Public Meeting Regarding NationsBank and BankAmerica - Panel 13
Thursday, July 9, 1998
Transcript of Panel Thirteen
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1 MR. FRIERSON: Just to clarify one point.
2 The comment period was extended by the board. It
3 expires today.
4 Last week there was a submission sent to
5 current commenters, and the comment period for the
6 commenters who received that submission was extended to
7 July 17th, which is the same day that people appearing
8 at the meeting today can supplement their comments.
9 MS. SMITH: Thank you for the correction.
10 If there are no questions from the panel,
11 then we'll go on to the next one. Thank you very much.
12 (Pause in proceedings.)
13 MS. SMITH: If we could start with
14 Mr. Devine.
15 MR. DEVINE: That's me.
16 Good afternoon. My name is Richard Devine
17 and I'm here on behalf of the Center of Community
18 Change. The Center for Community Change is a national
19 nonprofit organization headquartered in Washington D.C.
20 that provides technical assistance and research on
21 behalf of local community-based organizations serving
22 low-income and predominantly minority constituencies.
23 For almost 30 years the center has been
24 especially active in advising communities groups on
25 their efforts to develop and implement community
26 reinvestment strategies designed to stimulate the flow
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1 of private lending and investment to underserved urban
2 and rural communities.
3 The merger of NationsBank and Bank of
4 America, two of the nations largest banks, promises to
5 have important and profound implications for the
6 residence and businesses located in the many markets
7 currently served by these institutions.
8 CDC is mindful of the fact that many
9 community groups and different markets served by one or
10 both of these banks have complained about various
11 inadequacies in their CRA performance records.
12 Further, some of these local citizens groups
13 have also raised questions about whether the proposed
14 consolidation will result in reductions in lending or
15 deterioration in the quality of the essential banking
16 services for their areas.
17 In an effort to address some of these
18 concerns that have been expressed, the two banks
19 announced on May 20th they would make a ten-year, $350
20 billion community development commitment.
21 While substantial and impressive on its face,
22 the commitment lacks two important details. Lacks
23 important details about how this ambitious effort will
24 be undertaken, not just for the 22 states now served by
25 these two institutions, but for two -- new market areas
26 as well.
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1 A detailed implementation plan should be
2 required by the Federal Reserve Board should the
3 proposed merger be approved.
4 Additionally, we believe the merged
5 institution should be required as a condition for
6 approval to establish and capitalize a new nonprofit
7 corporation that would have two principal purposes.
8 First, to improve access to and the terms of
9 credit for low and very low income households and market
10 areas affected by the proposed merger.
11 And, second, to preserve the affordable
12 housing inventory that is either rapidly being converted
13 to market-rate properties in places like the greater San
14 Francisco Bay Area or being left to deteriorate at an
15 accelerated place in communities where the conditions
16 for conversion to market-rate housing have yet to
17 evolve.
18 We advance this proposal because past
19 experience with mergers of lesser scope and magnitude
20 has demonstrated conclusively that multimillion or
21 billion dollar loan commitments, however
22 well-intentioned or implemented, do not address
23 fundamental issues of income and asset and equality that
24 permeate our society.
25 Also, we believe very strongly that
26 communities and populations now credit-scored below the
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1 minimum established for participation in regulated
2 credit and banking markets should be accorded the same
3 benefits as the senior executives of NationsBank and
4 BankAmerica who realize great personal gain from the
5 favorable regulatory ruling.
6 With funds equal to those earmarked for the
7 care and comfortable retirement of senior executives, it
8 will be possible to acquire, rehabilitate and preserve
9 for at least an additional 35 years approximately 75,000
10 affordable housing units.
11 It is our understanding that as part of the
12 proposed merger senior executives of NationsBank and
13 Bank of America shall receive at no cost to them options
14 to purchase stock of a new holding company that price is
15 not available to the general public.
16 In addition to this benefit, senior
17 executives of each institution shall receive lump sum
18 cash payments and other compensation typically referred
19 to as golden parachutes.
20 A recent 8K filing by NationsBank has stated
21 that the company expects to incur pre-tax merger and
22 restructuring items of approximately $1.3 billion. What
23 fraction of this total amount will be devoted to exit
24 cost related to contract terminations and other
25 reorganization costs has yet to be disclosed.
