Public Meeting Regarding NationsBank and BankAmerica - Panel 10
Thursday, July 9, 1998
Transcript of Panel Ten
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4 MS. SMITH: Okay. We can start. If you'll say
5 your name. I can't see from here so if you can tell us
6 who you are.
7 MS. JOHNSON: Good afternoon, I'm Barbara Johnson
8 and I'm the cofounder and the Executive Director of the
9 Women's Initiative for Self-Employment here in
10 San Francisco.
11 We are a nonprofit 501C3 founded in 1988. We
12 provide micro-enterprise training, financing and support
13 services to low-income English and Spanish speaking women
14 who are residents of the Bay Area. Women come to Women's
15 Initiative because our training and financing is sensitive
16 to who they are, their needs, their lives, and because we
17 provide them training and support to grow and start
18 successful small businesses.
19 We serve an exclusively low-income female
20 clientele. 70 percent of our clients are women of color,
21 25 percent of our clients receive their training in
22 Spanish. We've provided self-employment training,
23 assistance, financing to more than 3500 women. More than
24 800 small business start-ups and expansions have begun
25 because of our assistance. We've made more than 150 loans
26 totaling more than a half a million dollars and leveraged
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1 in excess of 850,000 of commercial lending. And we
2 maintain historic default rate of five percent in our loan
3 fund with poor women who don't know how to manage money;
4 right? Yep. And who shouldn't really be able to borrow
5 money to start a business, but they sure do.
6 And we've been able to achieve this competency
7 and develop our capacity in part because of the long-term
8 support of Bank of America. We've received generous and
9 consistent in kind general operating loan fund capital and
10 special event support from Bank of America since the
11 planning stages in 1987. The total of this support has
12 been in excess of $620,000. We definitely consider Bank
13 of America a partner with us.
14 Bank of America foundations early and continued
15 support have attracted other corporate and philanthropic
16 support which together have allowed Women's Initiative to
17 help women change their lives and the lives of their
18 families and the lives in their communities.
19 I'm concerned that this kind of support will
20 change with this merger. I want assurances that it won't.
21 I know that Bank of America has a concerned investment
22 with us and we want to make sure that this return on this
23 investment can continue. There is a need and, indeed, the
24 need is increasing.
25 My comments today are not directed against this
26 merger. I'm here to ask this panel to seriously consider
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1 imposing some conditions before the merger is approved.
2 Women's Initiative feels strongly that this new merged
3 bank must promise an equal or larger commitment of
4 philanthropic support over the next ten years and more to
5 California nonprofit organizations which provide critical
6 community, economic, social development assistance to
7 low-income and disenfranchised communities. We're
8 requesting that the merged bank's foundation maintain
9 staffing, grant making discretion in California and in
10 San Francisco. Without this kind of assurance, BofA's
11 historic, informed, aware and what we consider sensitive
12 community investment and corporate citizenship policies we
13 feel are in danger of being eroded.
14 I maintain, it's impossible to have your finger
15 on the pulse of a state, let alone that of a specific
16 urban or rural community from the far reaches of the east
17 coast. California, its communities, its economies, its
18 challenges are nowhere else on earth like anywhere else on
19 earth, that's unique, it can't be known from afar. So
20 without an assurance of continuing presence and a
21 charitable funding commitment by the merged bank over the
22 next ten plus years which is equal or greater, we're
23 afraid of losing this very important support.
24 And finally, I feel that the people and the
25 corporate citizens of California will lose an important
26 corporate role model and leader within California national
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1 banking industry and I don't think that the leader of a
2 pack should be made lame.
3 And so we really would like to have assurances
4 and some kind of stipulations made that the important
5 philanthropic work and history will be maintained.
6 There's all sorts of talk and commitment about
7 lending to housing to businesses and I understand that
8 because that's a bank's business. There has been nothing
9 that I know of about the continuation of corporate
10 philanthropic support and I'd like it considered, please.
11 MS. SMITH: Thank you. Next.
12 MS. JUNG-LEE: Good afternoon, I'm Lynette
13 Jung-Lee with the East Bay Asian Local Development
14 Corporation. I also want to express my concerns regarding
15 the merger of Bank of America with NationsBank.
16 EBALD, which is the acronym for our organization,
17 is a 23 year old community development corporation which
18 develops affordable housing and community facilities
19 including child-care centers, nonprofit offices and
20 storefronts for small businesses. We also do planning and
21 organizing work in targeted neighborhoods and we provide
22 assistance and micro-loans to small businesses. Our
23 target population is low-income residents of the East Bay
24 and with a special focus to the Asian and Pacific Islander
25 community.
