Public Meeting Regarding NationsBank and BankAmerica
Thursday, July 9, 1998
Transcript of Panel Fourteen
|
Public Meeting Regarding NationsBank and BankAmerica |
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23 MS. SMITH: We are ready to start with
24 Mr. Butts.
25 MR. BUTTS: Good afternoon. My name is
26 George Butts and I serve as president of ACORN Housing
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1 Corporation. ACORN, for those of you who may not know,
2 stands for The Association of Community Organizations
3 for Reform Now. And the ACORN Housing Corporation we
4 like to call the service arm of the organization, and we
5 provide loan counseling and some development. We are 24
6 states now, 24 cities now, with two hopefully opening by
7 the end of the year.
8 It's not the usual role for ACORN Housing
9 Corporation to testify to the Federal Reserve Bank in
10 favor of the merger of banks. This is a different role
11 for us.
12 We're living in a country where the home
13 ownership rate for white households is 72 percent, but
14 the home ownership rate for black households is 45
15 percent and Hispanic households of only 42 percent.
16 Redlining and unfair barriers to credit have profoundly
17 impacted our communities as we will continue to speak
18 out and we will continue to speak out on these issues.
19 But we're here today because NationsBank
20 stands out as a leader in the community reinvestment
21 field. They're leaders for some very specific reasons.
22 First, NationsBank has recognized that community
23 organizations are the vehicles for real success to the
24 community.
25 We have too many banks which believe that an
26 occasional loan to a community development corporation,
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1 a small grant means a partnership.
2 NationsBank has invested in building the
3 infrastructure for the nonprofit community organizations
4 to grow and produce. For us that means our housing
5 counseling program has grown with Nations from five
6 cities to, now, 11 cities across the country. We have
7 expanded the housing staff working in Nation's cities
8 from 10 to 32.
9 Second, NationsBank has produced, the ACORN
10 Housing Corporation NationsBank partnership alone has
11 produced over $236 million in mortgages. Virtually all
12 of these loans were to lower income households with
13 small down payments, with non-traditional credit, with
14 cash-on-hand, with older urban housing stock, and these
15 loans performed well and with low delinquencies.
16 Third, NationsBank has been flexible. They
17 were the first multi-state lender to negotiate their
18 mortgage underwriting standards with us, and their
19 having stepped forward did a lot to bring our kind of
20 underwriting standards for low-income people into the
21 mainstream of the mortgage market.
22 At the time, these things were pretty
23 radical, but today no one thinks twice about the
24 appropriate use of low down payments, non-traditional
25 credit, foods stamps as income, voluntary child support,
26 cash on hand or steady income rather than the same job
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1 for two years.
2 In the early days plenty of lenders talked
3 the talked but Nations rewrote the mortgage program.
4 Within the year, we were doing three to four hundred
5 mortgages a year in cities like Houston and Dallas,
6 Texas where other lenders told us low-income people told
7 us couldn't even own a house.
8 Fourth, NationsBank is innovative. We are
9 now talking with them about providing significant
10 pre-development and interim financing. Nonprofits lose
11 out on the bidding for affordable multi-family housing
12 project to wealthier for-profit speculators, unless we
13 can move quickly to evaluate and acquire
14 Nations is hammering a 30-day fast track
15 development fund so that more multi-family properties
16 around the country can be purchased, upgraded and
17 maintained as affordable housing by nonprofits.
18 NationsBank views their commitment to our communities as
19 part of their business.
20 Many lenders view the community reinvestment
21 as a legal obligation rather than a core market.
22 With their new $350 billion commitment and
23 their aggressive 50,000-unit target, we are seeing them
24 view our community as a market of its own.
25 For me, the single event that best
26 illustrates the NationsBank commitment to our
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1 communities occurred a few years ago when the Community
2 Reinvestment Act was under attack in congress by radical
3 right-wing republican. NationsBank was the only
4 national bank that took a stand ino support CRA.
5 When I say public, I am not just talking
6 about writing letters. Cathy Bessant sat next to me in
7 front of a hostile banking chair who wanted to hand our
8 heads to us on a plate and told the congressmen exactly
9 what they didn't want to hear.