26 But a recent article in the San Francisco
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1 Chronicle stated that the five highest paid BankAmerica
2 corporate officers would collect a total of $65 million
3 in severance pay and windfall stock profits if they lose
4 their jobs, and, and I quote, "A thousand of the senior
5 managers are also covered by San Francisco banking
6 giant's generous golden parachute program. If they all
7 get dumped, they collectively would be entitled to
8 severance benefits estimated at well into hundreds of
9 millions of dollars."
10 Our proposed nonprofit organization will be
11 capitalized from two sources, a cash contribution from
12 NationsBank and Bank of America and other institutions
13 in similar circumstances such as Wells Fargo, Citicorp
14 or Western Travelers, equal to the sum of all exit costs
15 related to the employment of senior executives and stock
16 options equal in number and in all other respects to
17 those granted senior executives of the affected
18 institutions as part of actions requiring your
19 regulatory approval.
20 The initial cash contribution will match on a
21 dollar-for-dollar basis the sum of all golden parachute
22 payments, will allow the new corporation to commence
23 immediately and the stock options, assuming the
24 prosperity of the new holding company will provide
25 funding for future years.
26 If these measures are implemented, there
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1 should be no need for additional funding.
2 I see that my time has expired. We have
3 submitted a written statement for the record here.
4 Essentially the position that we are espousing is that
5 the citizens of the communities affected by this merger
6 should be treated equally as senior executives of each
7 of these institutions, and the great personal benefits
8 they should be received should be shared and distributed
9 in the communities that they are supposed to serve.
10 MS. SMITH: Thank you very much. Mr. Lewis.
11 MR. LEWIS: Good afternoon, Madam Chairman,
12 members of the board, ladies and gentlemen from the
13 audience. My name is Al Lewis. I came here to share my
14 community's concerns and to ask the board for remedies.
15 I am the coordinator for the Save the Bank of
16 America Ocean Avenue Faxon Branch. A branch that
17 represents three neighborhoods and a community of about
18 50,000 people.
19 A year-and-a-half ago this bank closed, after
20 75 years of profitable operations. The bank was the
21 only one that we have in the immediate community. The
22 closest Bank of America is about a mile away or two
23 miles.
24 Bank of America told us at a community forum
25 that they would be happy to work with us to try to get
26 another bank for the community. The board of
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1 supervisors in San Francisco had a hearing and they
2 adopted the resolution in which Supervisor Medina was
3 the writer, endorser of it, and it was sponsored -- it
4 was co-sponsored by Supervisor Tang, Behrman{}, Yaki,
5 Brown and others.
6 And essentially what it says was, whereas the
7 Bank of America, as a good corporate citizen, should do
8 whatever it can to keep the Ocean Faxon Branch open or
9 find a substitute financial institution to serve the
10 neighborhood, now, therefore, be it resolved that the
11 Board of Supervisors urges the Bank of America to keep
12 open its Ocean Faxon Branch or find a substitute
13 financial institution to serve the neighborhood before
14 they close the branch.
15 Well, needless to say, that Bank of America
16 ignored the community, it ignored the Board of
17 Supervisors and ignored its valued customers and decided
18 to close the branch on March 21st, 1997.
19 Since that time, we've had downsizing of the
20 community. Since the major portion of over 5 million --
21 I am sorry, over $50 million in deposits were removed
22 from the community into -- split up into three other
23 communities where they had existing banks.
24 We have no bank. The merchants on the strip
25 are stranded for their immediate cash. Seniors are
26 affected and impacted because they have direct deposits
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1 of Social Security. We have no lending, there are no
2 wire services for the Latino citizens or for the Chinese
3 citizens who use the wire services.
4 I'm also the Committee Chairperson for the
5 alternative banking, Committee for Alternative Banking.
6 When I wrote to Nancy Pelosi, our congress women, she
7 told me that, "In response to the Supreme Court ruling,
8 I am co-sponsoring House of Representative Bill 1151
9 which would codify the national longstanding policy of
10 the National Union Administrative Board regarding the
11 field of membership of the federal credit union."
12 In other words -- in other words, we tried,
13 the Committee for Alternative Banking, tried to find a
14 credit union in our community to ask them to expand
15 their services so that they could serve the credit
16 needs, the lending needs of all of the community
17 citizens.
18 However, the initiation of the American
19 Banking Association in which Bank of America is a major
20 contributor and a major member of sued the National
21 Credit Union Association to prevent them from expanding
22 into the community and expanding so that citizens in the
23 community might find financial services and products
24 that the bank had left them without those services.
25 So I have a letter here that I say that the
26 Bank of America is not in compliance with the Federal
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1 Community Reinvestment Guidelines, and, since it has
2 reinvested little or no monies into the OMI community,
3 its agency as a nonprofit organization or its schools
4 and it violates the CRA Act.
