, Professor Campen cited
11 the example of LMI borrowers purchasing homes in the
12 City of Boston. In 1995, such borrowers received
13 274 loans from Fleet and 400 loans from Shawmut, for
14 a total of 674 loans. In 1998, Fleet made 335
15 loans, for a decrease of almost exactly half, 50.3
16 percent.
17 This particular finding was chosen as
18 representative, not extreme. The same general
19 pattern existed whether one looked at Boston or the
20 entire state, at loans to African-Americans, to
21 Latino or to LMI borrowers.
22 The point of Professor Campen's testimony
23 at the 1998 hearing was to highlight the possibility
24 that the Fleet/BankBoston merger would turn out like
. 0276
1 the Fleet/Shawmut merger and that total mortgage
2 lending would dramatically decrease after the merger
3 was completed.
4 It turns out that Professor Campen's
5 worries, shared by many of those who testified at
6 the July 1999 hearing, were fully justified. Home
7 purchase lending by Fleet in 2002 was dramatically
8 lower than lending by Fleet and BankBoston combined
9 in 1999, the year of their merger.
10 Professor Campen focuses on home purchase
11 lending because of its great importance to creating
12 home ownership and because that was the focus of his
13 1999 testimony.
14 In this testimony Professor Campen will
15 focus on what has happened to the level of Fleet's
16 lending in the City of Boston during the 1999 to
17 2002 period. Fleet and BankBoston combined made
18 1,006 home purchase loans in Boston in 1999, but
19 Fleet made only 400 loans in 2002, a decrease of
20 60.2 percent. The 2002 total was less than one
21 quarter of the 1,714 home purchase loans made in
22 1995 by BankBoston, BayBank, Fleet and Shawmut
23 combined.
24 When we consider the number of these loans
. 0277
1 that went to minority and lower-income borrowers, we
2 find similar trends that are included in the tables
3 that he submitted in his testimony.
4 In each of these cases, the result of the
5 Fleet/BankBoston merger was one plus one is less
6 than one, a very long way indeed from the one plus
7 one is greater than two that Chairmen Murray and
8 Gifford said would result.
9 Professor Campen believes that these very
10 substantial falls in home purchase lending in the
11 City of Boston, the Boston MSA and the State of
12 Massachusetts in the aftermath of the
13 Fleet/BankBoston merger deserve your careful
14 scrutiny, and he thanks you for the opportunity to
15 present these comments.
16 PRESIDING OFFICER SMITH: Thank you very
17 much. Any questions?
18 Thank you for coming this afternoon.
19 We'll start with Ms. Callahan.
20 MS. CALLAHAN: Thank you.
21 PRESIDING OFFICER SMITH: You have four
22 minutes each.
23 MS. CALLAHAN: Distinguished members of the
24 Panel, thank you for allowing me to appear today to
. 0278
1 express the perspective of small property owners on
2 the proposed merger of Bank of America and
3 FleetBoston. Further consolidation in the banking
4 industry is detrimental to the interests of local
5 communities, citizens and taxpayers. Therefore, the
6 application of Bank of America to acquire
7 FleetBoston should be denied.
8 I am Pat Callahan. I live in Washington,
9 D.C., but was born and raised in Boston. I'm also
10 the president and founder of the American
11 Association of Small Property Owners, the voice of
12 small landlords and real estate investors. I am a
13 community organizer from the property-owning class.
14 I have been working with groups in Massachusetts and
15 around the country for ten years. I consider our
16 most notable accomplishment getting rid of rent
17 control in Massachusetts in 1994.
18 Unlike many others in this room, I am not
19 here to extort money from the banks. I am here to
20 demand accountability from the banks and from the
21 regulators.
22 You, the regulators, are supposed to be
23 protecting the public from fraud. Fleet Bank and
24 others like them can treat customers and the public
. 0279
1 with impunity. They act like they are accountable
2 to no one. Fleet has no fear of you.
3 You have heard extensively about community
4 development and other services and programs, like
5 education, but you need to look at management to get
6 and evaluate the basics of banking.
7 FleetBoston is the poster child for bad
8 corporate behavior. The management problems at
9 Fleet are so severe that the Federal Reserve should
10 delay any merger considerations and immediately
11 undertake an investigation to determine why
12 FleetBoston is not using due diligence to protect
13 customers' monies from fraud.
14 While my experience with AASPO would
15 provide a wealth of reasons to support our position
16 to deny the bank merger, my own personal story
17 graphically illustrates what is wrong with the
18 present trend toward consolidation.
19 I had money taken from my account on a
20 forged signature in Boston at Fleet Bank six years
21 ago, and despite my considerable effort and
22 resources -- I am a lawyer -- I have been unable to
23 get my money returned. Fleet Bank has at every
24 juncture treated it as my problem, not theirs.
. 0280
1 In 1998 I discovered that Fleet Bank had
2 cashed three checks totaling $88,000 with my
3 endorsements forged. Five and a half years later,
4 after stonewalling, they now claim that the statute
5 of limitations has run, and, "Hey, lady, you're out
6 of luck."
7 Fleet doesn't deny that my signature was
8 forged. You can see for yourself, in the materials
9 I provided, how different the signatures are. Fleet
10 cashed a $50,000 check, apparently without requiring
11 identification. Fleet will not accept
12 responsibility and reimburse me for my loss. Fleet
13 instead engaged in a cover-up with such consistency
14 that I suspect that this MO has been applied to many
15 others.
16 First Fleet said that I was not an owner,
17 that I was a mere convenience, but I disproved that.
18 They then hid behind the UCC, claiming that the law
19 creates a legal presumption that all signatures on
20 negotiable instruments are valid, and that if they
21 thought it was genuine, it was genuine. Well,
22 that's pretty twisted logic. Finally, Fleet
23 produced a phony affidavit that had nothing to do
24 with the checks, but my money still has not been
. 0281
1 returned.
2 Before Fleet disappears and Gifford takes
3 his millions, I want my money returned. The only
4 way to hold this arrogance in check is by
5 regulation, oversight and penalties, with the money
6 from penalties going to the U.S. Treasury, not Bruce
7 Marks.
8 I have written more than six times to Fleet
9 officers and directors, specifically Chad Gifford
10 and Gary Spiess, and seven outside directors,
11 including the Dean of Faculty at the Harvard
12 Business School, but they have all ignored me.
13 Having been a lawyer at SEC, I know that corporate
14 governance requires directors to exercise
15 independent judgment over corporate management.
16 Here there is a glaring failure to do so.
17 FleetBoston has not protected customers or
18 the public from financial fraud, and in fact Fleet
19 management has established a pattern of avoiding
20 responsibility, even when criminal acts are brought
21 to their attention.
22 Finally, in determining whether to approve
23 a bank merger, the Board considers several factors.
24 The fifth factor is managerial resources and
. 0282
1 includes consideration of the competence, experience
2 and integrity of the banks' officers and directors.
3 Clearly and unequivocally, Fleet's officers and
4 directors fail on this point.
5 Thank you.
6 PRESIDING OFFICER SMITH: Thank you.
7 Mr. Wong.
8 MR. WONG: Aloha. My name is Al Ku'ahi
9 Wong. I am the President of the Boston Hawaiian
10 Club here in Boston. We're a group of about 100-
11 plus folks from Hawaii, both folks who have the
12 native blood, in addition to those who have lived
13 there or like our culture.
14 Our core mission in our club is to preserve
15 and perpetuate native customs and Hawaiian values.
16 Notice "perpetuate." We cannot perpetuate and
17 pursue the life, liberty and happiness unless we
18 have the common tools to do so, such as mortgages.
19 I'll be surprised if those in the audience
20 here have not seen an article in the Boston Globe
21 today -- I got a call yesterday from the writer --
22 which starts off, "Unless Bank of America provides
23 more mortgages to Native Hawaiians, the Boston
24 Hawaiian Club in adamant. It wants the Federal
. 0283
1 Reserve Board to deny approval of the bank's merger
2 with FleetBoston Financial Corporation."
3 Here is why. Excuse me. You have copies
4 of my full written testimony, and if you care to
5 follow it, I'm on Page 1, the second paragraph,
6 which starts, "Bank of America's $150 million
7 Hawaiian Commitment to FHA-247. In December of '93,
8 based on evidence of illegal discriminations against
9 Native Hawaiians and Filipinos, the Hawaii Fair
10 Housing Coalition proceeded to formally protest Bank
11 of America's application to the Office of Thrift
12 Supervision for regulatory approval to merge with
13 Liberty Bank.
14 "The Coalition then transmitted its
15 analysis of Bank of America's lending practices to
16 the U.S. Department of Justice. As a result, the
17 DOJ began investigating Bank of America for
18 violation of fair lending laws. Confirmation of
19 this investigation was made in a January 4, 1994,
20 letter from the FBI's Honolulu office to a key
21 member of the Coalition.
22 "The protest was deemed substantial, and
23 five months later the OTS held a hearing in Hawaii
24 on the matter. In May of 1994, as a result of the
. 0284
1 Coalition's actions, the Federal Reserve Board order
2 approving Bank of America's acquisition of Liberty
3 Bank incorporated the fact that Bank of America
4 recently announced a comprehensive program to
5 enhance service to the Native Hawaiian and Filipino
6 communities. The program included a four-year
7 commitment," four years, "to provide $150 million in
8 residential mortgage loans for Native Hawaiians
9 seeking housing on Department of Hawaiian Home
10 Lands."
11 As you can see, I have the appropriate
12 citation down there that gives where that
13 information is from.
14 I am now on the last paragraph on Page 2:
15 "The $150 million commitment to FHA-247 loans was to
16 be carried out between July of 1994 and June of
17 1998. This was one of the primary commitments made
18 by Bank of America to the Federal Reserve Board in
19 connection with the Liberty Bank application, and
20 pursuant to its regulations the Board made the
21 commitment a written condition of its approval."
22 Since then $30 million was spent in this
23 effort. Five and a half years late, there are
24 monies owed still. If we as a mortgage owner were
. 0285
1 five days late with a lending institution, they
2 would say something. If we're five months late, we
3 don't have a home.
4 Now I'm on Page 4, the last paragraph:
5 "NationsBank and Bank of America Executives arrive
6 in Hawaii. On August 10th, 1999, Cathy Bessant,
7 President of NationsBank Community Development
8 Group" -- she is currently the chief marketing
9 officer for BOA -- "Doug Woodruff, as well as
10 another NationsBank executive and an executive for
11 BOA, arrived in Hawaii for meetings regarding BOA's
12 commitments to the Hawaiian people. On August 11,
13 1998" -- I want to backtrack. August 8, 1998, was
14 the 100th anniversary of the legal annexation of the
15 Kingdom of Hawaii, a sovereign nation, to the United
16 States, so on August 11th there were thousands of
17 people in Hawaii recognizing this occasion.
18 Anyway, these bankers met with, as I say,
19 all these elders and all these folks on the Palace
20 of Iolani, Iolani Palace in Honolulu. At this
21 occasion they confirmed that BOA would complete the
22 $150 million Hawaiian obligation without delay.
23 I can see that I have been given a
24 heads-up, so I'm going to see if I can move along
. 0286
1 faster. It's not easy. I'm not a banker.
2 PRESIDING OFFICER SMITH: Why don't you
3 just decide what last point you want to make.
4 MR. WONG: Okay. I'll close with saying
5 that we urge the Federal Reserve Bank not to approve
6 the application of this merger until this commitment
7 has been satisfied. They have made no notions of
8 their intent to do so.
9 I appreciate this opportunity.
10 PRESIDING OFFICER SMITH: Thank you very
11 much.
12 MR. COLEMAN: How much time do I have? Is
13 it three minutes?
14 PRESIDING OFFICER SMITH: You have four
15 minutes.
16 MR. COLEMAN: I'll read a little more
17 slowly, then.
18 My name is Joseph Coleman, President of
19 RiteCheck Financial Services Centers in New York,
20 and director of FiSCA, Financial Service Centers of
21 America, a national trade association representing
22 over 5,000 check cashers in local communities across
23 the country.
24 I come before you today as a mythological
. 0287
1 beast. According to myths told around the campfires
2 of some banks and federal offices, the so-called
3 check-casher beast preys on low-income Americans,
4 charges them high fees, deprives them of bank
5 accounts, and launders money to boot.
6 One glance at the real life lived in low-
7 income areas, as opposed to this invented
8 mythological realm, and this beast undergoes a
9 metamorphosis into the local hard-working
10 businessmen and women who provide an absolutely
11 essential bottom rung on the ladder out of poverty.
12 Check cashers provide transaction-based,
13 low-cost financial services. Check cashers provide
14 three critical low-income necessities that banks,
15 with their relationship-based business model, cannot
16 provide. These necessities are liquidity, access
17 and service. I would love to elaborate on those
18 three more, but I'll go on.
19 Check cashers provide these necessities at
20 lower costs than banks can. In short, ours is the
21 model that succeeds at providing financial oxygen to
22 low-income Americans and minorities.
23 Another myth is that check cashers are high
24 risk for money laundering. This is a particularly
. 0288
1 pernicious myth that some federal examiners use to
2 scare bankers away from check cashers.
3 Check cashers are less prone to money
4 laundering than banks. Check cashers are
5 structurally encumbered from money laundering.
6 Launderers want to get money off the street and into
7 the banking system. The check casher earns his
8 living by taking money out of the banking system and
9 putting it onto the street.
10 Our association was in the vanguard of
11 developing comprehensive training programs for our
12 member companies to comply with the Bank Secrecy Act
13 and the U.S. Patriot Act. And if that is not enough
14 to convince, James Sloan, previous director of
15 Treasury's Financial Crimes Enforcement Network,
16 stated that, quote, check cashers do not represent a
17 heightened risk for money laundering, unquote.
18 So what does all of this have to do with my
19 industry's opposition to this acquisition? Echoing
20 an unproven assertion by the OCC that check cashers
21 are at high risk for money laundering, both these
22 institutions have summarily closed all of their
23 check casher accounts.
24 Check cashers cannot operate without a bank
. 0289
1 to provide cash and clear checks. When two banks of
2 such extensive geographical reach take such a
3 draconian position regarding an entire industry, it
4 puts upward pressure on the fees that check cashers
5 must charge and threatens the very existence of
6 these companies in the areas that most need them.
7 And make no mistake, many people use our
8 services because what banks offer is useless to
9 them. Driving out check cashers does not somehow
10 magically lead to people having bank accounts. It
11 just pushes the bottom rung up out of poverty even
12 more out of their reach.
13 It is FiSCA's view that the Federal Reserve
14 Bank should require, as a condition to approving the
15 acquisition, that Bank of America make commercial
16 banking facilities available to check cashers and
17 prohibit the bank from enforcing its discriminatory
18 blanket withholding of services from the entire
19 industry.
20 If we can improve the quality of
21 partnerships between check cashers and banks, we
22 will see the beauty in the beast.
23 Thank you for this opportunity.
24 PRESIDING OFFICER SMITH: Thank you.
. 0290
1 Ms. Maker.
2 MS. MAKER: Good afternoon. My name is
3 Ruhi Maker, and I'm here testifying under my own hat
4 today, as it were. And I am here to testify against
5 the approval of this merger. I co-convene the
6 Greater Rochester Community Reinvestment Coalition
7 in Rochester, New York.
8 We are requesting that the Federal Reserve
9 condition this merger on Bank of America making
10 Upstate New York specific commitments on how it will
11 address community credit needs in Upstate New York.
12 It is Bank of America's position that they
13 will work out the specifics of their $750 billion
14 pledge post-merger. That, in my opinion, is not
15 good enough. The last Fleet merger with BankBoston,
16 in which I testified here as well, Fleet announced a
17 five-year commitment that broke out the pledge by
18 small business loans, affordable mortgage lending,
19 consumer lending, et cetera.
20 In 1999, right in this room, the details of
21 that pledge were shared with this community.
22 Ironically, we felt that was not detailed enough at
23 the time. However, we hope we can prevail upon
24 Fleet to advise Bank of America what made sense in
. 0291
1 1999, with two Mass. banks merging, makes even more
2 sense with the creation of a 29-state bank.
3 Fleet also provided breakouts in its
4 progress reports so that a community group can
5 ascertain by state and type of commitment, i.e.,
6 affordable housing, community development, et
7 cetera, where Fleet is in making progress on that
8 five-year commitment.
9 We have gone to the Website of Bank of
10 America and tried to reconstruct where this $165
11 billion has been spent, and we haven't been able to
12 do that. I was told this morning by one of Bank of
13 America's officials that such detail does in fact
14 exist, and I would urge the Fed, as this merger goes
15 ahead, that everyone should know publicly where this
16 trillion dollar bank is spending this money by
17 assessment area and by type of loan.
18 We are pleased that Bank of America has
19 come to Rochester, New York, and has met with me and
20 with coalition members, and they have agreed to a
21 business plan post-merger. However, unfortunately,
22 it still hurts me to say that it's not enough to
23 say, "Trust us. This is a good merger for
24 Rochester," particularly in light of the concerns
. 0292
1 that the colleagues in North Carolina and California
2 have raised post the NationsBank merger.
3 I'm particularly disturbed about the true
4 value of this commitment when I read a quote in the
5 Boston Globe that says, and this was a quote that
6 was referred to in this morning's testimony, "I feel
7 pretty certain that they're not putting $750 billion
8 into high-risk lending, which is what minority
9 lending tends to be. The term 'community economic
10 development' in my view can mean just about
11 anything."
12 This quote is not a community activist who
13 is disaffected; this is in fact Richard Bove, who is
14 a managing director at Hoefer & Arnett, and this is
15 referred to in the Boston Globe story.