10 She testified that NationsBank was against
11 any effort to weaken the CRA. NationsBank was bucking
12 the industry mainstream, but the message was clear,
13 NationsBank saw the underserved covered by the Community
14 Reinvestment Act as their market. In that first
15 negotiation, that's exactly what we asked them to do for
16 us.
17 NationsBank 350 billion ten-year community
18 investment commitment is different from the commitments
19 we see from other lenders.
20 Nations senior management sat down for a day
21 with us and the product of those discussions shows up in
22 a single-family, multi-family and economic development
23 commitments.
24 (Bell)
25 MR. BUTTS: I'm not done.
26 But to sum up quickly, when the rubber meets
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1 the road, they're not just talking the talk, they're
2 actually doing what they say they're going to do.
3 They'll make credit work for low and moderate income
4 people and they'll work with community institutions.
5 The fight for affordable housing and fair access to
6 credit is not over, not by a long shot.
7 NationsBank has been an ally among leaders
8 and the leader in these struggles, and we believe
9 they'll bring to Bank of America markets the same
10 attitude of innovation, flexibility and production.
11 Thank you.
12 MS. SMITH: Yes, please do submit your full
13 statement for the record.
14 Ms. Galvin.
15 MS. GALVIN: Yes. My name is Karen Galvin,
16 and I am a board member with the Summerhill Neighborhood
17 Development Corporation. SNDC is a nonprofit community
18 development corporation in downtown Atlanta that is
19 dedicated to revitalizing a community that is full of
20 assets that have been overshadowed by crime, poverty,
21 and drugs. My statements today are in strong favor of
22 the NationsBank acquisition of Bank of America.
23 Two years ago my husband and I began the
24 process of finding and purchasing a new home. We
25 weren't just looking for a house, we were looking for a
26 true community. One in which you could sit on the front
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1 porch and wave to people, one in which neighbors knew
2 each other and looked after each other.
3 We were looking for a diverse, mixed-income
4 community in which residents felt empowered against
5 crime and urban decay.
6 Some friends of ours told us about the
7 Summerhill neighborhood. That was historically very
8 prosperous, had been overrun by highways, model cities,
9 crime, and was now in the midst of revitalization
10 efforts.
11 Our very first meeting was with a staff
12 person with SNDC and a representative of NationsBank
13 CDC. It was at that meeting I first heard of the
14 partnership between NationsBank and SNDC. It was at
15 that time I realized that both entities were committed
16 to rebuilding a community by uplifting its residents and
17 not just building houses.
18 My husband and I that day bought a house, but
19 we also bought into a vision. After moving into the
20 Summerhill community, the dedication of SNDC and its
21 partner, NationsBank, expired me to join the board of
22 directors. Since that time, SNDC has had numerous
23 partners, but none has risen to the level of commitment
24 that NationsBank has exhibited.
25 Other corporate sponsors have come into our
26 community, built a few homes, co-sponsored a few events
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1 and moved on to the next media-focused area in the city.
2 NationsBank has proved time after time that
3 they are committed to being with us for the long hall.
4 The CDC always strikes the balance of
5 empowering the community to revitalize itself as opposed
6 to merely pouring money into various situations for
7 short-term solutions.
8 They have referred us to various resources to
9 assist with more development, introduced and advocated
10 for us with various foundations that assist us with
11 providing programs and services to our children and
12 elderly residents, and they have also provided technical
13 support for community mobilization against crime and
14 housing code violations.
15 Currently, they are in the process of
16 partnering with us to complete the Terry Place Housing
17 Development in which I reside, which is 40 houses which
18 are mixed income. They also just signed an agreement to
19 partner with us to complete another area in the
20 community called the Orchard.
21 The Orchard was started five years ago by
22 another bank institution that was partnering with us,
23 and it was left far from completion. Once again,
24 NationsBank saw a void and volunteered to assist us in
25 filling it.
26 I cannot begin to relate to you the
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1 excitement and the appreciation of the residents in this
2 community.