26 We have worked with Bank of America for many
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1 years. BofA has assisted EBALD by making construction
2 loans for multi-family housing projects and being a
3 permanent lender for our Asian Resource Center building
4 which houses many nonprofit organizations and small
5 businesses.
6 BofA has also assisted by providing grants for
7 programs such as a pilot Bay Area wide collaborative for
8 individual development accounts for low-income households
9 to build up individual assets. And we have many partners
10 in this process, including the Women's Initiative. BofA
11 has also supported programs which develope capacity for
12 community development practitioners and organizations,
13 such as the Leadership Academy with the Development
14 Training Institute.
15 A really important element for BofA's work in the
16 community is that many of their community development
17 staff live in or work in the neighborhoods in which the
18 revitalization efforts are taking place so that they have
19 an understanding of and experience with the community
20 needs and dynamics and the organizations who are involved
21 with that transformation process.
22 If the merger results and bank community
23 development staff being headquartered in North Carolina,
24 reviewing loans and grant proposals for projects and
25 programs in California, there will not be that same kind
26 of understanding. It is critical, therefore, that there
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1 continue to be bank community development staff
2 headquartered here in California. It is also important
3 that the structure of the BofA Community Development Bank
4 be maintained, recognizing the greater flexibility and the
5 various strategies that such an entity can have and can
6 play in terms of revitalization efforts.
7 It is also important that NationsBank, who I
8 understand has a CDC, not compete with the nonprofit CDCs
9 and HDCs that are here in California, but that the banks
10 instead provide a nurturing and supportive role to the
11 CDCs and HDCs who are based here.
12 The BofA and NationsBank merger must make a clear
13 commitment to California. We believe that we must -- we
14 want to see some specific commitments around specific
15 programs and I ask that you record the continuance of the
16 Community Development Bank, the commitment to affordable
17 housing, the economic development and rural initiatives,
18 the continuance of the Bank of America foundation, and an
19 increase in the level of charitable contributions above
20 what BofA has already offered in past years. Thank you.
21 MS. SMITH: Thank you.
22 MR. ISHI: It is very nice to follow Lynette
23 Jung-Lee of the East Bay Asian local corporation. Our
24 organizations house her building and thank you for your
25 long-time support.
26 Good afternoon, my name is Tomoji Ishi, I'm a
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1 sociologist with a Ph.D. from the University of California
2 Berkeley. And while I'm teaching sociology and Asian
3 American studies at the City of San Francisco, I also
4 serve as a senior researcher and a senior project manager
5 of the Japan Pacific Resource Network which is called
6 JPRN. JPRN is an Oakland based community organization
7 which has been in 13 years in the forefront of social
8 corporate responsibility advocacy for the last 13 years by
9 educating banks and corporations in both in America and
10 Japan. JPRN is currently conducting CRA research project
11 through which we examine the bank -- California based
12 banks small business lending practice as well as branch
13 activities.
14 Also, next Monday, July 13th, we are sponsoring
15 an Oakland based community economic (unintelligible) forum
16 with an Oakland based community organization and the City
17 of Oakland. This Oakland forum will focus on the impact
18 of the cities of major mergers by banks, including the
19 BofA and NationsBank and how it affect communities of
20 color and the poor.
21 I am very troubled by the proposed acquisition of
22 Bank of America by NationsBank. It is my belief that this
23 acquisition will have many adverse effects particularly on
24 the low-income and the minority communities. However,
25 today out of many adverse effects, I will focus on my
26 comments on the issue of the branch closures.
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1 It has been recognized that the larger the banks
2 become, the more branch closures and consolidation take
3 place. This phenomena will be accelerated by bank
4 mergers. The Bank of America acquisition proposal
5 (unintelligible) our concerns. For example, from January,
6 1995, to June, 1997, Bank of America closed 63 branches in
7 California and 11 offices in the San Francisco Bay Area,
8 including our neighborhood in Oakland. Although Bank of
9 America has a policy of notifying communities that will be
10 affected by bank closures, their practice has been to
11 notify such communities only after the decision has been
12 made to close the banks.
13 Under the proposed acquisition of Bank of
14 America, its headquarters in San Francisco will cease to
15 exist. Instead, the fate of California, the state who has
16 the largest economy and most diverse population in the
17 nation, will be determined by the NationsBank headquarters
18 in North Carolina over 3,000 miles away.