5 In addition to that, the State of California,
6 the Attorney General's Office has sued the Bank of
7 America for fraud and about ten other complaints the
8 Attorney General has in case No. 968484 in the San
9 Francisco Superior Court.
10 In addition to that, the State of Texas, the
11 banking regulators are suing the NationBank for
12 circumventing the Texas banking laws of $5.8 billion
13 which they took out of the State of Texas and moved to
14 the headquarters of NationsBank.
15 So what really counts here? What counts is
16 the public and the Federal Reserve Board and what Allen
17 Greenspan will do about this merger. This process was
18 designed to regulate and supervise national banks to
19 assure a safe and sound competitive National Banking
20 system that supports the citizens' communities and
21 economies of the United States. It is a process to
22 bring the banks into compliance with the Community
23 Reinvestment Act and the expansions of access to credit
24 capital and the development of affordable housing and
25 supporting small businesses by providing startup and
26 expansion finance and working capital.
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1 Thank you for the opportunity to speak in
2 behalf of those low-income and disadvantaged and at-risk
3 citizens in my community, and I hope that the board not
4 only listens but they will act. Thank you.
5 MS. SMITH: Thank you very much. Mr. Omoto.
6 MR. OMOTO: Thank you. My name is Martin
7 Omoto. I am the Executive Director of the California
8 Nevada Community Action Association representing
9 community action agencies in both states to provide
10 direct services to over 4 million low-income people in
11 both states.
12 Currently our association has no position on
13 the proposed merger, but I am here simply to state and
14 raise concerns of the proposed merger's impact on low-
15 income Californians and Nevadans, particularly those in
16 rural areas.
17 First, many of our agencies in California and
18 Nevada, and they are both public and private nonprofit
19 agencies, have already and effective partnership with
20 Bank of America on local community programs. Our
21 concern is we don't want to lose that.
22 Second, we are also concerned the proposed
23 merger could mean or could result in bank branches,
24 especially those in rural areas, and also low-income
25 areas being closed. We are concerned that the proposed
26 merger could result in the reduction or elimination of
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1 services impacting low-income people in Nevada and also
2 in California. We are concerned that the proposed
3 merger could mean the increased -- a result in increased
4 fees that would make necessary banking services for the
5 elderly, for the low-income people in the state less
6 accessible.
7 Concern that the proposed merger could impact
8 the upcoming mandated electronic fund transfer of
9 benefits for retirees and SSI recipients, millions in
10 the state who are unbanked and might find it difficult
11 to get an electronic transfer account.
12 Recently in the San Francisco Chronicle, I
13 believe, the CEOs of both NationsBank and Bank of
14 America recently wrote their commitment, their pledge
15 for $350 billion in local community lending is a floor,
16 not a ceiling.
17 Our association is here to make sure or to at
18 least raise a concern that floor is not a trap door for
19 low-income people.
20 Finally, we want to applaud the Federal
21 Reserve Board members here that -- of holding these
22 hearings in the first place and we urge you to hold
23 additional hearings in California. I also personally
24 applaud your stamina. So thank you.
25 MR. LEWIS: I want to extend my thank you
26 also for the board's patience and stamina.
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1 MS. SMITH: Ms. Gibson.
2 MS. GIBSON: Good evening. My name is Rose
3 Gibson. I am a city council woman in the city of East
4 Palo Alto. I've also chaired a coalition to bring a
5 bank to East Palo Palo Alto and most recently chaired
6 the Special Banking Task Force which represented
7 community organizations which included the Community Law
8 Project, which I've listed as representing today.
9 I appreciate the opportunity to express the
10 community's concerns regarding the merger of Bank of
11 America and NationsBank. And this clearly here just to
12 be sure we express the reasons why we have some
13 concerns.
14 Over the past years Bank of America has
15 endorsed the notion of addressing the banking needs of
16 low and moderate income customers. This can be seen in
17 their community reinvestment projects such as the Jam
18 and Hoops Basketball Program and the East Oakland Youth
19 Development Center. However, East Palo Alto is one
20 community that Bank of America did not include.
21 East Palo Alto is a city with a population of
22 approximately 25,000, which is predominantly African
23 American and Latino. Throughout its history, East Palo
24 Alto has been greatly underserved by banking
25 institutions.
26 Fifteen years ago many of the bank branches
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1 that once existed in East Palo Alto closed. Bank of
2 America was one of the first to leave. As a result,
3 residents must travel long distances to deposit their
4 paychecks, to withdraw cash and to get change for their
5 businesses.