16 The reality is today -- and I represent a
17 lot of minority lending clients; I think I have over
18 100 clients, and I stopped counting after the first
19 100, most of whom are members of the protected
20 classes, and most of whom are senior African-
21 American women -- racism still results in disparate
22 impact in access to credit in minority communities
23 in this country, and in particular to African-
24 Americans, and we must not forget that.
. 0293
1 This lack of lending hurts, and hurts
2 deeply, as we have heard from other groups, and I
3 think that needs to be addressed.
4 I would like to end on a positive note.
5 While we have been working on increasing access to
6 lending for over ten years, we found that there were
7 minority census tracts in Rochester that, despite
8 all our goals that were met for the city and for
9 blacks and Hispanics and low-income households,
10 there were still census tracts with no prime loans,
11 all they had were sub-prime loans.
12 In a previous merger with another Rochester
13 bank, we specified 34 census tracts, and we said,
14 "We know you have met all your other goals in the
15 past, but in this agreement we want loans in these
16 34 census tracts." It was a three-year term. They
17 met their goal in one year.
18 We met with them recently and said, "That's
19 amazing. This is fantastic. How did you do it?"
20 They said, "Well, we used our branch network, and we
21 did a radius around the branches, and we made the
22 loans, and it made good business sense."
23 So in light of this, I urge the Fed to
24 condition this merger on specifics, and perhaps it
. 0294
1 is naive of me to believe that, in light of the
2 testimony presented today, the Fed will do the right
3 thing. Thank you.
4 MR. MARSICO: My name is Richard Marsico,
5 and I now I am presenting my own testimony.
6 I am a professor at New York Law School and
7 director of the school's Justice Action Center. I'm
8 also a member of the National Community Reinvestment
9 Coalition.
10 Thank you for this opportunity to testify
11 here today on the proposed merger of Bank of America
12 and Fleet, the largest bank merger up to this point
13 in United States history. If approved, the merger
14 would create one of the largest banks in the United
15 States, with branches and customers throughout the
16 country.
17 One cannot underestimate the significance
18 of the Federal Reserve's decision on this
19 application. Your decision will have an impact on
20 tens of thousands of low-and-moderate-income and
21 minority persons in communities across the country
22 who seek banking services and loans for homes, small
23 businesses and small farms. They face a reduction
24 of banking services and loans if this merger is
. 0295
1 approved without conditions and, as frequently
2 happens when bank services are reduced, an increase
3 in predatory lending.
4 Your decision will have an impact on
5 sub-prime lending practices and supporting
6 activities, not only for the banks before you, but
7 for all banks involved in the sub-prime market.
8 Finally, your decision will tell banks in
9 the community whether banks can get away with vague
10 and unilateral commitments to lend, or whether the
11 Federal Reserve will seek meaningful, detailed
12 promises, negotiated with and based on input from
13 community organizations.
14 For these reasons I'm testifying in
15 opposition to the merger unless the Federal Reserve
16 conditions it on submission of a plan by the Bank of
17 America that includes at least the following three
18 components:
19 First, a plan to increase lending in its or
20 Fleet's areas where their lending lags behind
21 industry averages.
22 Second, a promise to at least maintain
23 lending and service levels in areas where Fleet's
24 and Bank of America's lending equals or is better
. 0296
1 than industry averages.
2 And finally, a promise by the Bank of
3 America to follow the best practices of Fannie Mae
4 and Freddie Mac regarding sub-prime lending, which
5 would be an agreement not to purchase sub-prime
6 loans with single premium credit insurance, loans
7 with points and fees exceeding 5 percent of the
8 loan, loans that have mandatory arbitration clauses,
9 and loans that have prepayment penalties after three
10 years.
11 There is not sufficient time to review in
12 detail all the relevant data, but research that has
13 been done by the National Community Reinvestment
14 Coalition and its member organizations, much of
15 which has already been submitted to the Federal
16 Reserve in individual comment letters including my
17 own, show the following salient facts about Fleet
18 and Bank of America's lending:
19 First, in many cities and rural areas
20 around the country, Bank of America or Fleet's home
21 mortgage and small business lending to low-and-
22 moderate-income and minority persons and communities
23 lags behind the industry's averages. These areas
24 include New York City, Los Angeles, San Diego,
. 0297
1 Chicago and Baltimore.
2 In 2002 in New York City, for example, Bank
3 of America was 48 percent below industry averages in
4 home mortgage lending to African-Americans and
5 Latinos, 35 percent below in loans to low-and-
6 moderate-income persons, 28 percent below in lending
7 to low-and-moderate-income census tracts, and 38
8 percent below in lending to predominantly minority
9 census tracts.
10 Second, following Bank of America's merger
11 with NationsBank in 1998, the lending of the
12 combined bank decreased in many states, including
13 California, Illinois, Indiana, Massachusetts,
14 Nevada, and North Carolina, at rates faster than
15 other banks, or the lending increased more slowly
16 than other banks. Its percentages of branches in
17 low-and-moderate-income neighborhoods declined,
18 compared to an increase for all lenders.
19 Bank of America's commitment to make
20 $750 billion in community economic development loans
21 is not sufficient to address these concerns with its
22 record. The commitment does not contain details
23 such as where it will make the loans and what they
24 will be for.
. 0298
1 A Wall Street analyst quoted in the Wall
2 Street Journal agrees. He said, "The term
3 'community economic development' in my view can mean
4 just about anything. This is such a big, broad,
5 meaningless statement that we don't have to worry
6 about it," while residents of low-and-moderate-
7 income and predominantly minority neighborhoods do
8 have to worry about it.
9 I therefore ask the Federal Reserve not to
10 grant this application unless the Bank of America
11 makes a meaningful and detailed commitment to meet
12 the credit needs of the communities it serves.
13 Thank you.
14 PRESIDING OFFICER SMITH: Thank you very
15 much for your comments this afternoon.
16 We are back to three minutes, please.
17 We'll start with Ms. Richter.
18 MS. RICHTER: Thank you. Madam Chairman, I
19 ask your indulgence and that of the panelists
20 because I need to make an airplane, so I'll try to
21 do the three minutes.
22 My name is Lisa Richter, and I thank you
23 for the opportunity to testify on behalf of National
24 Community Investment Fund in favor of the Bank of
. 0299
1 America/Fleet merger.
2 I will describe Bank of America's support
3 for NCIF and the support for improved delivery of
4 banking services in low-to-moderate-income
5 communities that it represents.
6 In so doing, I would like to suggest that
7 Bank of America approaches its community development
8 investing, lending and partnerships with an approach
9 that exceeds the letter of the law, seeks innovative
10 and substantive solutions for underserved
11 communities, includes significant risk taking, and
12 works closely with community partners and other
13 financial institutions to manage that risk.
14 Since I'm submitting comments, very
15 briefly, NCIF is a certified CDFI, it's a nonprofit
16 trust, and we invest in insured depositories, that
17 is, banks and credit unions, operating in distressed
18 communities with a primary mission of community
19 development.
20 We were launched in 1995 through then
21 NationsBank, which funded our organizational costs
22 and supplied additional capital in the form of an
23 extremely flexible $15 million loan for ten years at
24 1 percent.
. 0300
1 The vision at that time and still today was
2 that NCIF would increase the number and capacity of
3 domestic depository institutions that are both
4 effective agents of local community development in
5 distressed markets and sound financial institutions.
6 With Bank of America's backing, combined
7 with its commitment to creative and innovative
8 product development and its guidance, delivered by
9 numerous senior executives over the years who have
10 interacted with NCIF as trustees or loan officers,
11 we have been able to build a fully national
12 investment fund with $23 million in assets and
13 investments in 28 development banking institutions
14 that provide credit and financial services in
15 distressed urban, rural and reservation communities.
16 I might note that while this by no means
17 begins to meet the need, one example would be
18 Hawaiian Community Assets, which is an entity
19 designed to promote and enhance home ownership by
20 Native Hawaiians. NCIF has an investment, and I
21 believe Bank of America also has a direct investment
22 with that entity.
23 Their extremely flexible financing set a
24 precedent for us to raise additional capital from
. 0301
1 institutions like MBNA and Washington Mutual. And
2 when those later investors came in, although BOA's
3 investment was much larger, they conceded any
4 priority in terms of how the funding would be
5 directed, and they set a standard for sort of a
6 strategic use of proceeds where investments were
7 made nationwide where they were most acutely needed,
8 such as on the Hawaiian homeland, and where they
9 could be most effectively deployed.
10 The vast majority of NCIF's investment are
11 in banks or credit unions that serve minority, low-
12 income urban or rural communities, with the balance
13 in rural underserved communities that may not have
14 high minority populations. 70 percent of the
15 institutions in our current portfolio are in urban
16 and 40 percent in rural and reservation markets.
17 Some are in both. 82 percent are minority focused,
18 and 67 percent of the dollars are in minority-owned
19 institutions.
20 Since we began tracking the activities of
21 these portfolio institutions in 1999, they have
22 generated almost $1 billion in development loans,
23 over 11,000 loans tracked, geocoded to distressed
24 communities and low-income borrowers.
. 0302
1 Since I'm getting the signal to end, I
2 would like to say that the structure of this
3 financing allowed us to not only make these
4 investments, make them on terms that were of the
5 highest value to the institutions, namely tier one
6 capital and development banks in many cases, but
7 also supply working capital for us to provide
8 technical assistance to the management of these
9 organizations, so that they could raise capital from
10 other sources to enhance their development impact
11 through product development.
12 This was acknowledged or recognized by the
13 Honorable Donald E. Powell at the FDIC when he
14 created a partnership with us in 2003 to see how we
15 could leverage the workplace to get to low-income
16 workers and get them into the mainstream, and
17 finally to help the institutions become more
18 efficient.
19 With that I thank you very much, and I look
20 forward to the increase in impact that can be
21 achieved when you bring together the resources and
22 commitment of the institutions that we're talking
23 about today.
24 PRESIDING OFFICER SMITH: Thank you very
. 0303
1 much.
2 Mr. Egan.
3 MR. EGAN: Good afternoon, Madam Chairman.
4 I am Conrad Egan. I'm the President and Chief
5 Executive Officer of the National Housing
6 Conference. And since I have already submitted a
7 formal statement for the record, I would
8 respectfully request that that be placed in the
9 record and that I just deliver some briefer remarks
10 today.
11 First of all, let me describe the National
12 Housing Conference. It is the nation's oldest and
13 most broad-based housing advocacy organization,
14 having been in this business, so to speak, for 70
15 years. And I want to indicate very clearly up front
16 that we are fully in support of the application for
17 acquisition before you these days.
18 I also want to make it very clear, and I
19 support the comments by one of the earlier
20 presenters, Ms. Wilkerson, that sunshine is good.
21 Both Bank of America and Fleet are significant
22 contributors to the National Housing Conference. We
23 are very proud of those contributions, and I assume
24 the institutions are proud to make them.
. 0304
1 With their assistance and the assistance of
2 many of our other members, significant members,
3 including some of whom have appeared before you
4 today, we have conducted some really groundbreaking
5 research, particularly about the challenges that
6 working families face in the area of housing
7 opportunities.
8 In fact, in one of our recent reports,
9 which just received extensive national publicity, we
10 point out that over the four-year period, just the
11 four-year period from 1997 to 2001, the number of
12 working families in this nation paying more than
13 half of their income for housing increased by 60
14 percent, just during that four-year period. And my
15 assumption is -- that was between '97 and 2001. My
16 assumption is that that has increased even more
17 significantly now.
18 Also, through support from Bank of America,
19 Fleet, and our other members, amongst our other
20 activities have been our regional senior executive
21 round tables which we have held in communities in
22 this region, such as Providence, Rhode Island;
23 Portland, Maine, just up the street; and also in
24 Charlotte, North Carolina.
. 0305
1 In fact, Mayor McCrory, who was in front of
2 you earlier today, was part of one of those round
3 tables where we bring together business leaders,
4 other private sector leaders, academic leaders,
5 public officials, and housing and community leaders,
6 to talk about strategies for better community
7 development and increasing housing affordability in
8 those areas.
9 I would like to bring two matters to your
10 attention which I think lend credence to the
11 approval of this application. First of all, Bank of
12 America particularly has taken the lead on
13 supporting very creative financing.
14 Again, Mayor McCrory referred to this
15 earlier, but I don't think he was strong enough in
16 saying how much Bank of America has done on a
17 nationwide basis to support the revitalization and
18 the recapitalization of the public housing portfolio
19 across this nation. In fact, I would like to say
20 that one of their senior officers participated along
21 with the other staff of the housing commission in
22 supporting that particular proposal.
23 Also, as Congressman Frank indicated
24 earlier today, the Bank of America has been very
. 0306
1 active in supporting and using the affordable
2 housing program of the Federal Home Loan Bank
3 system, so we are very pleased to see that the bank
4 has committed itself to keeping its charter in the
5 Northeast so that it can continue to participate in
6 that system.
7 Let me close by thanking you for being here
8 today. I have been here all day, not just in
9 appearing before you and offering these humble
10 comments, but also being able to learn the kinds of
11 things I have learned today. Let me assure you I
12 will go back to Washington with a greater resolve to
13 deal with many of the problems and challenges that
14 have been identified today.
15 Thank you.
16 PRESIDING OFFICER SMITH: Thank you very
17 much.
18 MR. FLORES: Good afternoon, buenas tardes.
19 My name is Ramon Flores, and I along with my wife
20 own La Plaza Del Mercado, a supermarket located
21 inside a popular multistore building located in Park
22 Street, Hartford, Connecticut. I am here today to
23 voice a favorable opinion on the merger of Fleet
24 Bank and Bank of America.
. 0307
1 I am testimony of the American dream, a
2 dream that started about ten years ago, in which I
3 wanted to establish my own business in Hartford,
4 Connecticut. Today I am here to give a resounding
5 thank-you to Fleet for allowing me to live my dream.
6 It is with this affection that I have to stand up
7 and state publicly that if there were more banks
8 such as Fleet, many of our inner-city economic
9 problems could be resolved.
10 It was through one of Fleet's very
11 successful partnership community loan funds that I
12 was able to obtain my first loan to purchase
13 equipment and expand my business. Without the
14 Fleet/HEDCO/SAMA Loan Fund, I would not be here.
15 This fund, which provides loans at very
16 favorable interest rates for businesses that
17 otherwise do not qualify for traditional bank
18 lending, provided me and my wife the capital to
19 continue to run my business during a period of time
20 when many businesses were failing. The
21 Fleet/HEDCO/SAMA Loan Fund allowed me to establish
22 and improve my business so that six months ago I
23 applied to another loan, and I was approved by a
24 conventional line of credit from, guess, Fleet Bank.
. 0308
1 Speaking to my Hispanic business friends,
2 they all agree with me that it is Fleet that is
3 visible and active in the area of not only lending
4 money, but also educating them through a program
5 especially geared for the Hispanic business owner, a
6 program such as SAMA's Passaporte Community Training
7 Program, which my wife and I took two years ago, and
8 sponsored again by Fleet Bank.
9 I only expect better things to happen in my
10 street from the merger of Fleet Bank and Bank of
11 America. Park Street needs more economic
12 development, and it will not likely come from
13 another area bank. This merger could only advance
14 the plans we merchants have, envisioning a strong
15 and lasting Park Street, one in which the corner of
16 Park Street and Main Street will finally be
17 developed.
18 Fleet Bank's financial hand is over Park
19 Street not in the thousands of dollars, but in the
20 millions of dollars. I encourage the people here
21 today who have to decide on the merger to make a
22 walk through Park Street, and you will see what I am
23 talking about. Block upon block, Fleet Bank has
24 committed its financial resource.
. 0309
1 Fleet Bank sees the value and strength of
2 our Hispanic community. Now they know that it makes
3 good business sense to lend in our community.
4 Therefore, I do not expect that commitment to
5 diminish with the merger, but to grow as strongly
6 with benefits to the Hispanic community, not just in
7 Hartford, but through all the cities that will be
8 served by the new bank.
9 Thank you very much.
10 PRESIDING OFFICER SMITH: Thank you very
11 much for your comments.
12 MR. GAGLIARDI: Good afternoon. My name is
13 Peter Gagliardi, and I currently serve as the
14 Executive Director of HAP, Inc., a regional housing
15 partnership that serves the 43 cities and towns of
16 Hampden and Hampshire Counties in Massachusetts with
17 a wide variety of affordable housing programs.
18 I speak today in support of the proposed
19 merger, subject to a number of expectations that are
20 based upon a long and very fruitful relationship
21 with Fleet Bank.
22 Our relationship with Fleet spans virtually
23 the entire period since they entered the Western
24 Massachusetts market. Fleet, for example, was
. 0310
1 instrumental in the creation of our first-time home
2 buyer program, through which over 3,000 people have
3 graduated and more than 1500 have been able to
4 purchase their first home.
5 Nearly 500 of HAP's first-time home buyers
6 have accessed the Soft Second Loan Program through
7 Fleet, and I was delighted today to hear that Bank
8 of America has committed to 3,000 soft second loans
9 over the next ten years.
10 There are many other relationship items
11 that I have cited in my written testimony, but in
12 the interests of time, I'll ask you to please look
13 at those, but move on.
14 Fleet's personal interest in the success
15 and growth of our business, our business as a
16 nonprofit affordable housing corporation, has been a
17 critical asset. Fleet's Western Massachusetts staff
18 person in their community development area has been
19 a major part of that resource, helping us to grow by
20 establishing a strong banking relationship and by
21 providing guidance and support to us as an
22 organization.
23 The presence of an effective partner
24 knowledgeable in the area of community development
. 0311
1 has allowed the relationship to grow and our
2 business to flourish, to the benefit of low-and-
3 moderate-income people in our region.
4 Our expectation going forward is that Bank
5 of America will continue to provide the resources
6 and services that have been instrumental to our
7 efforts in Western Massachusetts.