19 JPRN, our organization, also seriously is
20 disturbed by the practice of NationsBank's disregard. Our
21 investigation indicated -- identified the closing of 35 or
22 14 percent of bank closure -- branch closure during the
23 time in the last two years, thereby the number of branches
24 have been reduced to 213 today in North Carolina,
25 Nationsbank's home state.
26 According to a CRA advocacy group in North
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1 Carolina, NationsBank has been closing bank branches while
2 opening it's subcity (unintelligible) offices which
3 charges higher interest rate loans to a disproportionately
4 large number of African American and low-income persons.
5 Additionally, Mr. Hugh McColl, Jr., CEO of
6 NationsBank, explicitly stated at one of the meetings with
7 CRA advocacy groups in San Francisco that the decision to
8 close branches is up to NationsBank and then not to local
9 committees. How many branches will be closed or
10 consolidated due to the acquisition of Barnett Bank in
11 Florida by Nationsbank? The total number will be 204.
12 Therefore, we believe that numerous closure and
13 consolidations also would occur in the state of New Mexico
14 and Texas where about 234 NationsBank and 201 Bank of
15 America exist.
16 Branch closing activities are not made at random
17 but selectively. A conspicuous example is seen in
18 NationsBank's activities in its home state. We were able
19 to identify zip code numbers of these 30 closed branches
20 out of the 35 and then it was found that 56.3 percent of
21 the communities where branch closure occurred were
22 predominantly either African Americans or the poor
23 according to zip code census data.
24 Given this history of the NationsBank, we are
25 compelled to believe once the merger takes place that this
26 pattern of branch closure will continue. And the branch
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1 closure create serious adverse impact which include
2 layoffs, loss of capital access, erosion of a community
3 economic development and also personal services. It is
4 the consumers resident and small business of color and the
5 poor which would face these harmful impacts.
6 And this unless NationsBank discloses their
7 potential branch closing, I urge the Federal Reserve Board
8 not to approve this merger. Such information is necessary
9 to give the public adequate information with which to
10 comment about the merits of this proposal.
11 I am requesting the NationsBank to disclose any
12 intent of branch closure, not only in the San Francisco
13 Bay Area, but also in other parts of the country where the
14 two banks currently offer service. Thank you for giving
15 me my opportunity to speak.
16 MS. SMITH: Thank you.
17 MR. STERN: Honorable committee, my name is John
18 Stern. And the President and CEO of Wesley Housing
19 Development Corporation of Alexandria, Virginia, and I'm
20 here to testify in favor of the merger of NationsBank and
21 Bank of America.
22 Wesley Housing has developed over a thousand
23 units of housing affordable to those with low and moderate
24 incomes in northern Virginia just across the Patomac from
25 our nation's capitol. One of our larger communities
26 containing 162 apartments reputed to be one of the first
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1 garden apartments in the United States remains as
2 affordable housing because NationsBank lent us over $5.6
3 million to acquire it. But more significant was the help
4 that was provided by their Community Development
5 Corporation which assisted my predecessor in negotiations
6 with Mobil Oil to buy back a $2 million note for 45 cents
7 on the dollar.
8 NationsBank's CDC provided the required $909,000
9 as an equity investment into a partnership that was
10 created to facilitate the purchase of the note. Today we
11 are subsidizing 17 very low-income households at this
12 community costing $32,000 per year out of the rents that
13 we collect there.
14 The supported residents are typically elderly,
15 living on social security, and have lived at this property
16 for over 20 years. With no federal Section 8 subsidy
17 available, these long-time stabilizers of the community
18 could not continue to live at our property without our
19 support.
20 Because NationsBank CDC enabled the preservation
21 of this property and agreed to our internal subsidy
22 program, these 17 households, along with their 145
23 neighbors, who mostly earn very low to moderate incomes
24 were not displaced when Mobil sold the property and are
25 able to live in decent, safe and sanitary housing in one
26 of the highest income areas in the United States.
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1 Having run two nonprofit housing development
2 companies here in the Bay Area and having administered the
3 Affordable Housing Program for the Federal Housing Finance
4 Board in Washington, I know firsthand the good work of
5 both Bank of America and NationsBank and their CDCs in the
6 affordable housing arena.