6 Local merchants report that they are unable
7 to develop the kinds of relationships with lenders that
8 could result in access to credit. In addition, the city
9 reports having difficulty securing loans as well as
10 other discriminatory lending practices despite federal
11 Fair Lending Laws. The Home Mortgage Disclosure Act
12 data for 1996 suggests that only 68.42 percent of home
13 loan applications from East Palo Alto were ultimately
14 approved.
15 In addition, local businesses reports having
16 difficulty securing loans and receiving good rates of
17 interest on their loans.
18 Seventy-two percent of the small businesses
19 responding to an EPA Can Do, which is a local CDC,
20 survey reported that financial institutions for small
21 businesses in the community, they reported that they
22 were -- they rated them either very poor or poorly.
23 Very poorly at 48 percent and poorly at approximately 24
24 percent.
25 Only eight percent of the small businesses
26 responding to the East Palo Alto Can Do survey reported
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1 that financial institutions met their credit needs.
2 Because of this, East Palo Alto developed a
3 program called the financial services incentive program.
4 This program was developed to make it easier and more of
5 an incentive for banks to locate in East Palo Alto. As
6 a result, Bank of America began to provide some grants
7 to East Palo Alto organizations. However, this is not
8 enough.
9 Whenever we talked to bank executives about
10 opening a branch in East Palo Alto, the reasons for not
11 doing so always boiled down to money and profits. The
12 absence of a bank in East Palo Alto is a constant
13 reminder to residents that they are being deprived of
14 something that every community deserves.
15 Bank of America's merger application states
16 that low and moderate income markets have proven to be
17 profitable and valued business segments for both banks.
18 However, this has not been our experience. Bank of
19 America has refused to open a branch, despite their
20 knowledge of economic development progress within our
21 city.
22 On June 27th we had our first groundbreaking
23 ceremony on Phase I of a major retail center with Home
24 Depot, Office Depot, Comp U.S.A. and Good Guys as our
25 major anchors.
26 It took nearly ten years to get the BofA ATM.
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1 So we wonder how long it will take to bring a branch to
2 our bank.
3 The merger would facilitate more branch
4 closures and will also create the job losses. And East
5 Palo Alto is a living example of some experiences.
6 Since I only have a few minutes left, I'm
7 going to close by saying that the Community Reinvestment
8 Act was enacted to encourage banks to meet the credit
9 and banking service needs of the entire community, which
10 includes low and moderate income neighborhoods. And
11 East Palo Alto is still underserved, and, although Bank
12 of America/NationsBank have a great plan for community
13 reinvestment, East Palo Alto does not seem to be
14 included in that plan and other communities such as
15 ours.
16 So I want to thank the Federal Reserve Bank
17 for this opportunity and hope they would take into
18 consideration the banking needs of East Palo Alto and
19 other communities of low and moderate income within the
20 State of California.
21 MS. SMITH: If you haven't already done so,
22 please do submit your full statement for the record.
23 MS. GIBSON: All right. I have another one
24 I'll submit to you, not this one.
25 MS. SMITH: Mr. Randolph.
26 MR. RANDOLPH: Good afternoon, Madam
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1 Chairman, members of the committee, the East Palo Alto
2 Community Alliance and Neighborhood Development
3 Organization, EPA Can Do for short, wishes to thank you
4 for the opportunity to present testimony regarding
5 proposed merger of NationsBank and Bank of America to
6 the City East Palo Alto.
7 My name is Leonard Randolph and I'm the
8 Executive Director of EPA Can Do, a nonprofit community
9 development organization whose mission is to enhance the
10 quality of life for all residents of East Palo Alto by
11 empowering our members to engage in housing, economic
12 and community development.
13 EPA Can Do was founded in 1989 as a direct
14 result of community residents organizing to attract a
15 financial institution to East Palo Alto. We serve a
16 low-income population in San Mateo County, one of the
17 wealthiest counties in the country. The median income
18 for our city, approximately 34,000 for a household of
19 four, so approximately half of the county, $68,600 a
20 year income. And 18.6 percent of our population lives
21 below the poverty -- U.S. poverty level, according to
22 the 1990 census.
23 The private sector and the surrounding
24 jurisdictions contributed to these conditions through
25 pillaging of our resources and disinvestment.