3 In closing, I see the acquisition of
4 BankAmerica by NationsBank as an opportunity for
5 NationsBank to continue its positive work in even more
6 communities.
7 As a former antitrust attorney, I realize
8 that has businesses grow as quickly as NationsBank has
9 grown over the past few years, people start to get
10 nervous, but NationsBank has proven that they are a
11 responsible and committed citizen partner -- citizen
12 partner with us. As they continue to grow, I truly
13 believe that their efforts to empower people and build
14 communities will become even more far reaching parks.
15 I thank you for this opportunity to speak
16 today and again I fully support the merger.
17 MS. SMITH: Thank you very much. Ms. Ford.
18 MS. FORD: My name is Carolyn Ford. I'm the
19 Executive Director from North Florida Education
20 Development Corporation, and I come out of North
21 Florida.
22 I'm here to support the merger for
23 BankAmerica and NationsBank. As I listen to a lot of
24 the testomonies and I kept thinking what I had to say
25 about it from a personal basis, coming from a community
26 that's kind of void completely of banks altogether.
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1 I'd like to talk a little about BankAmerica,
2 which is more or less a west coast bank, and how I
3 became involved with them.
4 I'm a recent graduate of DTI. That's
5 Development Training Institute. And BankAmerica
6 financed that fellowship partly. While I was there in
7 training, in training with other 35 nonprofits
8 throughout the nation, and I was trained in many things,
9 someone from a very rural community such as Gasden
10 County where you have 38 percent poverty level. This
11 kind of commitment from a bank is kind of unheard of in
12 our area.
13 Since that time, NationsBank has acquired
14 Barnett Bank which is in our area. So they have been in
15 our area about approximately six months. Since that
16 time they have reached out to our very impoverished
17 community.
18 I have had many meetings with the local
19 NationsBank community development person there, and we
20 are in the process of developing a partnership where we
21 can -- we'll be able to, really, to bring affordable
22 homes into the area.
23 The last home that was built in my county was
24 like in 1994. So you see some of the problems that --
25 we have some local banks there, some home, rural banks
26 there, but home ownership and business development is
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1 kind of unheard of.
2 So, with the merger of Bank of America, which
3 I know a lot about, and their commitment to low-income
4 communities and with the merger of NationsBank, it has
5 to be a win/win situation for us in North Florida.
6 Also, I am also involved with the Stand Up
7 for Rural American campaign where BankAmerica and
8 NationsBank are also members of their campaign. So
9 their commitment to rural America is -- to rural America
10 is just exciting at this moment, because, you know,
11 rural America has just kind of been overlooked pretty
12 much by everybody.
13 So, but their commitment in terms of the $10
14 billion in lending and investment to foster economic
15 development in our area is just exciting at the moment.
16 I think that with this merger there has to be the kind
17 of vision that all people especially in these -- in poor
18 communities throughout this nation to benefit from --
19 it's just not how you benefit from.
20 A lot of the things that have been said here,
21 I have to agree, I really don't understand, so I rely on
22 you all to really tie down the numbers and really I
23 guess put their feet to the fire in terms of specific
24 kind of things, but, when it comes to partnerships, this
25 is unheard of in our area.
26 I just want to thank you for allowing me to
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1 come here and speak to you and the fact that we support
2 the merger in North Florida. Thank you.
3 MS. SMITH: Thank you. Mr. VanbBrunt.
4 MR. VANBRUNT: Thank you, Madam Chairman and
5 members of the committee.
6 My name is Mark VanBrunt, I am a Deputy Vice
7 President for community development with the National
8 Council of LaRaza. NCLR is the nation's principal
9 national Hispanic organization representing more than
10 200 affiliated organizations in 32 states, District of
11 Columbia and Puerto Rico.
12 I personally serve this affiliate base with a
13 range of urban and rural housing community development
14 programs for 22 years.
15 As an organization, we're committed to
16 reducing poverty and discrimination and improving life
17 opportunities for the more than 30 million American of
18 Spanish descent.
19 NCR approaches these issues from two
20 positions, two roles and perspectives. As an advocate
21 we're very much interested in the larger policy
22 implications of legislation, it's implementation and the
23 rule making that's associated with that that may produce
24 disparate impacts on Latinos in all income and ethnic
25 communities.