8 That brings me to, I think, my most
9 important point. As we like to point out to our
10 politicians here in Massachusetts, there is a
11 Massachusetts beyond Route 495. There is another
12 Massachusetts that's not the same economy, the same
13 market as the one in this area where we're sitting
14 today.
15 It's a very separate and distinct market,
16 one that's not seeing the economic boom that the
17 eastern part of the state experienced in the 1990.
18 Our area is characterized by an economy that has
19 grown only slowly after a prolonged recession. Our
20 urban areas continue to suffer the ravages of
21 abandoned housing, vacant lots, boarded-up buildings
22 and other conditions of urban blight.
23 In January 2000, we took a survey just of
24 the two principal cities, Springfield and Holyoke,
. 0312
1 and there were nearly 2,000 vacant and abandoned
2 dwelling units in those two cities alone in January
3 2000.
4 We have issues that remain, and I've given
5 you, for your benefit, some photographs with my
6 testimony of some of the neighborhoods, both in 2000
7 when we did the study and today, in one little
8 neighborhood of 5,000 people that has 130 vacant
9 abandoned parcels, some with houses still on them,
10 some not.
11 We need the new Bank of America's support
12 to continue the revitalization of neighborhoods like
13 this and to bring decent jobs, good-paying jobs, and
14 opportunities to the low-and-moderate-income people
15 of Western Massachusetts.
16 Thank you.
17 PRESIDING OFFICER SMITH: Thank you very
18 much.
19 Mr. Sierra.
20 MR. SIERRA: Good afternoon. My name is
21 Angel Sierra, and I am a business owner in Hartford,
22 Connecticut.
23 First I would like to thank the Federal
24 Reserve for allowing me the time to come before this
. 0313
1 body to speak about my support for the merger of
2 Fleet Bank and Bank of America.
3 I am the owner of Hispana Vision, a small
4 eye-care business located in the heart of Hartford's
5 Hispanic community, and also the president of the
6 Spanish-American Merchant Association, better known
7 as SAMA.
8 In 1993, I risked leaving the private
9 sector to establish my own business, Hispana Vision,
10 and it was during this period of time that I
11 understood what it really is to have the backing of
12 a Fleet Bank in the community. Fleet Bank, since my
13 inception, has been there to support my growth.
14 They have been -- they have supported my business
15 with three loans, each allowing me to grow my
16 business.
17 One of these loans was for me to purchase a
18 vacant property in an area of Hartford that needed
19 development. This loan, which was used to renovate,
20 build out and relocate my business, could not have
21 been possible without Fleet.
22 In addition, it was through another loan
23 fund sponsored by Fleet and managed by HEDCO and
24 SAMA, known as the Fleet/HEDCO/SAMA Loan Fund, that
. 0314
1 my building got completed. This loan fund served as
2 a subordinated equity to allow the rest of the
3 lenders to finance this risky project.
4 Not only in this instance was Fleet there
5 for me, but only just last year I was given the
6 opportunity to purchase an adjoining empty lot in
7 the rear of my building. And Fleet gave me not only
8 the money to purchase the lot, but also restructured
9 my loan to help me lower my monthly payments, very
10 important.
11 I am also a proud graduate of a computer
12 training program through SAMA geared to Hispanic
13 merchants that was funded by Fleet Bank, which
14 provided valuable training to merchants such as
15 myself who understood very little about computers
16 used in today's business. Without the training, I
17 would not have been able to expand my business,
18 without understanding the technology available
19 today.
20 Today my new business employs seven people
21 and is associated with five optometrists and several
22 ophthalmologists. Hispana Vision is the first
23 Hispanic-owned full-service optical business in the
24 Greater Hartford area.
. 0315
1 I plan in the near future to expand my
2 business into other towns, and I know that Fleet
3 Bank will be there to assist me. I continue to look
4 forward for new challenges as my business grows and
5 believe that the merged banks will be there for the
6 growth.
7 Bank of America has a very strong
8 commitment to the Hispanic minority community.
9 There is still much to be done in our Hispanic
10 community, especially in the area of Park Street,
11 and we need strong institutions that have performed
12 well in the past and will be there for us in the
13 future.
14 Thank you.
15 PRESIDING OFFICER SMITH: Thank you.
16 Mr. Rothman.
17 MR. ROTHMAN: Good afternoon. I'm George
18 Rothman, President and CEO of MANNA. We're a
19 21-year-old faith-based and community-based
20 nonprofit affordable housing developer and producer
21 in Washington, D.C.
22 I am not here because Bank of America
23 provides my organization with large grants, because
24 it doesn't. We do get some small ones. I'm here
. 0316
1 because I support this merger. In my opinion, Bank
2 of America represents community lending and
3 participation at a very high level. They are
4 certainly the best at it in D.C.
5 Not long ago I opposed a proposed merger
6 between a large North Carolina bank and a
7 mid-Atlantic one. I did this because the acquiring
8 bank had a very lackluster record of community
9 lending; in the current slang, they talked the talk
10 but didn't walk the walk. I opposed it even though
11 my organization regularly received grants and/or
12 sponsorships from the acquiring bank.
13 What I like and respect about Bank of
14 America is that community involvement and social
15 responsibility are not simply a means of meeting CRA
16 requirements, but are generally perceived as
17 admirable goals and good business.
18 Even though we are small by developer
19 standards, my organization is fortunate enough to
20 have established a strong track record in Washington
21 over the years, such that we're in a position that
22 we can select the banks with which we want to work.
23 Getting loans for our projects are the least of our
24 problems. Many banks want our business.
. 0317
1 But we have chosen to work with only three
2 of them on a regular basis, and B of A is one of
3 them. This is because of a multiplicity of factors,
4 which include a thorough understanding of our
5 business, flexibility in lending, and most of all a
6 caring and concern about our mission.
7 However, I do not for one minute think the
8 concern is philanthropic, nor does the bank act that
9 way. What makes them so good? In addition to the
10 aforementioned reasons, let me give a specific
11 example.
12 Not a lot of lenders really care about
13 getting community input and then respecting and
14 implementing it on projects in which they have huge
15 equity investments, which B of A has done in
16 Washington with residents of the Hillsdale
17 Neighborhood.
18 In one of those projects, B of A sought
19 community input through a charrette process, and
20 followed through on major recommendations made by
21 neighborhood residents, even though several of the
22 recommendations reduced the profit potential for the
23 project.
24 In that project we are a partner, and it's
. 0318
1 a project to develop and renovate a portion of an
2 old garden apartment complex into condominiums. If
3 other banks were in a similar situation, they would
4 probably go out and hire a well-known architect and
5 general contractor to design and build the project.
6 Not Bank of America, and I'm talking about
7 a $12 million project. They asked us to do the
8 architectural design and act as the construction
9 manager, general contractor, and real estate agent.
10 I don't know of any other bank which would do that,
11 because none has.
12 Recently we formed our own mortgage
13 company, the first and only nonprofit mortgage
14 company in D.C. To serve a very-low-and-low-income
15 minority clientele better, we decided to establish
16 wholesale business relationship with three lenders.
17 We selected B of O as one of them because of the
18 variety of affordable mortgage products they
19 offered, their understanding of our needs, and their
20 willingness to work with us. For them we were less
21 than a drop in the bucket.
22 To make this arrangement work
23 administratively, B of A had to jump through many
24 more hoops than MANNA did, and MANNA had no track
. 0319
1 record of mortgage lending. Now, that's unusual.
2 In D.C., all of the former large hometown
3 banks, except one, have been purchased by out-of-
4 town banks. The one exception is the one I'm least
5 likely to do business with.
6 Based on our long-time experience dealing
7 with Bank of America and its predecessor
8 NationsBank, and because of its outstanding
9 performance in doing business in underserved and
10 distressed communities in Washington, D.C., with my
11 organization and other nonprofits, I don't think
12 there is any better large bank for a community to
13 welcome than Bank of America.
14 Thank you.
15 PRESIDING OFFICER SMITH: Thank you.
16 MS. MICELI-VASQUEZ: Thank you for the
17 honor to speak today in support of the Bank of
18 America/FleetBoston merger.
19 My name is Elaine Miceli-Vasquez from Fort
20 Lauderdale, Florida. I co-own the pioneer Spanish
21 newspaper El Heraldo de Broward and a multicultural
22 firm called Latin Power, Incorporated. And next
23 time I visit Boston, I promise to bring some Florida
24 sunshine.
. 0320
1 I am active on more than 15 nonprofit
2 boards in the community. Presently I serve at the
3 Governor's pleasure on a post-secondary education
4 planning commission that among other duties creates
5 the master plan of education from K through 20 in
6 the State of Florida.
7 When I heard about this opportunity, I
8 simply had to speak openly and honestly about Bank
9 of America, as I feel I represent a good profile of
10 the Bank of America customer in Fort Lauderdale.
11 My sister recently retired from Fleet Bank
12 after a merger with Northeast Savings in Schenectady
13 and has moved down to Florida, and with her 401(k)
14 growing, she told me to say, "I have to come to
15 support this merger."
16 Ironically, my sister is now working at my
17 newspaper three days a week coordinating all of the
18 Bank of America sponsored events. Talk about a
19 change there.
20 Selecting a bank is very personal. It's
21 like going to a doctor. You have to be honest, you
22 can't tell any lies, your history is on paper, and
23 you're always waiting for an answer that you hope is
24 good.
. 0321
1 Small business owners like me assume we
2 aren't important enough for a big bank. But small
3 business is what makes Bank of America the bank it
4 is today in Fort Lauderdale.
5 In the early 1970s, as a single mother at
6 age 26, I had three daughters, ages four and twins
7 three months old, so you could count the numbers on
8 my age. It was nearly impossible to find any bank
9 that would even talk to me as a single parent.
10 In 1989 I was offered the opportunity to
11 co-own a newspaper and took the leap, although I had
12 two teenagers in high school and one in college. I
13 didn't know how I would begin selling advertising in
14 my free Spanish newspaper.
15 As the census had just come out in 1990, I
16 knew what was ahead of me with the Latin market, but
17 major companies wouldn't even talk to me. It was
18 just not on their marketing radar screen, until I
19 met Linda Stepenovitch of Barnett Bank in 1991. We
20 were at a luncheon, and both of us participated on a
21 newly formed CRA board in the county, and I was
22 hoping to encourage Barnett to join me in the
23 emerging market and collaborate with the culture.
24 That meeting began a journey of my banking
. 0322
1 experience and relationship with Barnett and through
2 the mergers with NationsBank and now Bank of
3 America. What began as a mere $1,000 partnership of
4 advertising in 1991 has grown to more than a
5 $75,000-plus relationship with my newspaper for the
6 year 2004.
7 I am proud to say that Bank of America owns
8 the market share of the Hispanic consumer in Fort
9 Lauderdale because of their early vision and their
10 cultural competency.
11 I must admit when the mergers took place,
12 like the one being discussed today with Fleet Bank
13 Boston, I thought that my small-town banking
14 relationship would end. I assumed that I would
15 become a number. I was concerned that all the
16 banking staff that I was accustomed to working with
17 would be replaced by the new bank staff, I would
18 start over again and find another Linda
19 Stepenovitch.
20 I was wrong. Everyone is still there
21 working with us. The market president, Jim Cassidy,
22 is a phone call away. I even have his cell phone
23 number. I can't tell you how many times the
24 president invited me to participate for input in the
. 0323
1 community.
2 What started as an early relationship of a
3 one-day event in 1989 called Viva Broward has now
4 turned into a month-long celebration of Hispanic
5 Heritage Month with 50 sponsors in 29 cities and on
6 a national level.
7 In closing, I would like to say that
8 customer service is the key to Bank of America's
9 success. When you walk into a branch, you can
10 almost feel the security that the employees have.
11 The smiles are genuine, and if someone is happy at
12 their job, then it will be passed on to you.
13 I fully support the merger and hope that
14 your customers are as pleased as I have been with
15 Bank of America.
16 Thank you.
17 PRESIDING OFFICER SMITH: Thank you.
18 DR. VASQUEZ: My name is Erwin Vasquez. I
19 am Elaine's husband. I am a cardiologist in Fort
20 Lauderdale, and I am pleased to be here,
21 unfortunately with this cold reception that I have
22 received.
23 As a sole practitioner, I rely on the bank
24 to understand both my personal and business needs.
. 0324
1 I have taken the time from my practice to travel to
2 Boston today to give testimony and support the Bank
3 of America and FleetBoston merger.
4 Any immigrant comes to a new community with
5 language and cultural barriers that present
6 challenges to communicate. These communication
7 challenges are increased when we confront them in
8 the financial world of banking. Understanding of
9 language of loans, meeting IRS requirements and all
10 of the matters pertaining to setting up a business,
11 you can be overwhelmed by that proposition.
12 To many of us coming to the shores of
13 America, this is the first time we encounter such a
14 situation and find ourselves discussing our personal
15 financial matters with a total stranger. It simply
16 doesn't occur in our culture.
17 When I selected a bank in the early 1980s,
18 I went to a local branch that was close to the
19 house. I found Ana in Barnett Bank. Ana speaks
20 Spanish. However, if it came to speaking English
21 too, I tried to speak in English.
22 Today Ana is still my account
23 representative, through mergers with NationsBank and
24 more recently with Bank of America. The continuity
. 0325
1 in the banking staff in a neighborhood branch a
2 block from my office has given me a sense of comfort
3 and convenience.
4 My opportunities became greater, obtaining
5 short-time loans for equipment, lines of credit and
6 investment opportunities.
7 My charitable work soon became an important
8 part of my personal growth. I founded a free
9 healthcare clinic for the immigrant pool called The
10 Light of the World Clinic in 1989. That relies on
11 volunteers, doctors, nurses and clerical workers.
12 Many of the patients are served for free and do not
13 speak English. Most came from all over the world.
14 When NationsBank came, they offered me
15 furniture and all of the equipment. Computers were
16 given to us. So that facilitated us to have some
17 data that we could use later on in our granting
18 needs.
19 Then it became Bank of America, which is
20 more than an institution. The bank has a social
21 conscience. For example, a bank volunteer chaired
22 our annual gala, to get more funds for our clinic.
23 The Bank of America Diversity Team came one day with
24 Boy Scout Troops to paint the pediatric room. Bank
. 0326
1 of America associates hosted a number of meetings to
2 learn more about the disparity of healthcare that is
3 very prevalent in this country, various children's
4 issues, mentoring programs, education access for
5 minorities.
6 I understand charity, and I advocate
7 volunteerism whenever it is possible. They put
8 their money and support behind United Way, the arts
9 and education issues. They touch the lives of many.
10 Recently I created the Vasquez Family
11 Public Fund, it's more than a million dollar fund,
12 and I asked Bank of America to help me out to put
13 that money in assets.
14 Relationships and loyalty are factors that
15 surrounded my culture. Bank of America knows and
16 understands me and values my input and recognizes my
17 needs.
18 I fully support the merger of Bank of
19 America and Fleet Bank Boston.
20 Thank you, all of you, for the opportunity
21 to share my experience with you.
22 PRESIDING OFFICER SMITH: Thank you.
23 Lisa Alberghini.
24 MS. ALBERGHINI: Madam Chair, members of
. 0327
1 the Committee, thank you for the opportunity to
2 comment on this most important matter. I am Lisa
3 Alberghini, Executive Director of the Planning
4 Office for Urban Affairs of the Archdiocese of
5 Boston, and I'm testifying today in support of the
6 FleetBoston/Bank of America merger.
7 The Planning Office's mission is to develop
8 affordable and mixed-income housing for low-and-
9 moderate-income people, and we began our work 35
10 years ago. I urge you to support this merger
11 because of Fleet Bank's commitment to community that
12 they have displayed in working in partnership with
13 us, and also because of Bank of America's commitment
14 to invest $100 billion in New England.
15 In our experience, Fleet's leadership in
16 affordable housing development has taken two forms.
17 One is an unusual partnership, and the second is the
18 bank's lending and investment practices on specific
19 affordable housing development projects.
20 First, the partnership. Fleet's leadership
21 and vision was responsible for initiating an unusual
22 partnership with the Planning Office of the
23 Archdiocese, which enabled us to dramatically
24 increase our housing production efforts by providing
. 0328
1 critical working capital to our office.
2 This is not a typical partnership, and it
3 represents a most important principle, that of
4 prominent business leaders not just talking about
5 what needs to be done to provide affordable homes,
6 but taking action to ensure those homes get built,
7 and there is a very big difference.
8 In April 2001, the Archdiocese joined
9 forces with the Greater Boston Chamber of Commerce
10 to learn about the obstacles to affordable housing
11 development. That work was made possible by a
12 generous contribution of $50,000 from Fleet Bank,
13 and it resulted in the publication of an important
14 study.
15 That report called for the need to build
16 36,000 additional units of housing, including 15,000
17 affordable units. A major theme of the study was
18 collective responsibility or the shared need for all
19 of those in a civil society to do their part in
20 responding to the housing crisis. In our view, and
21 in our very real experience, Fleet Bank has done
22 just that.
23 For its part, the Archdiocese committed to
24 make available some of its underutilized property to
. 0329
1 develop more affordable housing, and the Planning
2 Office was faced with the tremendous opportunity to
3 dramatically increase our production efforts, but we
4 needed help. We needed help to develop our capacity
5 and our working capital. To that end and in direct
6 response to the Archdiocesan commitment, FleetBoston
7 Financial partnered with our office and came to the
8 call of collective responsibility.
9 With $2 million from Fleet Bank, the
10 partnership between Fleet and the Archdiocese firmly
11 positioned our office to initiate a five-year plan
12 to increase our production efforts and produce 2,000
13 additional units of affordable housing.
14 The result is six developments under way
15 today, totaling 654 units, and many more in the
16 planning stages, in Boston, Brighton, Hyde Park,
17 Lynn, Brookline, Lowell, and a number of other
18 communities.