26 I would like to raise three concerns with
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1 respect to the merger of NationsBank with Bank of
2 America and the moving of the corporate headquarters to
3 Charlotte, North Carolina.
4 First, as a community development
5 organization, CDC, that is engaged in affordable housing
6 development, we are extremely concerned about the
7 financial potential impact this merger will have on
8 lending for multi-family housing developments.
9 I applaud the ten-year $350 billion
10 commitment in community development lending and
11 investment that, as Mr. Hugh McColl described as a
12 floor, not a ceiling.
13 I also commend them on their commitment to
14 acquire, build or rehabilitate 50,000 affordable housing
15 units over the same time period and a $115 billion
16 commitment toward this endeavor.
17 To date, however, there has been no
18 commitment from NationsBank to prioritize loans or lines
19 of credit for affordable housing development serving
20 very low-income households, those that are at 50 percent
21 of median income.
22 As the median income of East Palo Alto is at
23 50 percent of the county, our ability, meaning EPA Can
24 Do, the ability to provide affordable housing
25 opportunities for our residents, will be severly
26 hampered should Nations not support these developments.
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1 We are equally concerned with this merger the
2 new CDC went into the California market to develop
3 housing. I am well aware that NationsBank CDC has been
4 extremely successful in developing over 14,000 units,
5 but having them enter this heavily saturated market
6 makes me uncomfortable.
7 Community-based and grass root development
8 organizations are uniquely qualified to represent,
9 develop products and provide services that truly benefit
10 our communities. Removing this local connection will
11 mean that the concerns of the community will give way to
12 the bottom line of the disconnected outside agency.
13 In my opinion, this would lead to the demise
14 of community-based groups, the displacement of low-
15 income households and ultimately the destruction of
16 community.
17 Second, Mr. McColl indicated that it was
18 their intention to, quote, "Employ more people, lend
19 more money, do more business with minority vendors, be
20 more active in the community and generally make a bigger
21 difference in our predecessor institutions," unquote.
22 These are noble intentions indeed, and I
23 admire his commitment to community development. But I
24 do have a concern about past performance and future
25 accountability.
26 To make the best difference in our community,
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1 we needs the presence of a neighborhood-based financial
2 institution with local employees and advisory board.
3 The City of East Palo Alto, as my previous speaker just
4 mentioned, has been without a financial institution
5 since 1984.
6 The former Bank of America site closed in the
7 1970s is now home for a MacDonalds. A Wells Fargo site
8 also closed in the '70s is now home for a number of
9 nonprofit organizations. The last bank left the city in
10 1984 and their building now houses the city's community
11 development department.
12 While East Palo Alto does not have a single
13 bank branch, we have over 12 locations, including
14 convenience and liquor stores, where our residents cash
15 cash checks and get money orders at exorbitant prices.
16 Disinvestment by bank's over the past 14
17 years has dealt a severe blow to our community eroding
18 the city's economic base, forcing money out of the
19 community and creating hardship for our residents.
20 In June of this year, Bank of America opened
21 the first ATM connected to a major financial institution
22 in our community. And while I applaud this step, I am
23 ashamed that it took two-and-a-half years to develop it
24 from whence first discussion occurred with the Bank of
25 America.
26 Regardless of how much banking pattern is,
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1 the surveys will tell you that in-store banking and
2 electronic banking are what people find convenient, this
3 does not tell you why check-cashing outlets and pawn
4 shops flourich in low-income communities.
5 In the last ten years, as banks have
6 abandoned low-income communities, the number of pawn
7 shops have doubled. There is plenty of financial
8 activity going on in our communities, but at exorbitant
9 prices and in an unregulated environment.
10 Since I am short on time, I will skip ahead.
11 If NationsBank and Bank of America are going
12 to reach lending roles in low-income communities, it
13 needs to be a full participating creating conditions
14 that make lending possible. This includes not direction
15 -- job creation to consumer and business lending, it
16 also means direct job creation.
17 The disproportion of closing of branches in
18 low-income communities and the refusal to open new ones
19 impacts the joblessness and spending rates in these
20 communities and results in stagnant local economies. We
21 honor bank's need for best economies in order to invest,
22 they must then participate fully in the process.
23 In conclusion, we do not support the proposed
24 merger of NationsBank with Bank of America unless the
25 Federal Reserve requires them to clearly define their
26 strategy in low-income communities whose deposits they
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1 hold.
2 We believe this is the only way the
3 unscrupulous, unregulated financial system that is
4 currently the reality in low-income communities will
5 disappear.
6 Additionally, we want NationsBank and Bank of
7 America to commit specifically to opening fully-staffed
8 branches in East Palo Alto and other low-income
9 communities.