7 While some might say that more could be done by
8 both of these institutions or that this consolidation is
9 anticompetitive or will decrease services to communities
10 of color and low incomes, I believe that each has tried in
11 their own part of the country to serve those with special
12 needs.
13 I trust that this combined company will be
14 stronger than the parts and will live up to its commitment
15 to serve the country better with its greater resources and
16 coast-to-coast reach.
17 From my experience, there's little overlap in
18 their present service areas. And unlike the marriage of
19 Citibank and Travelers Insurance, both entities being
20 reviewed today, have weathered the storms of community
21 dissent to emerge stronger and better corporate citizens.
22 These strengths are spotlighted by the new
23 entity's $350 billion lending commitment to the
24 communities most needy groups, 115 billion of which is for
25 affordable housing, and 25 billion for nonprofit CDCs such
26 as Wesley Housing. I applaud that commitment and humbly
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1 ask your favorable resolution of these two banks'
2 requests. Thank you.
3 MR. LAWSON: Good afternoon. I'm Hank Lawson,
4 the Executive Director of Software Community Development
5 Corporation, a neighborhood based nonprofit housing
6 development corporation located in Dallas, Texas. I'm
7 here to speak in support of the proposed merger.
8 Our neighborhood in south Dallas is classified by
9 the city as a level five neighborhood. On a scale of one
10 to five, with five being the worst, and indicators over 50
11 percent of the residential housing units are in need of
12 substantial rehab, over 50 percent of the residents live
13 below the poverty level and over 50 percent of the
14 households being female head of households. In our
15 neighborhood, those residencies are well over 90 percent.
16 The 1990 median income for the -- strike that --
17 that comprise our target neighborhood are $9,000 and
18 $13,000. This is a neighborhood that until very recently
19 was the domain of the Park Row Posse, a drug gang.
20 In 1993, NationsBank made a long-term commitment
21 to south Dallas. In 1994, our nonprofit corporation South
22 Fair joined with NationsBank to form a joint venture to
23 seek the revitalization of this neighborhood. This is a
24 neighborhood that has been noted for the disinvestment by
25 both the public and private sector. Noted for its poor
26 educational performances and it's wide open drug
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1 trafficking.
2 Since 1994, our partnership has gotten a
3 long-term revitalization concept plan for this
4 neighborhood approved and adopted by the Dallas City
5 Council. We have began the revitalization process within
6 the acquisition rehabilitation of several hundred more
7 family rental units. Most importantly, though, this
8 partnership and our efforts has allowed the integrated
9 community building initiatives in the area of public
10 safety, economic development, and human services.
11 NationsBank's step up to the plate has allowed
12 other players to come to the table. Most notably the
13 Enterprise Foundation and the City of Dallas. Three and a
14 half years later, the neighborhood is more safer, our
15 educational scores for elementary kids are up, our tenant
16 profile is improving, the median income is on the way up
17 and the investment resources are coming into the
18 community. Because NationsBank dared to go where others
19 said "No," because NationsBank committed to a long-term
20 commitment, because NationsBank saw and understood the
21 need for impact investment, our neighborhood is on the
22 rebound.
23 Other lenders are now coming to the table, more
24 public and private resources are now targeted for our
25 neighborhood. This is due in large part to the initial
26 efforts of NationsBank's CDC. We can now see the
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1 beginning of the stabilization of needed neighborhood
2 institutions and assets, our schools, our nonprofit
3 groups.
4 We, the residents and the business leaders, have
5 a growing confidence that we can and will save our
6 neighborhood. We can have quality and affordable housing,
7 we can have better schools, we can have diminished the
8 high crime presence and have meaningful leisure outlets
9 for our families.
10 Other nonprofits with the capacity to make it
11 happen have benefited also by Nationsbank's Intercity
12 commitments. We have worked hard to make our neighborhood
13 a good place to live, work and play and we believe we're
14 well on our way to doing just that.
15 Based on our experience with NationsBank we
16 wholeheartedly support this merger realizing that more
17 resources should flow for similar neighborhoods.
18 MS. SMITH: Thank you. Mr. Gonzales.
19 MR. GONZALES: Thank you. My name is J.R.
20 Gonzales, I'm the immediate past Chairman of the Hispanic
21 Chamber of Commerce in Austin and currently vice-chair of
22 finance for TAMACC, the Texas Association of Mexican
23 American Chambers of Commerce which is about 29 chambers
24 strong. But I'm here this afternoon not to testify on
25 their behalf but me personally. I'm the President and CEO
26 of JRG Communications, and according to my CPA, I qualify
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1 as a nonprofit organization, I made no money last year.