19 Thus we have 654 units under way now, a
20 significant jump in our production, and we are well
21 on the way of meeting our 2,000-unit goal. That is
22 an incredible concrete or bricks and mortar result,
23 and it is primarily because of Fleet's vision and
24 commitment.
. 0330
1 The lending practices of Fleet have also
2 been extraordinary. They have provided us with a
3 $52 million construction loan on one development and
4 nearly $40 million of commitments on other
5 developments that we have under way.
6 We encourage this, encourage you to support
7 this. I do not necessarily think that big is bad in
8 the banking world. I think it is more and more
9 often a reality, and with it, though, can come
10 immense opportunity for investment and resources.
11 The key to seizing that opportunity is for
12 Bank of America to keep in place the community
13 relationships that Fleet has established, has well
14 established in this region.
15 I believe we should support the merger. We
16 should applaud the $100 billion investment Bank of
17 America has promised. And we should expect and
18 encourage a strong commitment to community to
19 continue under Bank of America, which most
20 importantly should be evidenced by remaining a fully
21 engaged partner directly involved in our work.
22 Thank you for the opportunity to give you
23 our point of view, and I wanted to let you know that
24 I left copies of my written testimony, which is a
. 0331
1 bit longer, out front. And attached to it is a copy
2 of an article from this month's Affordable Housing
3 Finance magazine, which describes the partnership
4 between Fleet Bank and the Archdiocese.
5 Thank you very much.
6 PRESIDING OFFICER SMITH: Thank you.
7 We are still in the three-minute time
8 frame, so if you could stick to it, we can start.
9 MR. GUNTER: Thank you, Madam Chair,
10 members of the Committee, for this opportunity to
11 speak in favor of the merger.
12 My name is Bruce Gunter, and I am the
13 founder, President and CEO of Progressive
14 Redevelopment, Incorporated, PRI, a nonprofit
15 developer of affordable housing based in Atlanta,
16 Georgia.
17 Now 15 years old, PRI has developed a wide
18 range of housing for low-income families and
19 individuals, including transitional housing for the
20 homeless, first-time home buyer townhouses, low-
21 income housing tax credit apartments, and supportive
22 housing mid-rises. We are the largest of our kind
23 in the state, with over 40 employees and almost
24 $120 million of developments.
. 0332
1 I began my career in finance working for a
2 major bank in Atlanta and then started and ran an
3 investment counseling firm and then a nonprofit
4 development company. Beginning with volunteer work
5 with Habitat for Humanity in the early 1980's, I
6 have been involved in affordable housing and
7 community development activities for over 20 years.
8 Today I serve on various boards of
9 directors of housing development corporations,
10 homeless transitional housing services, Advisory
11 Board of the Federal Home Loan Bank, and recently
12 the Affordable Housing Advisory Council of Fannie
13 Mae. For five years I was on the board of Habitat
14 for Humanity International, serving three of those
15 as treasurer.
16 So I must say I do find it quite odd to be
17 on this side of the table under such circumstances.
18 In fact, if these hearings produce more of a
19 commitment to affordable housing and community
20 development from Bank of America, then I would be
21 very pleased. But times have changed, and in some
22 respects for the better, and Bank of America
23 epitomizes these changes, in my view.
24 Through CRA, the realization that decent
. 0333
1 enough loans could be made in lower-income
2 communities, the realization that healthy
3 communities are in all of our interests, and just
4 the plain old notion of what is right and needs
5 doing, in my view banks today are for more
6 responsive to the needs of poor communities than
7 they were 10 or 15 years ago.
8 However, while all of the above reasons are
9 valid, the most important ingredient in my view is
10 leadership. Leadership sets the tone as to whether
11 the bank views their CRA requirement as simply one
12 more regulation to be fulfilled or as a duty of a
13 responsible corporate citizen at the fulcrum of
14 influence and wealth in our society.
15 Bank of America's leadership put their bank
16 out front on these issues, starting with Hugh
17 McColl, the former CEO. In my work with Habitat for
18 Humanity, I witnessed Hugh McColl's personal
19 commitment to Habitat, not just dollars. I saw him
20 at a building site, long after the cameras had gone.
21 I've seen him at small receptions for Habitat. I
22 know the figures of support from Bank of America and
23 NationsBank and before that NCNB. They are large;
24 they are larger, I believe, than any other bank in
. 0334
1 America.
2 Closer to home, I can safely stroll down
3 the street in my neighborhood in downtown Atlanta in
4 part because the then NationsBank became deeply
5 involved in bringing back the historic neighborhood
6 adjacent to the neighborhood where Dr. Martin Luther
7 King grew up. They worked closely in partnership
8 with the local CDC there.
9 As for my own organization, B of A has
10 become a valuable business partner. We enjoy a
11 small line of credit, a construction loan, small
12 grants from time to time, and members of their
13 senior management team have served on our Board of
14 Directors.
15 Therefore, I do testify on behalf of the
16 merger with Bank of America. I'm not qualified in
17 the least to comment on the strategic ramifications
18 of this merger, nor do I know specifically what
19 bearing the merger will have on the lives of low-
20 income people. But I do know what I have personally
21 witnessed by Bank of America in this arena for over
22 ten years, and it is this record that persuaded me
23 to come here today.
24 Thank you.
. 0335
1 PRESIDING OFFICER SMITH: Thank you very
2 much.
3 Mr. Arnett.
4 MR. ARNETT: Thank you. My name is Stu
5 Arnett, and I am the Director of Economic
6 Development for the State of New Hampshire. Also
7 my family is a client of Fleet. We have three small
8 accounts, commercial or residential accounts, and I
9 can assure you they are very small. I'm also
10 probably one of the few of your guests who have come
11 here today to get warmer.
12 The Economic Development Division of New
13 Hampshire basically supervises a number of program
14 areas, but just to give you some idea, a variety of
15 business services, including financing,
16 international trade, and small business counseling.
17 We also work indirectly on community
18 development and housing, affordable housing and
19 housing supply boards. I am a term employee,
20 meaning I'm appointed by the governor and what is
21 called the Executive Council. I was first appointed
22 and then reappointed by Governor Shaheen, and now
23 I'm happy to serve Governor Benson.
24 PRESIDING OFFICER SMITH: Excuse me. Could
. 0336
1 we have quiet in the back of the room.
2 MR. ARNETT: I mentioned I was appointed
3 and then reappointed by Governor Shaheen, and I am
4 happy to serve now with Governor Benson.
5 On December 19 I submitted to the Federal
6 Reserve a letter lending my support of the proposed
7 merger, basically because of the exemplary track
8 record that Fleet has with us in New Hampshire on
9 both community development and economic development
10 projects. Although I will say again for the record,
11 though, that they have not invested anything
12 directly as far as money into our organization; it's
13 basically pledging their community assets and their
14 time.
15 My last comment will be to read a letter of
16 support from Governor Benson, dated the 13th, to the
17 Federal Reserve Bank. "Dear Colleagues: I would
18 like to take this opportunity to express my support
19 for the proposed merger of Fleet and Bank of
20 America.
21 "Through the years, Fleet has continued to
22 demonstrate leadership in promoting economic growth
23 and healthy community throughout New Hampshire.
24 Fleet's employees and corporate management in this
. 0337
1 state have been leaders in volunteerism and
2 philanthropy.
3 "Based on what we have learned about Bank
4 of America's record of participation in these key
5 areas in other regions of the country, we are
6 optimistic that this merger will result in this
7 outstanding record continuing.
8 "Sincerely, Greg R. Benson, Governor."
9 Thank you.
10 PRESIDING OFFICER SMITH: Thank you very
11 much.
12 Ms. Greene.
13 MS. GREENE: Good afternoon. My name is
14 Jennie Greene. I'm the Executive Director of the
15 Aquinnah Wampanoag Tribal Housing Authority for the
16 Wampanoag Tribe of Gay Head in Aquinnah,
17 Massachusetts. I am speaking today as the board
18 representative of the National American Indian
19 Housing Council.
20 I speak on behalf of the housing interests
21 of 562 federally recognized tribes located on tribal
22 lands across this vast country, a population that's
23 been barely mentioned today.
24 I wants to thank you for the opportunity to
. 0338
1 speak, as Indian Country sorely needs banking
2 services. This merger is of acute interest to the
3 housing industry, which relies on financial
4 institutions in order to provide housing for Native
5 Americans who live on reservations or in tribal
6 areas. NAIHC would like to voice support for the
7 merger with the caveat that there be a binding
8 commitment established for the merged institution to
9 provide more loans and services in Indian Country.
10 It is our fear that because so few banks
11 serve the Indian reservations, as Indian
12 reservations are frequently located in rural and
13 remote areas, diminishing the number of separate
14 institutions will further hurt our chances of
15 getting these desperately needed services.
16 We recognize that housing loans are not the
17 only services that banks can provide to our native
18 people, because consumer economic development,
19 community and other loans are equally important to
20 tribes.
21 Both Fleet and Bank of America have a poor
22 history of providing banking products and services
23 to Indian Country. This is deplorable when you
24 consider that in 1998 the Bank of America committed
. 0339
1 millions towards community development for tribes,
2 as part of the Bank of America Rural 2000
3 initiative. However this commitment was never
4 fulfilled, and the native community never received
5 the millions in lending promised to assist them.
6 64 percent of the 2.5 million single-race
7 Native American population resides in the tribal
8 areas. Of that number, 86.4 percent of the tribal
9 work force is employed, ready to open checking
10 accounts, make investments and borrow money for
11 homes and businesses. Yet there are few, if any,
12 available in tribal areas. In some cases, the
13 closest bank is 150 miles away, hardly a convenient
14 place for someone to hop in the car to transact
15 business.
16 The lack of access to financial
17 institutions makes it difficult to establish credit
18 history, start a business, obtain a credit card or
19 even cash a check. It also prevents an honest,
20 hard-working person from getting a mortgage to buy a
21 home, when there is no bank to lend money and no way
22 to prove creditworthiness.
23 In an effort to create home ownership
24 opportunities for low-and-moderate-income Native
. 0340
1 Americans, the Department of HUD developed two
2 guaranteed loan programs, the Section 184 Guaranteed
3 Loan Program and the Title VI Guaranteed Loan under
4 the Native American Housing Assistance and
5 Self-Determination Act of 1996. Unfortunately,
6 these programs have not experienced great success.
7 Yet the delinquency or the default rate for the HUD
8 Section 184 program is just over 1.1 percent, and
9 even lower for Veterans Affairs loans to Native
10 Americans, hardly high-risk lending.
11 While NAIHC supports the merger, we request
12 the bank to develop and implement a plan to develop
13 banking products and services to the tribes on their
14 reservations and in Indian areas. Further, we ask
15 that the merger include language with a commitment
16 by Bank of America to take steps to protect Native
17 Americans from being victims of predatory lending,
18 something that is occurring more frequently to those
19 with the least exposure and experience with banks
20 and their products.
21 A study completed last summer found a
22 number of tribal members lost their homes to
23 predatory lending, particularly among the elders,
24 first-time home buyers, and purchasers of
. 0341
1 manufactured homes.
2 Bank of America must monitor the practices
3 of its sub-prime lending and work with native
4 nonprofits in developing financial literacy and
5 antipredatory lending initiatives. Native Americans
6 must be provided the same considerations as other
7 races, to prevent discrimination in the provision of
8 services.
9 It is my belief that Bank of America can do
10 the right thing for native people by strongly
11 committing to these recommendations to better serve
12 the underbanked population in this nation. We have
13 provided further testimony with statistics which
14 would help you in your consideration of this.
15 Thank you for your time, and should you
16 have any questions, I will be more than happy to
17 answer them.
18 PRESIDING OFFICER SMITH: Thank you very
19 much.
20 Mr Kreymeyer.
21 MR. KREYMEYER: Good afternoon. My name is
22 Chris Kreymeyer. I'm the Executive Director of
23 Beyond Housing/NHS in St. Louis, Missouri, and I
24 applaud the bank and its staff for carrying out this
. 0342
1 very important but seemingly endless process here
2 today. So in the ninth hour now of this, I will try
3 to be as brief and succinct as I can.
4 For 25 years Beyond Housing/NHS has been
5 helping low-income families in communities in the
6 St. Louis region through a variety of mechanisms.
7 First, the construction and rehabilitation and then
8 renting of single-family homes to low-income
9 families, to single moms with kids, and offering
10 them a wide variety of support services.
11 Secondly, leading broad-based community
12 building work where we are working with several
13 communities and their leadership to build new homes,
14 to buy and rehab existing structures, to give out
15 grants to existing homeowners for code violations.
16 We run two family support centers. We do a wide
17 variety of programming for the children and the
18 seniors in the community.
19 Lastly, we run a home ownership center
20 that's designated by our national partner,
21 Neighborhood Reinvestment Corporation. We are one
22 of 200 or so affiliates across the country.
23 That kind of work and the reach that we're
24 able to have day in and day out is only possible
. 0343
1 when you have friends and partners like Bank of
2 America. Our work with them has been long, and it
3 has been consistent over many years. They offer us
4 competitive loans, countless charitable
5 contributions, provide us in-kind donations through
6 a wide variety of means.
7 Our work of helping those that we serve is
8 critical. We can't do it without great friends like
9 Bank of America. They are also flexible and
10 creative. They have created a limited liability
11 corporation with our organization to work in a
12 targeted neighborhood in terms of housing
13 construction and housing development. They've also
14 offered us one of their banking institutions to
15 provide some home ownership education curriculum to
16 a part of our community that is underserved relative
17 to that.
18 I'm here today to say that Bank of America
19 is a great friend and great partner. I don't
20 pretend to be smart enough to understand the size
21 and scope of this on a national level, but I want to
22 leave you with one last thought.
23 You have been bombarded with a variety of
24 statistics and numbers and dollars. Behind all of
. 0344
1 that is a human face, and what we've seen and what
2 we know is, because of Bank of America, new homes
3 have been built where vacant land used to be.
4 What I do know is, where dilapidated
5 structures used to be, newly renovated homes now
6 exist and families have a place to call home. What
7 I do know is, because of Bank of America's support,
8 children have after-school programs, have access to
9 summer camp. What I do know, because of Bank of
10 America in the St. Louis region, a lot of folks are
11 better off.
12 And my belief is the leadership of the Bank
13 of America, their commitment to our work in St.
14 Louis, can cascade throughout this country if this
15 transaction is approved.
16 Thanks very much,
17 PRESIDING OFFICER SMITH: Thank you very
18 much.
19 We're going to take a break. We're going
20 to break just for ten minutes, given that we're
21 behind schedule. So if you could gather yourselves
22 after that.
23 (Recess)
24
. 0345
1 PRESIDING OFFICER SMITH: We're running
2 behind schedule somewhat, so we are holding to the
3 three-minute assigned time that you have been given.
4 Watch the timers, and do try to wind up quickly
5 after you're given the signal that your time has
6 expired.
7 So we'll start with Mr. Grogan, name and
8 affiliation to start with.
9 MR. GROGAN: My name is Paul Grogan. I'm
10 the president of The Boston Foundation, which is
11 Greater Boston's community foundation. I'm glad to
12 be here today.
13 I'll be very brief, and I do want to note
14 that I am not here representing The Boston
15 Foundation, which takes no position on transactions
16 of this kind, but I'm here rather as a long-time
17 housing and community development official in
18 government and in the nonprofit sector that has had
19 extensive experience in working with the two banks
20 that are proposing to merge.
21 I think all of us Bostonians, of course, if
22 pressed, would be delighted if Boston were to be the
23 headquarters of this new combined bank, but the
24 economic realities being what they are, if our
. 0346
1 hometown bank is going to merge, it couldn't have a
2 better partner, in my experience, than the Bank of
3 America.
4 I was the president and CEO of the Local
5 Initiatives Support Corporation for 13 years in the
6 '80s and '90s. I'm actually affiliated with a
7 number of organizations you're going to be hearing
8 from subsequently, but what many of these
9 organizations represent is really the cutting edge
10 of housing and community development.
11 Not only have Fleet and Bank of America, in
12 my experience, fulfilled their commitments, they
13 have put outstanding executives to work on issues
14 relating to urban development and housing and
15 community development. They have made it central to
16 their institutions' missions. They've gotten
17 results.
18 And they have been extremely receptive to
19 cutting-edge ideas and new products that have really
20 advanced the whole housing and community development
21 field and account for much of the stunning
22 neighborhood revitalization that we see in our own
23 City of Boston and many other cities around the
24 country.
. 0347
1 I think it's fair to say that on a national
2 level the Bank of America has really been one of the
3 principal architects, at least among major banks, in
4 terms of what I think of as the community
5 development banking revolution in the mainstream
6 banking sector, which is the lengthy process, but
7 it's well along now, of legitimating the flow of
8 market capital and bringing real emphasis and
9 standards to that market capital into distressed
10 neighborhoods and into areas where it once feared to
11 go.
12 So I think these are two superb
13 institutions that have fulfilled their obligations.
14 And in my long experience through many, many
15 different organizations, they've fulfilled their
16 commitments, they have been receptive to good ideas,
17 and they're going to fulfill the commitments that
18 they have already declared nationally and locally in
19 the context of this merger.
20 Thank you very much.
21 PRESIDING OFFICER SMITH: Thank you.
22 MS. HABIBY: My name is Anne Habiby, and
23 I'm with a national nonprofit called the Initiative
24 for Competitive Inner City. We are Boston based.
. 0348
1 Our mission is to make the business case for inner
2 cities and try to accelerate business investment and
3 business growth in inner cities.
4 Clearly a lot of the conversation today has
5 been about mortgage finance. I wish to add a
6 different perspective, and that is around investment
7 in job and business growth, a very important
8 function that commercial banks play.
9 I also wish to unambiguously speak in favor
10 of the merger. Merger is unavoidable, and we have
11 two of the best here at the table together. I think
12 this is a dramatic opportunity.