26 To this end, we would submit to the board
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1 formal comments which are attached for the record.
2 But NCR is also very concerned about helping
3 affiliates achieve a meaningful local impact for our
4 common customer, which is the Latino family.
5 Briefly, I'd like to inform the board of some
6 concrete ways in which the current bank relationships
7 have had this kind of impact. I should say I'm not
8 familiar with the whole national, the totality of it and
9 the national scope of their activities, but I would
10 speak to ours with our affiliates.
11 I can only echo previously, what's previously
12 been said about a long relationship with Bank of
13 America, being our office serving predominantly the
14 southwest. The support of the community development
15 staff, the capital of particularly the community
16 development bank and more recently we have great
17 expectations for the Rural 2000 initiative and its
18 resources.
19 Our relationship with Nations is a lot more
20 recent, the last -- just over the last two years. They
21 have made some significant commitments that have
22 enhanced our capacity and effectiveness to particularly
23 have some local impact with our affiliates, three ways.
24 First, we've really received some direct staff support,
25 support that has allowed us to reach new markets and
26 more affiliates with transactions that are both
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1 traditional and non-traditional.
2 So, in addition to housing development and
3 home ownership network which we've pursued for sometime,
4 we have been able to assist affiliates with other
5 priorities such as essential community facilities,
6 charter schools and economic development projects.
7 Secondly, pre-development and capacity
8 investments to these projects by Nations has proved very
9 critical in helping them become operational in starting
10 them up.
11 Third, I'd say, especially over the past
12 year, the Nations community development staff has played
13 a key role in helping us evaluate and define investment
14 strategies and products to serve more of our affiliate
15 base in some unique ways.
16 This same kind of commitment has been
17 extended to a number of affiliates and their boards
18 themselves, which we have appreciated.
19 To this end, NCR expects to soon consummate
20 an agreement with the bank as a major capital
21 contributor to our expanding affiliate partnerships,
22 which we call the Initiative to our Partnerships of
23 Hope.
24 In conclusion, I would characterize our
25 relationship as very positive and fruitful and we would
26 say that we have every expectation that the merged bank
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1 would be able to address both the policy concerns raised
2 in our comments as submitted and continue to expand the
3 investments which I have described above, which are so
4 critical to expanding and reaching Latino market.
5 Thank you.
6 (Pause in proceedings to change Court
7 Reporters.)
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1 MR. McNULTY: My name is Robert McNulty. I'm
2 president of Partners for Livable Communities. My
3 statements today are to emphasize the key involvement of
4 NationsBank and the leadership of community investment
5 over the last decade in this country. Partners is a
6 25-year-old nonprofit organization that grew out of a
7 national conference on neighborhoods.
8 Our board is made up of governors. Paris
9 Glendenning serves on our hoard, commentators, Neil
10 Pierce, the writer, the publisher of Governing Magazine,
11 Peter Harkness, Mayor Webb of Denver, Monsignor Linder of
12 the New Community Corporation is vice chair of our board,
13 and the chair is Linda Good. Past trustees have included
14 Michael Wu of Los Angeles City Council, Wanda Vinski, and
15 currently serving on our board is Katherine Vinson of
16 NationsBank.
17 Partners believes livability is an equal
18 opportunity goal. We use community mobilization
19 asset-based conference. Community development strategies
20 and social equity are the concept of fairness as
21 strategies to effect change and create more livable
22 communities for all citizens.
23 Partners has served as a bridge to create
24 first-time racial partnerships in Richmond, Savannah,
25 Memphis, Chattanooga, and recently we put together a
26 white leadership pledge of $200 million investment in
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1 downtown Kansas City in the historic African-American
2 18th and Vine neighborhood.