2 We employ about five people. And I'm a customer
3 of NationsBank. It wasn't my choice. My bank got gobbled
4 up by Nations many, many years ago, about ten years now,
5 but I've been with Nations and been with them ever since.
6 As a customer, I believe I have the right to choose who I
7 bank with and Nations has been my bank of choice. I don't
8 always agree, I always don't get along. There's sometimes
9 we have a problem. But as far as customer service, as far
10 as resolving some of the issues that I bring forward,
11 NationsBank has been excellent.
12 As I hear a lot of testimony today, I can't help
13 but wonder, back home or in Austin -- or back in Texas
14 where we can still use bilingual education for our
15 children, I'm the first one to jump in when there's a
16 fight to be fought. And if there is an inequity, if
17 there's an injustice if there's something that deals with
18 something of imparity for minorities, I'm the first one
19 there, I really am. But with the same respect when I look
20 at this banking thing and this merger, this is based on
21 business and the future of our economy in our country.
22 As you hear all the statistics of the Imparities
23 or inequities from the different minority communities, I
24 can't help but wonder how many -- in what arena is there
25 not inequity. We're going to see it in banking and we're
26 going to see it in hiring practices, we're going to see it
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1 in social settings, we're going to see it in any number of
2 places, so being a minority and not getting a fair shake
3 isn't something new. So to point to the banking industry
4 I think is a little unfair. But in the same respect when
5 I look at NationsBank and some of the outreach that
6 they're doing, I'm very, very encouraged and I'm
7 encouraged by this merger because I see two basically
8 sound banks merging together to do a little more outreach.
9 Does discrimination or should I say disparity exist? Yes.
10 Are we happy about it? No. Will it change? I believe
11 so.
12 Now, speaking -- and I'm going to use Texas
13 because I really can't attest to the rest of the country.
14 But within the next ten to 50 years, 51 percent of the
15 State of Texas will be Hispanic. You add the African
16 American and the Asian component to that and that's going
17 to be quite a few folks. And any business cannot afford
18 not to do outreach and service its customers. So as the
19 minority population grows, it's going to be inevitable
20 that if any business is going to survive it's going to
21 have to start targeting those markets and make more
22 inroads into the community.
23 Has NationsBank and Bank of America been perfect
24 so far? By no means. But a lot of it is not, I believe,
25 done intentionally, a lot of it is of ignorance. We need
26 to see more minorities, more people of color on the board
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1 of directors, in higher positions with these banks and
2 institutions in every institution across the country. And
3 then will we start seeing change.
4 But I'm very proud to be a customer of
5 NationsBank because, as a customer, as a small business, I
6 have the right to choose, and I've chose NationsBank to be
7 my bank. One of the reasons is because they send me the
8 canceled checks so I can kind of reconcile my own
9 accounting every now and then. I'm not very good at that.
10 When I started the business 14 years ago, I
11 learned a lot of things. I never took a business course.
12 Minority owned business upstart, I was young, I was
13 foolish, for all intents and purposes. I should have
14 thrown in the towel several times but I didn't. And I
15 think that says something for the culture, if you will.
16 My parents never got a bank loan, my grandparents
17 never got a bank loan. Heck, I've never had a bank loan.
18 I'm educated, I'm in business, I've been in business for a
19 number of years but a lot of that stuff is very
20 intimidating. So I'm proud to see that NationsBank, at
21 least in Austin, Texas, they're working with the Hispanic
22 Chamber of Commerce and other organizations to do the
23 necessary outreach to better train and better prepare
24 minority businesses to fill out the paperwork properly.
25 Because even though you see very few loans, I can't help
26 but wonder how many of those loan applications were
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1 prepared properly and not rejected on the basis of a
2 person's ethnic background but on the basis that it wasn't
3 filled out properly?
4 So taking ethnicity out of it and let's just
5 strictly look at business, it's good business for these
6 two banks to merge. It's good business to start doing
7 outreach in the minority communities. And the minority
8 communities -- and it's frustrating because every time you
9 talk to minority business, some people want to equivocate
10 minority business with inferior product and that's not so
11 and that needs to change. But to make it change, minority
12 businesses all across the country need to step up to the
13 plate and work just a little bit harder and make sure we
14 fully understand what's necessary. And for these reasons,
15 I encourage the merger of these two institutions. Thank
16 you very much.