13 I also wish to sort of tell by way of
14 anecdote the power of the leadership of these two
15 institutions and what we have to gain.
16 In 1997, NationsBank, of course now Bank of
17 America, pioneered a national effort to raise
18 awareness about the job and business potential of
19 inner cities, obviously areas that most had written
20 off. They convened about 100 leaders for three days
21 to talk about change and what we were going to do to
22 move the needle in this country.
23 A group of about ten people worked all
24 night for two nights, and remarkably Cathy Bessant
. 0349
1 was one of them. She not only hosted the meeting,
2 but she didn't sleep for three days. Long after
3 everyone was sleeping, she was there, and she meant
4 business.
5 The most important idea that came out of
6 this was in fact a mega-movement for inner cities.
7 We came up with this crazy idea that the president
8 of this country should advance a trade mission to
9 what, our own inner cities, instead of doing trade
10 missions overseas.
11 Cathy Bessant and Gail Snowden took up that
12 charge. They went to their leaders and said, "We
13 must make this so." And lo and behold, President
14 Clinton created something called the New Markets
15 Tour, and didn't stop there, subsequently created
16 something called the New Market Tax Credit. This
17 was a milestone for inner cities. People made a
18 difference, and these two leaders made it happen.
19 But that wasn't quite enough. Three months
20 ago these same leaders, Bank of America, Fleet and
21 others, convened about 200 leaders to once again
22 think about what could be another step forward.
23 Again, people met all through the night to
24 work through these ideas, and to our amazement,
. 0350
1 Cathy Bessant showed up. She had not been invited,
2 because she had risen well above the level of
3 executive worker bee. Again she demonstrated her
4 depth of commitment, her sense of urgency for inner
5 cities.
6 One could tell exactly the same story of
7 Gail Snowden, but I don't need to do that, because
8 all of us in this room know her well and are
9 inspired by her work.
10 My point of support for the merger is
11 twofold. It is indeed about people, which is what a
12 lot of people have said today. We have two of the
13 best. They collectively have pioneered what we have
14 come to understand is community banking in this
15 country. Having them join forces is a step forward.
16 Second, much more needs to be done. This
17 morning Massachusetts Senator Wilkerson referenced
18 comments by a very famous Wall Street analyst who
19 cast doubt on the merger. The analyst had the
20 audacity to say, "I feel pretty certain that they're
21 not putting $750 billion into high-risk lending,
22 which is what minority lending tends to be."
23 We should support Bank of America in
24 affirming, with this commitment, the viability of
. 0351
1 inner-city markets, and we should stand behind them.
2 Merger is going to happen. We have a tremendous
3 opportunity with these two banks and these two
4 leaders. I submit that this merger is a significant
5 opportunity for the inner cities of the Northeast.
6 PRESIDING OFFICER SMITH: Thank you.
7 Mr. O'Connor.
8 MR. O'CONNOR: Madam Chairman, thank you
9 very much. My name is Stephen O'Connor, I'm with
10 the Community Development Trust, and as Mr. Grogan
11 said, I am one of the several progenies that have
12 come as a result of his leadership and initiative
13 and dedication.
14 Founded in 1999 by the Local Initiatives
15 Support Council when Mr. Grogan was there, the
16 Community Development Trust, or CDT for short, is
17 the nation's first and only real estate investment
18 trust dedicated to the preservation of affordable
19 housing. We accomplish our mission through direct
20 equity investments in expiring use properties,
21 attempting to capture and preserve these vital but
22 diminishing national assets by preventing their
23 conversion into market-rate properties.
24 Unlike the 180 or so publicly traded REITs
. 0352
1 in the United States with access to broader capital
2 markets, CDT's unique mission is achieved through
3 the direct investment of socially minded and
4 dedicated community development institutions like
5 Fleet Bank.
6 Our mission was successfully launched
7 through the private placement of nearly $32 million
8 of equity capital. Fleet Bank was not only one of
9 the first to pledge their support, but they were
10 also one of our largest initial investors, providing
11 $3 million toward our ambitious national goal of
12 affordable housing preservation.
13 Having now leveraged our initial capital
14 into nearly $200 million worth of affordable housing
15 assets, last year CDT set out to once again raise
16 additional capital. And once again, based upon
17 performance and mission, Fleet Bank came through
18 with an additional $3 million investment.
19 While the financial support of Fleet Bank
20 has been instrumental to the success of CDT, we have
21 also benefited greatly from the corporate leadership
22 of their commitment. Currently Mr. Phil Grossman is
23 a proactive and contributing member of CDT's Board
24 of Directors, and we view Fleet's overall
. 0353
1 participation in CDT as an integral factor in the
2 success of our mission.
3 In addition, CDT also serves as a pro bono
4 advisor to Habitat for Humanity. Under the Habitat
5 program, simple and decent affordable housing is
6 sold at no profit to low-income families who are
7 otherwise not eligible for conventional financing.
8 While the average Habitat dwelling costs
9 roughly $48,000 to construct, the typical Habitat
10 family only earns between 25 and 50 percent of area
11 median income. To help bridge the affordability
12 gap, each Habitat family is required to contribute
13 between 300 and 500 hours of sweat equity on the
14 construction of their own home, as well as working
15 on the homes of other Habitat families.
16 Currently, there are 1,650 local Habitat
17 affiliates that have collectively built, repaired or
18 renovated nearly 6,000 homes in 2003. To finance
19 these home, the typical Habitat mortgage bears zero
20 percent interest for a term of 20 years. And while
21 we have an effective secondary market in this
22 country for market-rate single-family mortgages, no
23 such vehicle exits for below-market-rate mortgages
24 made to low-income families.
. 0354
1 To help remedy this deficiency, as well as
2 to secure the future viability of this program, CDT
3 has helped to develop a securitization program for
4 Habitat mortgages. With approximately 35,000
5 mortgages held in the United States, collectively
6 the Habitat affiliates now hold nearly $750 million
7 in illiquid zero percent mortgages.
8 Under this new program, Habitat issues
9 bonds that are securitized by the principal payments
10 on the zero interest mortgages held by affiliates.
11 In return, investors typically receive between 1 and
12 5 percent interest on these bonds. To date, Habitat
13 has raised $45 million for affiliates through this
14 program.
15 Once again, Fleet Bank has been an early
16 and strong supporter of this program through direct
17 investments of $2 1/2 million in the Habitat
18 offerings.
19 My time is up, so in conclusion, we view
20 Fleet Bank as an active and responsible member of
21 the community development community, and we urge you
22 to support the proposed merger.
23 Thank you.
24 PRESIDING OFFICER SMITH: Thank you.
. 0355
1 Mr. Thomas.
2 MR. THOMAS: Good afternoon. I am Henry
3 Thomas, President and CEO of Urban League of
4 Springfield, Massachusetts, the largest African-
5 American community-based organization in the western
6 part of the state.
7 I want to first thank you for an
8 opportunity to testify on behalf of the Urban League
9 of Springfield, and we are here to support the
10 merger between Bank of America and Fleet Bank. We
11 think that it will yield some wonderful benefits to
12 the entire region.
13 The proposed merger for which we are here
14 commenting today represents a significant milestone
15 and opportunity for the citizens and businesses of
16 the community within the Commonwealth of
17 Massachusetts -- for communities within the
18 Commonwealth of Massachusetts.
19 In addition to uniting two of the nation's
20 finest and strongest banking institutions, this
21 merger will undoubtedly create a financial
22 infrastructure that will enhance our business and
23 retail climate.
24 While others are inclined to think that
. 0356
1 this merger will compromise banking service,
2 quality, jobs stability, et cetera, I believe on the
3 contrary that the result of this merger will bring
4 technological efficiencies and capacity that will
5 enhance employment opportunities, product
6 innovations, and financial sophistication.
7 Moreover, the financial strength of the combined
8 institutions will accrue to greater lending and
9 investment opportunities to grow local businesses.
10 During my tenure as President and CEO of
11 the Urban League of Springfield, I have come to know
12 the Fleet organization intimately and value their
13 commitment and involvement in our community. Our
14 corporate banking relationship eclipses more than
15 three decades and has evolved into a genuine
16 partnership. Without question, Fleet has been a
17 true partner and supporter with us in our efforts to
18 enhance the lives of our low-income community.
19 Our specific work involves advocating on
20 public policy issues affecting the dispossessed in
21 our community, promoting economic and financial
22 self-sufficiency, academic achievement, literacy and
23 proficiency among our city's youth, and developing
24 initiatives that enhance productive aging
. 0357
1 experiences for our senior citizens.
2 As our local Urban League affiliate is
3 stalwart in its efforts to positively influence and
4 revitalize the community, Fleet Bank has been a
5 consistent and essential link in the process.
6 Fleet's commitment has provided funding to
7 start and maintain programs, loan financing for
8 necessary capital improvements, lines of credit to
9 help with our funding inconsistencies, partnering
10 for financial literacy, education and home buyer
11 workshops and staff resources to help advance our
12 focused agenda to empower people for self-
13 sufficiency. Whenever called upon, and to the
14 extent possible, Fleet has been a true leader with
15 regard to sharing their financial resources with the
16 community.
17 I hear the bell here, and I'll close in
18 making a final comment. From our vantage point,
19 Bank of America -- the increase of resources by the
20 merger with Bank of America and Fleet Bank will
21 accrue locally and will not diminish the vital
22 corporate assistance that advances our human service
23 work. It is reasonable to anticipate that,
24 following the merger, these two organizations will
. 0358
1 enjoy greater financial strength in the global
2 marketplace.
3 CRA is important to Western Massachusetts,
4 and I believe that the combined institutions will
5 demonstrate and fulfill their commitment and their
6 resolve.
7 Thank you for the opportunity.
8 PRESIDING OFFICER SMITH: Mr. Brown.
9 MR. BROWN: Good afternoon. My name is
10 Michael Brown, and I'm the President and Co-Founder
11 of City Year. We are a national organization based
12 in Boston, committed to serving the community by
13 tapping the idealism of young adults for a year of
14 full-time community service.
15 I appreciate this opportunity to share City
16 Year's support for the proposed merger between Fleet
17 Bank and Bank of America. We support this because
18 we trust the new entity will continue investing
19 significantly in our community.
20 That trust and confidence is based not on
21 words but on deeds. It is rooted in the uniquely
22 supportive role, even the catalytic role that Fleet
23 Bank and its chairman and CEO Chad Gifford have
24 played in City Year's development and history over
. 0359
1 our 15-year partnership.
2 In 1988, Chad Gifford and the bank he led
3 took a risk on a new civic venture, becoming a
4 founding sponsor of City Year, and the first company
5 in the nation to sponsor a City Year team of diverse
6 young people in full-time service. Today more than
7 350 companies have followed this act of leadership.
8 The bank then became the first company to
9 sponsor a community service team in more than one
10 our cities, and ultimately became a founding sponsor
11 of four City Year programs, in Boston, Philadelphia,
12 Rhode Island and New Hampshire.
13 In 1999, Fleet Bank became the first
14 company to endow a City Year team, and in doing so
15 created the first endowed community service
16 positions for young people in the country.
17 There are countless stories of what Fleet
18 has made possible at City Year. Thousands of
19 children have been tutored and mentored, vacant lots
20 have been transformed into community gardens, scores
21 of community centers have been revitalized, and
22 thousands of citizens have been organized for
23 service through our annual serve-a-thon, all because
24 of Fleet support.
. 0360
1 All told, Fleet Bank has sponsored 350
2 full-time City Year corps members, who have
3 contributed more than 600,000 hours of full-time
4 service. On the financial side, Fleet has provided
5 City Year with a line of credit, a critical service
6 to a nonprofit organization.
7 We are now celebrating our 15th anniversary
8 with Fleet. What has maintained that partnership is
9 Fleet's strong commitment to community and its
10 culture of civic involvement and leadership.
11 It is greatly encouraging to know that Chad
12 Gifford will become Chairman of the Board of the new
13 entity of Bank of America and then become chairman
14 of the bank's charitable foundation in New England.
15 We know firsthand of his deep commitment to building
16 communities, to diversity, to social
17 entrepreneurship and especially to young people.
18 Bank of America also has a tremendous track
19 record of community investment. We have every
20 confidence that the new company being formed will
21 maintain this commitment to, in Fleet's own words,
22 "working together to help the future of our
23 community outshine its proud history."
24 Thank you for providing me with this
. 0361
1 opportunity to speak today.
2 PRESIDING OFFICER SMITH: Thank you.
3 MR. RUBINGER: Good afternoon. My name is
4 Michael Rubinger, and I am the President and Chief
5 Executive Officer of LISC, the Local Initiatives
6 Support Corporation. And while we have a long and
7 very productive relationship with Fleet Bank, I'm
8 here this afternoon principally to focus on our
9 equally productive relationship with the Bank of
10 America in markets outside of New England.
11 LISC is one of the nation's largest
12 nonprofit community development support
13 organizations. Since 1980, LISC has invested
14 $4 1/2 billion in low-income urban neighborhoods and
15 rural areas through local development corporations,
16 so-called CDCs.
17 This investment has led to the construction
18 or rehabilitation of over 130,000 affordable homes
19 and 20 million square feet of economic development
20 facilities, employing some 52,000 individuals. We
21 have helped to finance day care centers, health
22 clinics, schools and community centers, all serving
23 lower-income, inner-city and rural residents.
24 LISC now provides about $600 million
. 0362
1 annually to CDCs in the form of grants, loans and
2 investments. We have worked extensively in New
3 England, including Greater Boston, Rhode Island,
4 Connecticut and rural Maine, but much of LISC's
5 activity has been in markets that Bank of America
6 already serves.
7 For over 20 years our relationship with the
8 bank has been a close and mutually supportive one.
9 Bank of America has been one of our largest donors,
10 providing us with almost $11 million in grants,
11 $43.5 million in below market loans, and $480
12 million in equity investments.
13 At a total of over half a billion dollars,
14 this is very substantial level of commitment to
15 LISC, but more important to the community
16 development activities in low-income communities.
17 But numbers alone do not tell the full
18 story of our relationship. Bank of America has been
19 willing to invest its time and reputation as well as
20 its money in important and promising ideas.
21 In the early 1980s, for example, Bank of
22 America lent us $10 million, at that time by far our
23 largest bank loan, and an important statement of
24 confidence in us and the community groups we serve.
. 0363
1 That expression of confidence and support opened the
2 door to support from other financial institutions.
3 In virtually every innovative new program
4 we've launched, Bank of America has been at the
5 forefront, willing to take risks in the interests of
6 progress.
7 For example, Bank of America helped us
8 create and implement each of the following: a
9 secondary market for community development loans; an
10 equity investment fund for major inner-city
11 supermarkets; the nation's first real estate
12 investment trust dedicated to community development;
13 expansion of our successful urban program into rural
14 America; training and technical assistance programs
15 to strengthen the organizational capacity of CDCs;
16 and a partnership to help public housing authorities
17 access private financing.
18 We have found Bank of America has stayed
19 the course through the tough times, as well as the
20 good, balancing its own interests with the broader
21 mission of building communities. That has been very
22 important to us, to the CDCs we work with, and to
23 the community development field more generally.
24 The Bank of America has been a vital and
. 0364
1 productive partner for LISC in our community
2 revitalization efforts on behalf of lower-income
3 families and individuals nationwide.
4 If the merger before you is approved, which
5 we urge you to do, we have every reason to believe
6 that that partnership and those efforts will be
7 deepened and broadened, as the Bank of America
8 expands its community development activities and
9 commitment into the New England region.
10 Thank you very much.
11 PRESIDING OFFICER SMITH: Thank you very
12 much for coming this afternoon.
13 We'll start with Mr. Nugent.
14 MR. NUGENT: Good afternoon.
15 PRESIDING OFFICER SMITH: We're in the
16 three-minute frame.
17 MR. NUGENT: My name is Jeff Nugent. I'm
18 the Executive Vice-President of the Development
19 Training Institute, a 23-year-old national
20 organization devoted to supporting the leaders of
21 community organizations, government and the private
22 sector engaged in revitalizing blighted communities
23 throughout the nation.
24 Thousands of leaders of the most successful
. 0365
1 community-based development organizations -- and
2 actually a number of those testifying here today --
3 in the country have graduated from our intensive
4 leadership programs, and over 12,000 bankers have
5 attended our programs on community development
6 lending. I manage the national community
7 development lending school sponsored annually by the
8 Federal Reserve.
9 It's very fitting that I would follow Mike
10 Rubinger of LISC in this presentation. The leaders
11 of many of the organizations that have accomplished
12 the kinds of things that Mike spoke of are graduates
13 of DTI's programs.
14 I'm here to testify strongly in support of
15 merger between Bank of America and FleetBoston. The
16 Bank of America has led the banking industry in
17 supporting the kinds of leadership and management
18 development programs conducted for senior staff of
19 community-based housing and economic development
20 organizations by the Development Training Institute.
21 This investment by the Bank of America has
22 resulted in the development of tens of thousands of
23 affordable housing units and billions of dollars of
24 financing of housing and community economic
. 0366
1 development projects throughout Bank of America's
2 service areas. It has also helped to create the
3 next generation of leaders who will continue to
4 articulate new visions and deliver substantial
5 results for their communities.
6 Specifically, these results include the
7 development of over $2 billion in affordable housing
8 and community economic development projects, with
9 over $1 billion of these costs privately financed
10 often by the Bank of America but by other banks as
11 well. In this way the entire community reinvestment
12 industry has benefited from these investments made
13 by the bank in these leaders of community-based
14 organizations.
15 The merger between these two institutions
16 will result in increased innovation and further
17 commitments that will enhance the effectiveness of
18 community-based development organizations in
19 achieving their goals for years to come, and the
20 Development Training Institute is strongly in
21 support of this move.