3 Thus I do not come lightly to the statement that
4 NationsBank, through its Chair Hugh McColl, through it's
5 president Ken Lewis, and for the president of the
6 community investment, Kathy Bessant, have put in place in
7 the last decade a culture of community reinvestment
8 leadership for the corporation, for their market
9 communities, and for a national policy on this agenda
10 that is the exemplar in the country, bar none.
11 As examples, we are pleased to be associated
12 with NationsBank in 1992, '93, and '94 with a republican
13 secretary of HUD, a democratic secretary of HUD, a
14 republican secretary of HHS, and a democratic secretary
15 of HHS to research with Johns Hopkins a way of
16 restructuring the categorical programs to try to give
17 more independent ability of supporting families and
18 community across America. This result was published and
19 distributed, was sponsored by NationsBank, some six years
20 ahead of the restructure of welfare entitlements.
21 We were a cosponsor of Blueprint 2000, a program
22 undertaken by NationsBank with the National Community
23 Reinvestment Coalition, the National Council of LaRaza,
24 the National Urban League in 1994, '95, and '96, which
25 brought together 500 citizens throughout NationsBank's
26 community of trying to create a team work to meet
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1 community reinvestment goals and set priorities for
2 furthering.
3 We were also part of a planning team for
4 community capitalism, rediscovery of the market of
5 America's urban neighborhoods hosted by Columbia
6 University in 1997, chaired by Hugh McColl. All 65
7 business leaders, government, and community practitioners
8 called for a self-interest redefinition of investing in
9 the economics of our inner city. Again, a leadership
10 initiative continuing today done by NationsBank.
11 For these acts and many more, I urge that the
12 merger of NationsBank and Bank of America proceed and
13 that we look forward to continuing leadership on the
14 field of community reinvestment, continuing redefinition
15 of both profit and opportunity and community value as
16 NationsBank has done for the last ten years. Thank you.
17 MS. SMITH: Thank you. I don't have our last
18 speaker's name.
19 MS. GARRETT: My name is Pat Garrett. I'm the
20 president of the Charlotte-Mecklenburg Housing
21 Partnership in Charlotte, North Carolina. First I'd like
22 to thank all of you for letting us have an opportunity to
23 tell you about NationsBank commitment to our housing
24 partnership and to our local community.
25 Charlotte-Mecklenburg Housing Partnership is a
26 nonprofit housing developer providing affordable rental
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1 and home ownership in the Charlotte area. Since 1990, we
2 have produced 300 single family homes and 700 rental
3 units. Many of those homes would not have been developed
4 without the assistance of NationsBank. The average of
5 all our families served is 60 percent or less of median
6 income.
7 NationsBank has been one of our major partners
8 of our organizations as we have developed and implemented
9 our strategies for housing development. In fact,
10 NationsBank was instrumental in setting up the
11 partnership. The corporation provided initial operating
12 support and senior executives that committed many hours
13 of work as we developed our programs for single-family
14 and multi-family housing.
15 In the area of home ownership, NationsBank has
16 made a major commitment to our single family loan
17 consortium, which has now made over 270 loans to low and
18 moderate income buyers, utilizing relaxed credit
19 standards and at a reduced interest rate. This
20 commitment of over $5 million is more than 75 percent
21 encumbered, and the bank has indicated its willingness to
22 commit additional funds, as well as to assist in the
23 establishment of a second mortgage pool so that we can
24 sell these mortgages to neighborhood reinvestment.
25 Nations was selected by the other five bank
26 members to act as the lead bank. We can count on
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1 NationsBank to be out in front in the development of new
2 mortgage products such as the most recent acquisition
3 rehab product, as well as some issues such as the
4 recognition of the need for lenders to reimburse for the
5 cost of home ownership counseling.
6 A major part of our organization's focus has
7 been on reclaiming deteriorating high crime areas. As a
8 part of that focus, NationsBank employees, including
9 executives, volunteered numerous hours in rehabilitation
10 projects. Although the houses have been sold, we still
11 refer to several of those houses as NationsBank houses
12 because of the extensive work undertaken by the bank
13 employees as well as the support that they provided to
14 the new homeowner.
15 NationsBank has also provided financial support
16 for our multi-family developments. The bank provided an
17 equity investment for our second tax credit development.
18 Most importantly, the bank provided both construction and
19 permanent financing for the renovation of four former
20 housing authority complexes that we were able to
21 acquire. This produced 171 affordable rental homes and
22 also provided a cash flow stream to our organization that
23 enables us to carry out other affordable housing
24 efforts.
25 Not only has nations been a good partner as
26 Charlotte-Mecklenburg Housing Partnership carries out its
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1 mission of providing affordable housing, but the bank has
2 been instrumental in several other areas that improve
3 housing in our community.
4 NationsBank has been involved in a Hope 6
5 project to revitalize a very distressed public housing
6 complex and to remake it into an economically integrated
7 community. This project was done in cooperation with the
8 Housing Authority, the city, and our organization. The
9 same team is now uniting to revitalize another extremely
10 distressed public housing community, and we are waiting
11 word on our Hope 6 application for this project.
12 NationsBank is innovative in their investments,
13 with the impact of the project typically taking precedent
14 over the return of the project, and thus many of the
15 investments are structured to help to build the capacity
16 of the nonprofit developers and to have a significant
17 impact on the neighborhood.
18 Perhaps the most valuable service NationsBank
19 has provided to our organization is the dedication of
20 senior level executives at the board level to serve on
21 the board of directors, board committees, and as
22 consultants on specific issues.
23 Whether it's a video to promote our organization
24 or an analysis of a complicated loan, we know that we can
25 count on NationsBank to help us out.
26 In summary, NationsBank has truly been a partner
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1 in our housing and community redevelopment efforts, and
2 we look forward to a continued relationship with them. I
3 believe that they care about the communities that they
4 serve and that they will develop strong partnerships in
5 new communities.
6 MS. SMITH: Thank you very much. One
7 question.
8 MR. FRIERSON: Mr. Butts, I wanted to follow up
9 on your observation that this is an unusual position for
10 your organization to be in.
11 We've heard a lot of criticism today about the
12 NationsBank CRA pledges lacking in specifics, and I
13 believe you were -- just when you ran out of time, you
14 were getting ready to discuss the -- your views of the
15 pledge. And I'd like to give you the opportunity, if you
16 would like, to expound on how you view the pledge.
17 MR. BUTTS: Thank you. What happened was we
18 sat down that day with them and talked in real terms
19 about what this $350 billion would really mean, that we
20 didn't want it to be a hollow -- just a number that
21 looked good.
22 I think one of the examples that somebody
23 commented was we viewed this in contrast with the
24 Citibank/Travelers commitment. They haven't even met
25 with us to talk about their commitment yet. The
26 NationsBank commitment and mortgage production loan
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1 equals the Citibank/Travelers total commitment.
2 And I think the difference -- the difference is
3 that there's something backing up this commitment. It's
4 not the commitment in terms of public relations. It's
5 commitment in terms of what they really think they can
6 do, what real programs are going to come out there, and
7 that the real commitment comes from the top down. I
8 mean, I've seen them grow into these commitments.
9 So our history with them is long enough and
10 we've done enough agreements with enough banks that I can
11 see the difference between what a NationsBank commitment
12 means and what some other bank commitment means, and
13 that's really why I'm up here talking about them as
14 opposed to talking about other people who have merged.
15 This is the first time we've done this.
16 And to me, I put a lot on the line to come out
17 and say this, but I believe it to be true. If I didn't
18 believe that they were the kind of people that they were
19 doing this and that these commitments are real
20 commitments and not public relation commitments or stuff
21 to make it look good but they really want to change these
22 communities -- I mean, our first bunch of meetings were
23 not pleasant experiences for either one of us, you know,
24 and to see that movement from those meetings to the
25 meetings we have now has shown me that this is real. So
26 I can stay here and say with conviction that this is
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1 real.
2 MR. FRIERSON: Thank you.
3 MS. SMITH: Thank you very much for your
4 testimony this afternoon. And with that, we'll move on
5 to Panel 14. We'll go ahead and start. And if there are
6 other members of the panel, they can join us as we go
7 along. Mr. Espinosa.
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