22 PRESIDING OFFICER SMITH: Thank you.
23 We'll go to Mr. Banuelos.
24 MR. BANUELOS: Thank you. My name is Fred
. 0367
1 Banuelos. I'm the President and CEO of the Alliance
2 for Building Communities, a local nonprofit
3 affordable housing agency which spans five counties
4 in Northeastern Pennsylvania.
5 Headquartered in the Lehigh Valley, the
6 Alliance for Building Communities provides rentals
7 as well as first-time home buyer opportunities to
8 low-to-moderate-income families. We provide home
9 ownership counseling and owner-occupied
10 rehabilitation as well.
11 Since Fleet Bank's presence in the Lehigh
12 Valley two and a half years ago, the Alliance for
13 Building Communities has been able to build a strong
14 working relationship with Fleet Bank that has
15 enabled our affordable housing agency and low-income
16 families to participate in many funding products
17 that Fleet has to offer.
18 They have not only done a good job in
19 reporting on their reinvestment record in the
20 community, but they have worked tirelessly in making
21 sure that they are in touch with the community
22 banking needs.
23 I was pleased to learn that Bank of
24 America, with a strong banking reputation, and Fleet
. 0368
1 Bank will soon join forces to continue to work in
2 the community. So here today, I urge this merger
3 and am in full support of it.
4 Thank you.
5 PRESIDING OFFICER SMITH: Thank you very
6 much.
7 Mr. Sibley.
8 MR. SIBLEY: Good evening. My name is
9 Russell Sibley. I'm Senior Vice-President of
10 Greater Miami Neighborhoods, so I bring greetings
11 from sunny Florida.
12 I want to talk to you today a little bit
13 about the positive experience we have had with Bank
14 of America and its predecessors NationsBank and
15 Barnett Bank in community development activities and
16 give you one example, and perhaps it will help
17 focus. We are here, of course, in support of the
18 merger.
19 Our organization, Greater Miami
20 Neighborhoods, is a mission-driven nonprofit.
21 Although Miami is in the name, we're a statewide
22 organization working throughout Florida. We work to
23 provide housing for low-and-very-low-income families
24 throughout Florida. We have developed over 5,000
. 0369
1 homes and apartments valued at over $400 million in
2 the aggregate.
3 The Bank of America, through our 15-year
4 experience, and its predecessors, understand and
5 support the work that we have as a nonprofit
6 developer. With us in the past, they have served
7 obviously as a lender, they are a tax credit
8 investor in some of our developments, and in one
9 instance they've actually been a development
10 partner, standing side by side, working with us as a
11 development partner.
12 I want to talk about one particular kind of
13 transaction, though, and that is the preservation of
14 existing affordable housing, as we have properties
15 such as Section A properties or others that have
16 been in existence for 20 or 30 years with for-
17 profits owners who are getting out of the business.
18 They need to -- most of them are typically selling
19 their properties.
20 As they do so, in order for us as a
21 mission-driven nonprofit to be competitive, we have
22 to be able to move as quickly as any other buyer.
23 Bank of America understands that, and
24 together we've developed an interim financing model
. 0370
1 that lets us acquire these properties quickly, and
2 then over a period of, say, one to two and sometimes
3 up to three years, bring the additional financing
4 that will let us complete the rehabilitation work on
5 these 20-to-30-year-old properties, and then bring
6 subsidized and below-market-rate local government
7 financing and state financing to these developments
8 to provide stability for the long term.
9 The Bank of America understands that and
10 has really worked with us to do that. In the last
11 four years, using this particular model, we've
12 acquired five existing properties. They contain 844
13 units. Loans from the Bank of America have been in
14 the range from $2 1/2 million to almost $8 million,
15 and these loans aggregate $23 1/2 million.
16 These are significant commitments that
17 they've made. We've borrowed the money; we've paid
18 it back according to terms. We've executed on these
19 transactions the way we wanted to, which was to
20 bring in the bond financing, bring in the lower
21 interest rate, state and local subordinate debt.
22 And we have been able to complete the acquisition,
23 complete the rehab, and have these properties be
24 stabilized for the next 20 to 30 years.
. 0371
1 An important element of our success has
2 been our work with Bank of America. We appreciate
3 their work, and we expect it to continue following
4 the merger with the Fleet Bank Boston, and we are in
5 support of it.
6 Thank you.
7 PRESIDING OFFICER SMITH: Mr. Pinsky.
8 MR. PINSKY: Thank you. It's a pleasure to
9 be here. I'm Mark Pinsky, President and CEO of
10 National Community Capital Association. We are a
11 national network of community development financial
12 institutions.
13 The CDFI industry today comprises some
14 $10 billion in assets and have done upwards of
15 $12 billion of financing. Both of the banks
16 involved in this transaction, Bank of America and
17 Fleet, have been significant players.
18 I want to make three points today, and I
19 will do it as briefly as I can. The first is just
20 to say that National Community Capital is here to
21 speak in support of the merger of these two banks,
22 based on our experience in the CDFI industry. And I
23 want to identify four things that both banks bring
24 to the table and have demonstrated repeatedly in
. 0372
1 their work in the industry.
2 The first is that both banks have embraced
3 community development finance as integral to their
4 core businesses and not treated it as something
5 outside of what their businesses were.
6 The second is they have invested heavily in
7 human capital, expertise, as well as financial
8 capital. You have heard many examples today about
9 the ways that they brought innovation and ideas to
10 the table.
11 The third is they've consistently treated
12 CDFIs as customers and partners, and not, again, as
13 supplicants, if you will.
14 The fourth is that they have pioneered
15 products and services with CDFIs, as well as led
16 other banks into CDFI investments. Again, you have
17 heard other examples of that today.
18 The second point I wanted to make, despite
19 the fact that I come at this from a CDFI
20 perspective, is that CDFIs are only a part, and we
21 hope a relatively small part, frankly, of community
22 development finance in this country and the
23 strategies of both of these banks.
24 And I trust that both banks as they look at
. 0373
1 this, and the Federal Reserve as they look at this,
2 will in fact take seriously and think seriously
3 about some of the other issues we've heard about
4 today, particularly as they relate to the
5 specificity of plans going forward.
6 I trust that Bank of America and Fleet,
7 because of the experience that we've had with them,
8 will respond to that. I think that creates
9 transparency and credibility, and I think in fact
10 that this discussion today is an opportunity for the
11 banks to demonstrate that in fact they have done
12 that and that they're committed to doing that.
13 The third is really to recognize, picking
14 up on something that Paul Grogan said earlier, that
15 there has been a revolution in community development
16 finance and that in fact we're entering a new era,
17 and that in fact the way community development
18 finance gets done in the future is going to be
19 markedly different than the way it got done in the
20 past.
21 The creation with this merger of a national
22 bank creates all sorts of opportunities to create
23 systems that deliver capital, that bring people from
24 outside the economic mainstream into the economic
. 0374
1 mainstream and brings the economic mainstream into
2 the lives of those people in those communities in
3 the context of this merger, and again we urge to you
4 support it.
5 PRESIDING OFFICER SMITH: Mr. Foss.
6 MR. FOSS: Thank you for this opportunity
7 today. I'm the senior director for ACCION USA.
8 We're a private nonprofit organization that provides
9 credit and business training to micro-entrepreneurs,
10 low-and-moderate-income self-employed women and men.
11 ACCION is comprised of a micro-lending
12 network of five independent organizations serving
13 low-income communities in Greater Chicago, New
14 Mexico, San Diego, Texas and New York, along with
15 three direct lending offices in Atlanta, Southern
16 New England and Miami. They are all directly
17 managed from our Boston headquarters here, although
18 we'd prefer probably to be in Miami at this point.
19 To date, ACCION has dispersed over
20 $83 million in micro-business loans to 16,800 home-
21 based and storefront business owners, helping them
22 to expand their businesses, increase their income
23 and improve their families' well-being, individuals
24 very much like Mr. Flores who spoke on Panel 12 a
. 0375
1 few minutes ago.
2 The purpose of my testimony today is to
3 describe the overall positive interaction and
4 relationship ACCION has had with both banks for over
5 a decade and to speak in support of the merger.
6 Every ACCION program is located in a city
7 or community where Fleet and/or Bank of America have
8 an active presence and therefore a responsibility.
9 Bank of America and Fleet have both
10 provided significant financial support to our
11 network for over a decade. This includes ongoing
12 grants and support from Bank of America for ACCION
13 programs in Chicago, New Mexico, San Diego, Texas,
14 Miami and Atlanta. It also includes current support
15 from Fleet Bank for our work in New York and
16 Southern New England.
17 In addition to grant support, Bank of
18 America has invested in our loan pools as well. For
19 example, the bank made a $1.2 million loan to ACCION
20 Texas at a below-market rate. This timely
21 investment by the bank enabled ACCION Texas to
22 leverage it and match it with the CDFI Fund.
23 As important as the financial support, both
24 banks have served generously on the boards of
. 0376
1 directors and advisory boards of a number of our
2 network programs. We have two individuals, Gail
3 Snowden from Fleet and Mary Schultz Brown from Bank
4 of America, who serve on our national ACCION USA
5 Board of Directors.
6 Finally, we have worked closely with both
7 banks to establish joint customer referral programs.
8 When the banks aren't able to provide small business
9 loans to a potential customer, they will often refer
10 this lead to us. It tends to be a big part of our
11 business overall. Many of our current borrowers
12 came to us from bank referral programs.
13 Because of the support of Bank of America
14 and Fleet, ACCION has been able to help thousands of
15 hard-working micro-entrepreneurs with no other
16 access to loans. These small business owners in
17 turn have helped not only themselves but their
18 families, their employees and their communities.
19 We at this point look forward to building
20 on the fruitful and long relationship that we've had
21 with both institutions.
22 Thank you very much.
23 PRESIDING OFFICER SMITH: Thank you.
24 MR. UMANSKY: Good afternoon. My name is
. 0377
1 David Umansky. I'm the director of Civic Builders.
2 Thank you for the opportunity to speak out in
3 support of the merger.
4 Civic Builders is a not-for-profit real
5 estate developer of charter school facilities in New
6 York City. Charter schools are a type of public
7 school which are given independence from boards of
8 education in exchange for strict performance
9 accountability standards. They receive dollars from
10 the State and Federal Governments, and in New York
11 tend to serve economically disadvantaged
12 neighborhoods.
13 Charters do not receive a separate stream
14 of funding for facilities, and consequently the
15 funding of charters' facilities is difficult to
16 finance. Civic Builders depends on lending partners
17 like Bank of America to do its deals.
18 This past October we closed on a
19 $4.7 million real estate deal which includes a
20 $3.3 million loan in senior debt from the Bank of
21 America. The facility is in the Hunt's Point
22 section of the Bronx, which is the poorest district
23 in the country, according to the 1990 census.
24 With Bank of America's help, a blighted
. 0378
1 former salami factory is being turned into the Bronx
2 Charter School for the Arts, which will serve 280
3 neighborhood kids. I believe that anybody who would
4 have joined me at the groundbreaking for the Bronx
5 Charter School for the Arts and seen the 280 smiling
6 faces would support this merger.
7 Thank you.
8 PRESIDING OFFICER SMITH: Thank you.
9 MS. MIRANDA: Good afternoon. My name is
10 Grace Miranda, and I'm the Housing Director for
11 Corporation to Develop Communities of Tampa, Inc.,
12 located in Tampa, Florida.
13 The Corporation to Develop Communities of
14 Tampa, which I'll refer to as CDC of Tampa from now
15 on, is celebrating our 11th year of providing
16 services to low-and-moderate-income residents in the
17 East Tampa area, which is one our inner cities.
18 Our mission is to raise the economic,
19 educational and social levels of residents of
20 economically depressed areas of Hillsborough County,
21 and this is done through creating jobs, providing
22 job training, building community pride, promoting
23 entrepreneurship, revitalizing community areas, and
24 building affordable housing.
. 0379
1 Bank of America has supported the
2 revitalization efforts in partnership with our
3 organization for over four years now, and as
4 partners we share the belief that healthy
5 neighborhoods are built upon strong economic and
6 educational opportunities. Bank of America has
7 committed to the development of affordable housing
8 and support services for residents of East Tampa.
9 An example of that would be we are a
10 partner in a Greater Miami neighborhood to build a
11 low-income rental property which has been referred
12 to as a rose in a desert, because it's a first, and
13 it's of high quality. It's an apartment complex
14 that I would want to live in.
15 Bank of America also provides training and
16 technical assistance to our organization. I
17 received my home buyer education and training
18 certification because they sponsored and they
19 continue to sponsor a lot of our luncheons.
20 Practically anything that we venture out to do, they
21 have been very supportive.
22 Bank of America has also been the corporate
23 leader in providing operating grants, donation of
24 furniture, and our corporate office was donated at
. 0380
1 that time by NationsBank.
2 The bank understands a key factor in
3 sustaining a productive community is the ability for
4 individuals to build and maintain access. So with
5 this merger, we believe that it will continue to
6 allow Bank of America and Fleet to provide services
7 and funding that will enhance and strengthen the
8 inner city.
9 And in recognition of Bank of America's
10 excellent record of community involvement, ongoing
11 identification of regional needs, and innovative
12 service provisions that have fostered the continued
13 economic growth of both this region and its
14 citizens, the banks have our respect and support.
15 Thank you.
16 PRESIDING OFFICER SMITH: Thank you very
17 much.
18 We have three minutes for each of you, and
19 we will start with Mr. Bright.
20 MR. BRIGHT: My name is Robert Bright. I'm
21 the founder and President of Talson Solutions, and
22 we're located in Philadelphia, Pennsylvania. Thank
23 you for this opportunity to express my support for
24 the merger and express my experience as a minority-
. 0381
1 owned small disadvantaged business owner.
2 Talson provides construction consulting
3 services to improve the financial control
4 surrounding large capital projects. We perform
5 contract compliance reviews and risk assessments on
6 project management, design and construction
7 contracts.
8 I personally have over two decades of
9 engineering and financial consulting experience. I
10 hold degrees from two of the top universities in
11 engineering and business schools. I actually worked
12 for some of the most respected companies in the
13 United States, Exxon and PricewaterhouseCoopers.
14 I state the former in order to say that I
15 found BOA, Bank of America, to be very professional
16 and receptive of our firm's development. This is
17 especially through their minority supplier
18 development program. As a minority business owner,
19 I am pleased to find aggressive supplier
20 participation targets. More importantly, I am
21 pleased to be in a position through Talson to verify
22 the enforcement mechanism that hits the bottom line
23 for many design firms and general contractors.
24 I found many majority general contractors
. 0382
1 were initially surprised by Bank of America's
2 commitment and compliance to supplier diversity.
3 But once again, they only recognize that their
4 commitment is the only way of doing business with
5 the Bank of America.
6 After working with Bank of America for the
7 past five months, the bank and I are now exploring
8 opportunities for long-term growth for Talson, and
9 because of my firm's success, since its inception in
10 2001, I have not had the need to consider a small
11 business loan. However, I cannot ignore the bank's
12 commitment to small business should the need arise.
13 I wish to reiterate that I support the
14 merger and anticipate greater opportunities for
15 minority-owned businesses with the bank merger.
16 Thank you.
17 PRESIDING OFFICER SMITH: Thank you.
18 Mr. Torres.
19 MR. TORRES: My name is Felix Torres. I'm
20 the Executive Director of Manchester Neighborhood
21 Housing Services in Manchester, New Hampshire.
22 We're the largest community development corporation
23 in the state. We develop affordable housing for
24 sale or for rent. We have an active home ownership
. 0383
1 program which includes counseling, it includes
2 lending, it includes the largest IDA program in the
3 state.
4 We've had a long and very productive
5 relationship with Fleet Bank. They were intimately
6 involved in the founding of our organization over
7 ten years ago. They provided capital to get us
8 started. They provided charitable donations to get
9 us started. They provided human capital in terms of
10 members of the board and volunteers.
11 That relationship has continued over the
12 ten years. And every time there's been a merger --
13 there's been at least one or two with Fleet -- that
14 commitment has not diminished, it has actually
15 grown.
16 One of the most important things they have
17 done for us is to be willing to take risks with us
18 in many of our deals and many of the things that
19 we're doing.
20 In particular, several years ago we had 68
21 units that were going on the market full of
22 low-income families in the toughest rental market in
23 decades in New Hampshire, and they came up to the
24 plate and gave us the acquisition loan to buy the
. 0384
1 properties, an acquisition loan which we
2 incidentally paid back ahead of schedule. And
3 that's the kind of thing that Fleet has done for us.
4 Several years ago, again stepping up to the
5 plate, it was their charitable contributions that
6 enabled the State of New Hampshire to start a home
7 buying network statewide. It was their support that
8 allowed us and other groups throughout the state to
9 provide home buyer counseling throughout the entire
10 state. So time and time again, Fleet has been the
11 catalyst for a lot of the good things that happen in
12 our community.
13 Manchester is a small city, and New
14 Hampshire is a small state, and typically when these
15 mergers happen, people have concerns that the small
16 states will be ignored. In our experience, we have
17 not been ignored by Fleet. We strongly support the
18 merger, and we believe that this combination will
19 provide new resources, a more sophisticated array of
20 products to help the growing needs in our
21 communities.
22 Thank you.
23 PRESIDING OFFICER SMITH: Thank you very
24 much.
. 0385
1 Mr. Ansley.
2 MR. ANSLEY: I am Robert Ansley, President
3 of the Orlando Neighborhood Improvement Corporation,
4 in Orlando, Florida, where the temperature is about
5 75 degrees, but nevertheless I am pleased to be here
6 to speak in favor of our long-time partner, Bank of
7 America, in its merger with FleetBoston.
8 The ONIC, as we are called, is a nonprofit
9 developer of affordable housing in the Orlando
10 metropolitan area, and we were formed in 1985. Bank
11 of America and its predecessors, NationsBank and
12 Barnett Bank, have been a partner with ONIC in three
13 ways.
14 Since our founding, Bank of America has
15 been represented on our Board of Directors
16 continuously. Secondly, ONIC has received modest
17 grants for operating support from the Bank of
18 America Foundation over the last few years. But
19 most important is the participation and the support
20 of Bank of America in our production of affordable
21 housing.
22 Since 1989 ONIC has developed or in some
23 cases co-developed 16 communities totaling over
24 2,000 units. In ten of those, with over 1500 units,
. 0386
1 Bank of America has been a lender or investor. The
2 most dramatic of these is City View at Hughes
3 Square.
4 In 1999 ONIC had an opportunity to control
5 four vacant acres in part of downtown Orlando where
6 the census tract data at this location listed the
7 median household income as 37 percent of the
8 area-wide median. To accomplish our vision of a
9 significant mixed-income, mixed-use investment, we
10 needed a partner with horsepower and experience.
11 There was only one organization to call, and that
12 was Bank of America Community Development Banking.
13 We formed a 50-50 partnership, and as a
14 result, in this past November, 2003, the Hughes
15 Square Project opened, the $60 million Hughes Square
16 Project opened, with the following: 266-unit City
17 View Apartments, 107 of which are reserved for
18 households earning less than 60 percent of the area
19 median; 26,000 square feet of neighborhood-oriented
20 shopping; a 1,000-space parking garage; a Bank of
21 America branch; and finally, a 200,000-square-foot
22 national headquarters of Hughes Supply,
23 Incorporated, an Orlando-based company listed in the
24 Fortune 500.
. 0387
1 Bank of America invested $9 million of its
2 own money in tax credits and direct at-risk equity
3 at Hughes Square. Needless to say, this development
4 has already become a significant catalyst for
5 revitalization in the downtown Orlando neighborhood.
6 We look forward to the next one.
7 Thank you again for the opportunity to
8 speak.
9 PRESIDING OFFICER SMITH: Thank you very
10 much.
11 Mr. Place.
12 MR. PLACE: Hello. My name is Joe Place,
13 owner and president of CDS Air Freight. We're
14 located at Washington Dulles International Airport,
15 and our business provides domestic transportation as
16 well as handling import and export shipments from
17 Washington Dulles.
18 Bank of America has had a positive impact
19 on the growth and success of my business, and
20 therefore I am here today in support of the merger.
21 My business relationship with Bank of America began
22 in 1996. Bank of America was able to provide CDS,
23 when other institutions would not, a line of credit
24 that enabled us to manage our cash flow during our
. 0388
1 critical period of growth.
2 CDS has a fleet of trucks that was
3 originally financed with high-rate leasing
4 companies, high-interest-rate leasing companies, and
5 Bank of America was able to refinance at a lower
6 rate by actually half. This better ensured our
7 existence and future growth.
8 With the help of Bank of America in 1999, I
9 created another company named Global Solutions
10 Associates. We hire individuals who work as
11 government contractors. We provide both services
12 and product to the government. Bank of America
13 provided GSA, Global Solutions Associates, also a
14 line of credit. That enabled us to manage our cash
15 flow and our growth, which was very critical for
16 being awarded government contracts.
17 With the help of Bank of America in 2000, I
18 began another small company named JP Charters,
19 Incorporated. Bank of America was able to offer the
20 most competitive rate and terms on the purchase of a
21 very large asset. This asset is what generates the
22 revenue and hires the employees to operate and
23 maintain the company.
24 Most recently, in 2003, I purchased a
. 0389
1 commercial building. The relationship between Bank
2 of America and the Small Business Administration
3 made this possible. Bank of America was
4 instrumental in facilitating the paperwork needed to
5 close the deal with the Small Business
6 Administration. Bank of America again was able to
7 offer the most competitive rate terms. This recent
8 acquisition will enable me to expand my business and
9 hire more employees.
10 Lastly, and most importantly, throughout my
11 business relationship with Bank of America, I have
12 worked with the same bank representative since 1996.
13 Bank of America has served me well as a small
14 business owner, and I thank you for listening and
15 considering my experience with Bank of America.
16 PRESIDING OFFICER SMITH: Thank you.
17 MR. WHELAN: My name is Joe Whelan. I'm
18 the Executive Director of St. Joseph's Carpenter
19 Society. We are a 501(c)(3) neighborhood CDC
20 located in Camden, New Jersey. Our focus is to
21 provide home ownership housing, thereby increasing
22 the wealth of people who are relatively poor, by
23 increasing real estate values through investment
24 over time.
. 0390
1 We do that through a three-pronged
2 approach. That consists of education, quality
3 construction, and community organizing.
4 Camden, for those who don't know, is always
5 among the poorer cities of the country when those
6 cities are ranked. We are directly across the
7 Delaware River from Philadelphia. We're a city of
8 80,000, we have no middle-income neighborhoods, and
9 until recently we hadn't seen improvement in the
10 public high school dropout rate in years, and it
11 recently went below 50 percent for the first time in
12 quite some period.
13 Unemployment is usually three times the
14 national average, and infant mortality rates are
15 higher than many third-world countries. So that
16 just paints a picture of a place where many see
17 reasons for disinvestment, but Fleet has not.
18 New Jersey is an interesting place. It's
19 got about a quarter of the 25 wealthiest counties in
20 the country, while at the same time we have Newark
21 and Camden who are in great need of investment. We
22 have dozens of other small cities that have been
23 disinvested for decades.
24 And now Fleet's role. Fleet's role with
. 0391
1 the Carpenter Society has been the -- they have been
2 the only bank who in our 20-year history have
3 consistently been at our side to respond to our
4 call. Other banks are in and out depending on what
5 their needs may be, but Fleet and its predecessors
6 have always been there for us. They have made loans
7 and lines available to our organization. They have
8 provided residential mortgages.
9 We are currently in the middle of a
10 520-unit project. If I presented 100 homes that
11 were completed with home buyers, I'll tell you today
12 that Fleet will do at least half of the residential
13 mortgages. Such is our relationship with them, in a
14 place that's as broken as Camden.
15 They do those residential mortgages with
16 discounted rates and with underwriting that truly
17 understands the marketplace. They serve on our
18 Board of Trustees. They have provided grants for
19 our educational programs and much more support in
20 in-kind contributions and donations of time.
21 When I look to the future now, upon this
22 merger announcement, I look at Bank of America as an
23 unknown. I was enthused to hear some of the
24 testimony today. I would encourage Bank of America
. 0392
1 to fulfill the Fleet agreement currently in place --
2 I understand they will in New Jersey -- and then
3 renew it.
4 And I want to conclude by saying I
5 respectfully disagree with an earlier witness who
6 indicated bigger is not better. Bigger can be
7 better if you understand your market needs and
8 respond to them appropriately, as Fleet has done. I
9 believe Bank of America will do that, and I support
10 this merger application.
11 PRESIDING OFFICER SMITH: Thank you.
12 Mr. Owens.
13 MR. OWENS: Good evening. My name is
14 Edward Owens. I'm President and CEO of the Owens
15 Companies of Everett, Mass. Owens Companies is
16 comprised of two companies, a management company
17 that controls about 200,000 square feet, but Owens
18 Companies was also founded by my dad in 1927, Owens
19 Movers.
20 We're the oldest minority firm in New
21 England. We employ over 60 union movers in the
22 Boston area. 95 percent of our employees are
23 minorities. We put about $2 million of payroll,
24 health and welfare into the Roxbury and Dorchester
. 0393
1 communities.
2 When I say "we," I mean Owens Movers and
3 FleetBoston partnering through their minority
4 supplier development program. It really is. It has
5 been this way for over -- the last time I was here,
6 I was at the Bank of Boston/Fleet merger, and I had
7 very much concern about that last merger.
8 But the thing that renewed my faith was
9 Bank of Boston, Chad Gifford, people like Chad,
10 people like Gail Snowden. I've been with the bank.
11 I was one of the first minority vendors that Bank of
12 Boston had. It was known as a Brahmin bank, the
13 First National Bank, and I've seen the changes.
14 Ira Stepanian was the CEO at that time,
15 with CRA. And the bank had a culture, and that
16 culture was to be fair. And when the merger came
17 for Fleet Bank, I was very much concerned, because
18 Fleet really didn't have that positive input in the
19 community at the time.
20 But over a period of time, I've learned
21 that Fleet Bank is a great bank. It's been great to
22 over 60 families that work for me. It's given us an
23 opportunity. We were one of the first ones that got
24 a contract with them. It has renewed my faith in
. 0394
1 what everything that Chad Gifford said, he did. The
2 commitment that he made with Terry Murray, they did.
3 I'm here today to say that I believe, if
4 Chad Gifford says that this is good for the region,
5 for New England, it's good for me, it's good for
6 minority enterprise, because if there was a Hall of
7 Fame of CEOs, Chad would be number one. He is the
8 guy.
9 I know it took a great deal of pain to
10 merge this with Bank of America, because of the
11 unknown, but I think that with the strength that
12 Bank of America can come with Fleet Bank and the
13 type of person that Ken Lewis is, I have great faith
14 in Bank of America.
15 That's what I'm here to say, as the oldest
16 minority business in New England, one of the first
17 companies to ever do business with a bank in this
18 city, and we presently are enjoying that business.
19 We've done warehousing and distribution for the bank
20 for a number of years, and it's given my company
21 great credibility as far as to do business with a
22 bank.
23 Willie Sutton says, "I rob banks because
24 that's where the money is." For us, it was a
. 0395
1 position that we want to do business with banks
2 because that's where the credibility is. For a
3 minority business, credibility is everything.
4 They gave us that opportunity. We're still
5 enjoying that business with them now, and that's why
6 we are very happy to support this merger. For all
7 of the families of Owens Movers, I want to thank you
8 very much, and I'm glad to be here today.
9 PRESIDING OFFICER SMITH: Thank you very
10 much, all of you, for being here this afternoon.
11 Welcome to the last panel. We're in the
12 three-minute time frame.
13 MS. CRUISE: Good evening. My name is
14 Armentha Cruise. I am the President and CEO of The
15 Aspen Group. Aspen is a full-service human
16 resources management and staffing company,
17 headquartered in Silver Springs, Maryland. We are a
18 minority-woman-owned company, and we have been in
19 business for 15 years.
20 I am pleased to have the opportunity to
21 speak in support of the Bank of America and
22 FleetBoston merger. As a long-term Bank of America
23 customer and a Bank of America contractor, I can
24 provide testimony based on -- I will provide
. 0396
1 testimony based on my own personal experience.
2 Bank of America has contributed to Aspen's
3 extraordinary growth by providing access to capital
4 with low interest rates and excellent terms and
5 conditions on our loans.
6 As our company has grown over the years,
7 Bank of America has supported and funded that growth
8 by increasing our lines of credit as needed. The
9 relationship with Bank of America has been an
10 excellent one. I have received outstanding support,
11 guidance and services.
12 Equally important, Bank of America has also
13 supported Aspen's growth over the last 12 years by
14 allowing us to serve as a contractor. Now, when I
15 say "Bank of America," I'm also speaking of its
16 predecessors as well.
17 It is very difficult for a small minority-
18 woman-owned business to win major contracts,
19 especially the magnitude of Bank of America.
20 However, I'm pleased to say that our company, Aspen,
21 has provided staffing support to Bank of America and
22 its predecessors since 1992. We started out by
23 providing these services locally in the Washington
24 metropolitan area, and today those services have
. 0397
1 expanded to a national managed services contract
2 award.
3 This is extremely significant and very
4 impactful for our company, because what it does, it
5 pretty much positions us -- it does position us for
6 future growth and viability in the marketplace,
7 because it's a very, very competitive market. And
8 what this contract does, it certainly makes us a
9 major force in the marketplace.
10 With this major contract award from Bank of
11 America, I know that they've demonstrated their
12 commitment to minority and women-owned businesses
13 and small businesses. Because of Bank of America's
14 overall support for our company, Aspen, we are now a
15 national and international company.
16 It is my belief that this merger will be
17 very significant in allowing for further growth and
18 an expansion of opportunities in the marketplace for
19 women and minorities and small companies, as it has
20 done for Aspen. Thank you very much.
21 PRESIDING OFFICER SMITH: Thank you.
22 We'll go to Pastor Dewberry.
23 PASTOR DEWBERRY: Good evening. My name is
24 Ronald B. Dewberry. I'm the Senior Pastor and
. 0398
1 Founder of New Life Community Church in Syracuse,
2 New York. I'm here this evening to express my
3 support, which I believe is the sentiments of many
4 of those who are familiar with the very fine work
5 that Fleet Bank has done in the Syracuse area.
6 Like many urban cities, Syracuse has
7 experienced its economic difficulties. In the area
8 where I pastor on the South Side of Syracuse is an
9 area that is certainly most hard hit as far as
10 minority home ownership and things of that nature.
11 But I am proud to say that we have an
12 agency there by the name of United Neighborhoods,
13 Syracuse United Neighborhoods, which is involved
14 with monitoring lending institutions and their
15 practices as far as home mortgages. And last year,
16 or should I say in 2002, the United Neighborhoods,
17 they had recognized Fleet Bank as being one of the
18 leading mortgage lenders in that ten-census-tract
19 area.
20 So out of all of the potential lenders that
21 might have made a significant impact, Fleet was one
22 of the leading representatives there to assist in
23 that area, giving a little better than a half
24 million dollars.
. 0399
1 So I'm here again to express my support for
2 the merger, and I hope that this Committee would
3 give it its strongest consideration.
4 Thank you.
5 PRESIDING OFFICER SMITH: Thank you.
6 MR. EMBAYE: Good evening. My name is
7 Belay Embaye. And I am the Program Director of the
8 ECDC Enterprise Development Group. I'm happy to be
9 here and support the merger of Bank of America with
10 FleetBoston.
11 We are a nonprofit organization, and we
12 serve minorities in the Washington, D.C.,
13 metropolitan area, both as an intermediary of the
14 Small Business Administration, as well as member of
15 the CDFI. Our relation with Bank of America has
16 been fruitful and goes back many years. They
17 supported us in our programs as well as they have
18 given us support in development organization.
19 We have three major programs. One is the
20 micro-enterprise development program. Bank of
21 America gave us a low-interest, long-term loan with
22 $400,000, with which we are able to serve 32 people
23 to start their own business, ranging from $2,000 to
24 $35,000. They also gave us $30,000 as an operating
. 0400
1 fund, and both with their loan fund as well as their
2 operating fund, we were able to leverage other
3 sources like from the CDFI.
4 Another program area that we have is car
5 financing. And fortunately, Bank of America, as
6 sympathetic as it is to minorities like us, they
7 lent us $400,000, with which we were able also to
8 leverage another $500,000 from other sources.
9 And the third area where their help has
10 been useful to us is in the area of
11 micro-enterprise -- I mean, IDA program. So far
12 they have serviced more than 400 clients in their
13 banks, waiving all the difficulties, but more
14 importantly, where they have been most useful to us
15 is in lending us $4.7 million to acquire our own
16 building, so that we can expand our services in many
17 areas.
18 Once again, we are very happy with the
19 services that are provided to us by Bank of America,
20 and without their help, I don't think we would have
21 achieved the achievements we have received. So we
22 fully support the merger between Bank of America as
23 well as FleetBoston.
24 Thank you very much.
. 0401
1 PRESIDING OFFICER SMITH: Thank you very
2 much.
3 Ms. Davis.
4 MS. DAVIS: Good afternoon, and happy new
5 year to everybody. My name is Diane Davis, and I'm
6 the Senior Vice-President of Operations for
7 Renaissance Design Build Group of Jacksonville. We
8 are a minority-owned design build firm. Currently
9 we work for a local nonprofit, Oakland Trace
10 Redevelopment Land Corporation.
11 Bank of America Community Development
12 Division has been the lender and partner in
13 rebuilding East Jacksonville with this nonprofit
14 located in the area that is near our newly
15 constructed ballpark and arena in Jacksonville,
16 Florida. By the way, I'm not used to this cold
17 either.
18 Since these homes have been constructed,
19 the property values have appreciated from $72,000 to
20 $85,000, and in a blighted area that's substantial.
21 And this has taken place over a three-year period.
22 With the construction of these homes, we
23 have worked with the construction and permanent loan
24 product offered by Bank of America.
. 0402
1 We have found that, in a market where
2 things are generally expected to be difficult and
3 nonexistent, Bank of America has been responsive to
4 this underserved community, funding draws on time.
5 And if we had a process that slowed down at all, we
6 worked on that process together to improve it and/or
7 shorten the period between the next draw or closing
8 where it was required.
9 In addition, I have previously worked with
10 Bank of America and Nations and Barnett Bank. I've
11 been in the building business since 1972.
12 We have utilized their construction loan
13 product, construction permanent loans, acquisition
14 and development loans, and have found the
15 administrative staff, along with the loan officers,
16 to be very knowledgeable, responsive, and helpful,
17 and listening when we needed to make sure that all
18 of our subcontractors were paid on time, closing
19 packages were delivered timely, our agents were
20 given the proper information, and all of it was
21 handled during a reasonable time period.
22 I want to say that I support the merger,
23 and I am sure, with the resources of both of these
24 entities, that they will continue to build
. 0403
1 partnerships and relationships with communities in
2 desirable as well as urban areas needing
3 revitalization.
4 I do thank you for allowing me to be here.
5 PRESIDING OFFICER SMITH: Thank you very
6 much.
7 Ms. Gulley.
8 MS. GULLEY: My name is Isay Gulley. I'm
9 President and CEO of Clearwater Neighborhood Housing
10 Services in the shining city of Clearwater, Florida.
11 It seems like a punishment, when you want
12 to say so much and you have a few minutes to say it,
13 but I'm going to say what I have to say, in the
14 three minutes, and respect the timekeeper.
15 Clearwater Neighborhood Housing Services is
16 a private nonprofit, and it has been in existence
17 for 24 years. I've had the pleasure of working with
18 the organization for 23 of those years. And since
19 my term in office, I have seen many lending
20 institutions come and go, and not many have come and
21 gone and left an imprint in the sand as Bank of
22 America has.
23 Our Clearwater Neighborhood Housing
24 Services, as many of our organizations in our
. 0404
1 network, we're nationally chartered. Neighborhood
2 Reinvestment Corporation out of Washington, D.C., is
3 our national partner, and today we have about 235
4 affiliate organizations that are out here in these
5 communities trying to respond to neighborhood
6 revitalization.
7 The organization started up years ago, in
8 the mid-'70s, because of urban renewal. There were
9 so many lenders not loaning into the urban
10 communities, and we had a thing called redlining.
11 Today I'm very proud to say Bank of America
12 has not only talked the talk, they've walked the
13 walk, and Clearwater will never be the same, the
14 City of Clearwater, nor will the county, but
15 primarily our neighborhood in Clearwater known as
16 North Greenwood.
17 The most recent project that we've done
18 with Bank of America is a $14.6 million deal, and
19 it's known as the Greenwood Apartments Redevelopment
20 Project.
21 This project went on to win national
22 recognition from Fannie Mae last year, the Fannie
23 Mae Maxwell Award of Excellence. We had 126
24 organizations nationwide apply for this award, and
. 0405
1 we came in first place. That's all because of Bank
2 of America responding to an outcry from the
3 community.
4 This was 192 units of affordable housing,
5 where it was very deplorable. You had people living
6 there with not adequate heating, you still had the
7 old fuel oil heat, you had outdoor clotheslines, you
8 had asbestos, you just had all kinds of conditions.
9 It was shameful that it was allowed to exist.
10 But thanks to Bank of America for
11 responding and partnering with our organization to
12 take the property out of the hands of a slumlord
13 that didn't care. Not only did they partner with us
14 to do that, they are also partnering with affordable
15 housing to do in-fill housing, also purchasing of
16 existing houses, and they have a small business loan
17 program which we're partnering with them also.
18 I can't say enough in three minutes, but
19 all I can say, with this merger, I know Bank of
20 America is doing the right thing, and this will
21 allow it to do even more with the Fleet and Bank of
22 America merger. I strongly support it.
23 PRESIDING OFFICER SMITH: Thank you.
24 Mr. Hamilton.
. 0406
1 MR. HAMILTON: Good evening. My name is
2 Samuel C. Hamilton, and I am the Executive Director
3 and CEO of the Hartford Economic Development
4 Corporation and the Greater Hartford Business
5 Development Center located in Hartford, Connecticut.
6 I'm here to speak in favor of the merger of Bank of
7 America and FleetBoston.
8 We are a community development financial
9 institution serving Hartford and 62 of Connecticut's
10 169 towns since 1975. In addition to providing
11 technical assistance and loan packaging for small
12 business start-ups and emerging businesses, we are
13 an alternate lender to small businesses who are
14 unable to qualify for loans through the traditional
15 lending community, either in part or in total.
16 Our firm has packaged more than $150
17 million in loans for micro-entrepreneurs and small
18 businesses since our inception, impacted in excess
19 of 5,000 jobs, assisted a significant number of
20 entrepreneurs and small businesses, averaging more
21 than 450 such contacts per year.
22 Our objective is to incubate the start-up
23 or emerging business to the extent that it can
24 qualify for traditional bank loan programs. Thus we
. 0407
1 have a close relationship and a good understanding
2 of the commitment and involvement of traditional
3 lenders to serving this market, especially in the
4 urban center.
5 HEDCo/GHBDC has found FleetBoston to be an
6 extremely active institution in reaching out to
7 assure that access to capital, affordable housing
8 and wealth creation are possible for all, not just a
9 select few.
10 I am constantly amazed that, despite
11 FleetBoston's proactive position and active
12 involvement in their footprint to help make
13 communities more liveable for all, it does not
14 receive the recognition it deserves. Perhaps this
15 is reflective that it's more of a concern to them to
16 do the job than the PR associated with it.
17 The recent Outstanding rating from CRA
18 offers some vindication. FleetBoston is often first
19 to initiate programs to address a community need,
20 with others coming on board at a later time.
21 I find FleetBoston not only talks the talk,
22 but walks the walk, whether it is their
23 establishment of a revolving loan fund totaling
24 $6.2 million, leveraging another $4 million from the
. 0408
1 State of Connecticut to provide a revolving loan
2 fund to serve the underserved markets in Hartford,
3 New Britain, Meriden and New Haven, especially in
4 the Hispanic/Latino community, or the significant
5 participation in funding of IDA programs for small
6 business creation and individual wealth creation
7 strategies.
8 FleetBoston's commitment extends to
9 assisting in building capacity of small businesses
10 to manage their affairs, their financial affairs, by
11 funding computer labs, Quickbooks training, and
12 point-of-sale inventory systems.
13 As past chairman of the United Way of the
14 Capital Area, I have had personal experience with
15 FleetBoston's commitment to serve its role as an
16 outstanding corporate citizen. It starts from the
17 top and spreads down throughout the organization.
18 Chandler Howard, Fleet Connecticut President, led a
19 successful campaign this year, despite a sluggish
20 economy. It was his energy and FleetBoston's
21 support that made this happen.
22 As a Director of Neighborhood Support
23 Collaborative and the Local Initiatives Support
24 Corporation, I have personally experienced
. 0409
1 tremendous support both in financial and technical
2 assistance provided.
3 In summary, I summarize my remarks by
4 saying, in the case of the Bank of America/
5 FleetBoston merger, more is better. My firsthand
6 experience with FleetBoston, knowing how they value
7 community and keep their commitments, combined with
8 what I have garnered from my research on Bank of
9 America's track record, I believe the potential for
10 positive impact in the communities to be served by
11 the combined entities is enormous.
12 Thank you.
13 PRESIDING OFFICER SMITH: Thank you very
14 much.
15 Ms. Kleiman.
16 MS. KLEIMAN: I know you all are just
17 saving the best for last.
18 Honorable Members of the Federal Reserve
19 Bank of Boston and Committee Members, thank you for
20 allowing me to speak this afternoon at this
21 important hearing or the proposed bank merger
22 between Bank of America and Fleet.
23 I am Cathy M. Kleiman, Executive Director
24 of Charleston Affordable Housing, a 501(c)(3)
. 0410
1 nonprofit development corporation based in
2 Charleston, South Carolina. I am the founding
3 Executive Director, its first and only Executive
4 Director, and I'm appearing to provide our own
5 nonprofit's positive experience with Bank of
6 America, as well as its predecessor NationsBank, and
7 to give you the State of South Carolina's
8 perspective.
9 I have served on the South Carolina State
10 Fannie Mae Advisory Board and for six years on the
11 Advisory Council of the Federal Home Loan Bank of
12 Atlanta, as well as other regional and advisory
13 commissions.
14 Since Charleston Affordable Housing's
15 inception 13 years ago, Bank of America has
16 supported our efforts to create and produce
17 affordable housing opportunities for low-and-
18 moderate-income families and to build nonprofit
19 capacity throughout the Carolinas. It is only
20 because of their strong commitment to and
21 participation in community development and
22 affordable housing activities in our area that I am
23 appearing today and speaking in favor of the merger.
24 Unlike throughout much of the country, the
. 0411
1 development of nonprofit organizations and
2 corporations came slowly in the South. We needed
3 help to develop those community development CDCs and
4 especially in South Carolina to build capacity.
5 Bank of America has worked with nonprofit
6 development organizations to bolster the efforts and
7 the productivity of these organizations. They have
8 also invested in the projects and the programs of
9 those organizations. BOA's support has clearly
10 helped build up the nonprofit affordable housing
11 industry and promoted the successful production and
12 completion of desperately needed housing resources
13 for low-and-moderate-income households.
14 Tremendous resources, financial and human,
15 were needed a decade ago and are still essential
16 today to launch, coordinate and organize the
17 community-based organizations needed to
18 conceptualize, sponsor and develop affordable
19 housing developments and the related community
20 development activities. Resources are also crucial
21 to expand the community and economic development
22 groups, to fund their organization's programs, as
23 well as to actually finance the work needed to
24 implement their activities and projects.
. 0412
1 Bank of America's personnel and financial
2 resources have been and still are available to
3 provide technical assistance to the organizations,
4 education to the communities and their residents,
5 execute planning and project sessions, and to
6 finance the greatly needed programs and housing
7 developments throughout the State of South Carolina
8 for low-and-moderate-income citizens, in our cities,
9 counties, and communities.
10 BOA representatives have been actively
11 involved in the creation and financing of affordable
12 housing for over a decade and have always been
13 available to attend any meetings with government
14 entities, boards, investors, neighborhood
15 associations or any local entities.
16 Representatives and employees of the bank
17 participate in all kinds of charitable
18 organizations, and they serve in roles from
19 volunteers to being on boards of directors. They
20 assist us both in our housing development, economic
21 development, as well as all kinds of activities and
22 initiatives on statewide, countywide and local
23 levels.
24 I have submitted testimony to you which
. 0413
1 lists tremendous investments they've made throughout
2 the state in bonds and tax credit developments, and
3 I'll let you look at the statistics on your own.
4 Again, thank you, and we strongly support
5 the merger.
6 PRESIDING OFFICER SMITH: Thank you very
7 much.
8 Now to our last speaker.
9 MR. OGUNDELE: Good evening. My name is
10 Jelili Ogundele from Harlem Park Revitalization
11 Corporation in Baltimore, Maryland. I'm here
12 tonight to support the merger of Bank of America and
13 FleetBoston Bank.
14 Just like in Baltimore years ago we had
15 positive experience with NationsBank merging with
16 Bank of America, we believe this merger of Bank of
17 America and FleetBoston will benefit the state, the
18 communities, and all of the states that these two
19 banks are serving. By combining the assets and the
20 commitment of these two banks, we believe the
21 underserved community will benefit greatly.
22 In Baltimore, as some you might know, Bank
23 of America, through its development banking and also
24 the CDC, have invested a lot of capital in several
. 0414
1 communities in Baltimore, especially in Harlem Park,
2 where we are one of lowest income communities of the
3 city, and most banks come and chicken out, they come
4 and go. They make promises on paper; when it's time
5 to make the deal, they're gone, and you know that.
6 Bank of America through NationsBank came to
7 us since 1997, '98. We were able to develop a
8 community improvement plan which is the first ever
9 in the city. Our mayor has adopted this concept and
10 is encouraging all banks to go to some community and
11 partner with local citizen groups to create a vision
12 for the community.
13 This plan took 18 months. As you know,
14 banks don't have the patience, but we were able to
15 convince them that a plan is bigger than a project.
16 Within a plan, you can have several projects that
17 you can implement.
18 This plan focuses on four areas of our
19 community, abandonment of vacant houses, new housing
20 development -- we are used to three-story row houses
21 in Baltimore. Our community wants something new,
22 something like we see in the suburb, which is about
23 a mile from our community. There is an issue of
24 public safety, sanitation and transportation. There
. 0415
1 is an issue of new services.
2 This plan after 18 months becomes the
3 people's plan, and that's what we call it. This
4 plan has also stimulated a city-wide planning
5 process for different communities to take action and
6 take responsible for their life.
7 Bank of America through its CDC also was
8 very instrumental in implementation strategy. The
9 focus of the project in Harlem Park was the senior
10 citizen building for 94 units. This is the first
11 new construction in 30 years in our community.
12 What is good about this project, it's got
13 pharmacy, the only pharmacy left in the 'hood.
14 Also, it's going to have a restaurant, the only
15 restaurant in the 'hood, serving five or six
16 communities. Also it will have a doctor's office,
17 the only doctor's office, probably a general
18 practitioner, that will serve about five or six
19 communities. This one project itself is stimulating
20 a lot of reinvestment in the community.
21 There will be a Phase II for this project.
22 The Phase II is the home ownership project for 160
23 units, which will be low-to-moderate-income
24 families, creating a mixed-income community in a
. 0416
1 community where no one had thought anything is
2 possible.
3 We're here tonight to support this merger.
4 We think it's good for our community, and we believe
5 the community of Bank of America will continue to
6 grow. Thank you.
7 PRESIDING OFFICER SMITH: Thank you very
8 much. I thank everyone who presented testimony at
9 this public meeting. I thank you on behalf of the
10 panel here today and on behalf of the Federal
11 Reserve more generally.
12 It has taken a lot of patience on your
13 part, and on the part of panels already gone, to
14 abide by or try to abide by the time constraints
15 which we did find it necessary to impose. But it's
16 been an important meeting to obtain views both for
17 and against the merger, and we, again, thank you.
18 I also take this opportunity to thank the
19 Federal Reserve Bank of Boston for hosting the
20 meeting, and for all of the effort that went into
21 making sure that everything is fine.
22 This is the end of the panels. We had an
23 open mike. We have two people signed up. I have
24 Mr. James Carter and Archbishop Timothy Paul Bayman.
. 0417
1 Are you in the room? (No response)
2 Do you think they might be waiting for
3 6:35? Probably not. Well, we'll be around here, so
4 if they do show up, we'll give them a private public
5 meeting.
6 So with that, we are adjourned, and thank
7 you all again very much.
8 (Whereupon the hearing was
9 adjourned at 6:15 p.m.)
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
. 0418
1 I N D E X
2 SPEAKER: PAGE
3 Charles Gifford 6
4 Kenneth D. Lewis 15
5 Barney Frank 30
6 Joseph Kriesberg 40
7 Gail Lattimore 43
8 Richard Thal 46
9 Jennifer Van Campen 48
10 Robert Van Meter 50
11 John Waite 54
12 Jeffrey Sanchez 58
13 Vincent Fort 62
14 Derrick Boazman 65
15 Dianne Wilkerson 69
16 Richard Blumenthal 78
17 John W. Fonfara 83
18 Patrick L. McCrory 87
19 Michael McMahon 92
20 William Wainwright 95
21 E.G. Ned Fowler 99
22 Richard Brown 102
23 Brenda J. Clement 105
24 Juan Cofield 108
. 0419
1 I N D E X (Continued)
2 SPEAKER: PAGE
3 Nadine Cohen 112
4 Hillary Pizer 117
5 Harmon Hamilton 120
6 Roberto Miranda 122
7 George Butts 125
8 Maude Hurd 128
9 James G. Hagan 131
10 Sarah Gerecke 134
11 Stephen Schley 137
12 Mike Servais 139
13 Sister Mary Bourdon 142
14 William Guenther 144
15 Bruce Marks 148
16 Steven Fishback 153
17 Kirsten Keefe 156
18 Louise McNeilly 161
19 Phyllis Salowe-Kaye 166
20 Tanya Wolfram 170
21 Lee Beaulac 173
22 Ruhi Maker 178
23 Meizhu Lui 183
24 Rev. Al Sampson 186
. 0420
1 I N D E X (Continued)
2 SPEAKER: PAGE
3 Richard E. Barber 190
4 Deadria C. Farmer-Paellmann 198
5 Isidio Farash 204
6 Ramkrishna Tare 207
7 Bill Edwards 212
8 Daniel J. Forte 218
9 Joseph E. Washington 223
10 Lauren Compere 227
11 F. Barton Harvey, III 231
12 Charles Stith 235
13 Paul Guzzi 237
14 Dewitt Jones 239
15 Ronald L. Phillips 244
16 John Taylor 250
17 John Anderson 259
18 Andrea Psoras 263
19 Chris Cole 270
20 Richard Marsico 273
for James T. Campen
21
F. Patricia Callahan 277
22
Al Ku'ahi Wong 282
23
Joseph Coleman 286
24
. 0421
1 I N D E X (Continued)
2 SPEAKER: PAGE
3 Ruhi Maker 290
4 Richard Marsico 294
5 Lisa Richter 298
6 Conrad Egan 303
7 Ramon Flores 306
8 Peter A. Gagliardi 309
9 Angel Sierra 312
10 George K. Rothman 315
11 Elaine Miceli-Vasquez 319
12 Erwin Vasquez, M.D. 323
13 Lisa B. Alberghini 326
14 Bruce Gunter 331
15 Stuart T. Arnett 335
16 Jennie Greene 337
17 Chris Kreymeyer 341
18 Paul S. Grogan 345
19 Anne S. Habiby 347
20 Stephen H. O'Connor 351
21 Henry M. Thomas, III 355
22 Michael Brown 358
23 Michael Rubinger 361
24 Jeff Nugent 364
. 0422
1 I N D E X (Continued)
2 SPEAKER: PAGE
3 Fred Banuelos 366
4 Russell A. Sibley, Jr. 368
5 Mark Pinsky 371
6 Jeff Foss 374
7 David Umansky 376
8 Grace Miranda 378
9 Robert S. Bright 380
10 Felix M. Torres 382
11 Robert E. Ansley, Jr. 385
12 Joseph J. Place 387
13 William F. Whelan 389
14 Edward Owens 392
15 Armentha Cruise 395
16 Pastor Ronald B. Dewberry 397
17 Belay Embaye 399
18 C. Diane Davis 401
19 Isay M. Gulley 403
20 Samuel C. Hamilton 406
21 Cathy M. Kleiman 409
22 Jelili Ogundele 413
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. 0423
1 C E R T I F I C A T E
We, Jane M. Williamson, Registered Merit
2 Reporter, and Carol H. Kusinitz, Registered
Professional Reporter, do hereby certify that the
3 foregoing transcript, Volume I, is a true and
accurate transcription of our stenographic notes
4 taken on Wednesday, January 14, 2004.
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6 ________________________
Jane M. Williamson, RMR
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10 Carol H. Kusinitz, RPR
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