10 Thank you.
11 MS. SMITH: I don't have our last speakers
12 name.
13 MR. BLIESNER: On behalf of the City and
14 County of San Diego, I'd like to express my appreciation
15 for your perseverance and your willingness to listen to
16 public input in this merger.
17 The Reinvestment Task Force is a quasi --
18 MS. SMITH: Could you say your name for the
19 record?
20 MR. BLIESNER: My name is Jim Bliesner. I'm
21 the Reinvestment Director of the San Diego City and
22 County Reinvestment Task Force.
23 The task force is a quasi-public agency
24 established by the San Diego City Council and the County
25 Board of Supervisors in 1977. We have served
26 continuously since then to monitor lending practices and
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1 to develop strategies for reinvestment.
2 The task force is charged by city and county
3 policy to develop localized reinvestment plans with all
4 lenders under CRA doing business in San Diego.
5 We received that charge as a result of a
6 long-term analysis which showed significant patterns of
7 disinvestment by major lenders.
8 The task force has had a productive
9 partnership with the Bank of America defined by San
10 Diego reinvestment plan developed in 1992. The
11 reinvestment activities of the bank have been recorded
12 annually and reported to the city council and the county
13 board of supervisors.
14 The performance of the Bank of America under
15 that agreement has been stellar, and in many ways has
16 set the standard for reinvestment in the San Diego
17 region. The activities of the Community Development
18 Bank in doing affordable housing throughout the region
19 has been aggressive and innovative in many ways.
20 We take issue with some potential dangers
21 represented by this merger. Inasmuch as this merger
22 represents a threat to the use of the Community
23 Development Bank as a method for doing CRA, we are
24 opposed.
25 Inasmuch as this merger represents some
26 movement by the merged bank away from recognizing and
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1 validating the crucial benefits of forming specific
2 local partnerships to eradicate disinvestment, we are
3 opposed.
4 Inasmuch as this merger represents the
5 potential for higher fees for home loans, higher fees
6 for checking accounts, for check cashing services, for
7 small business loans and for other basic banking
8 services, we are opposed.
9 Inasmuch as this merger represents increased
10 costs, limitations and services, increased interest and
11 fee rates for micro and small business borrowers, we are
12 opposed.
13 In addition to these concerns and objections,
14 I'd like to highlight some specific issues with the
15 performance of the Bank of America in the San Diego
16 region and seek redress in this merger process.
17 As we stated, the Community Development Bank
18 with the Bank of America has exhibited stellar
19 performance in its stated goal of doing community
20 reinvestment.
21 What has been missing with the bank has been
22 the recognition in the mainstream bank that it too has
23 responsibility for implementing CRA reinvestment
24 activities.
25 For example, of the top ten home mortgage
26 lenders in the San Diego market, there is an annual
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1 rejection rate over a period of five years for African
2 American borrowers of about 22 percent. That's the
3 average rejection rate for the major lenders.
4 Overall, this rate is higher than rejection
5 rates for other ethnic groups and for Caucasions, but
6 this rate, high rate, is exceeded by the Bank of America
7 consistently. On average over five years the Bank of
8 America shows a rejection rate of 40 percent for this
9 population.
10 This is almost twice the rate of other
11 lenders. It's a striking statistic. We ask, what
12 lending policies of NationsBank will mitigate this
13 problem?
14 The Bank of America has shown a consistent
15 decline in its level of home mortgage lending in
16 minority communities under 120 percent of median income
17 between the years of 1992 and 1996.
18 Though the Bank of America is always one of
19 the top ten lenders in this market, if they are compared
20 with their peers, their market share has shown regular
21 decline or sporadic behavior at best. I am not sure if
22 this is a marketing problem or loan approval policies.
23 On small business lending, of course we don't
24 have a full statistical accounting as yet, our
25 experience in small business lending is defined by a
26 series of community-based small business credit needs
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1 assessment. In those small business credit needs
2 assessment, what we find consistently, and particularly
3 in communities served by the Bank of America, is that
4 the rejection rate for small business loan applications
5 is higher than regional or national averages in low-
6 income communities.
7 We have been dismayed by the absence of the
8 Bank of America from key reinvestment initiatives in San
9 Diego. They are the only major bank in California not
10 to invest in San Diego's community development financial
11 institution. They have ignored our local banker's
12 lending consortium.
13 In conclusion, the task force has eight
14 reinvestment plans which has been endorsed and supported
15 by the City of San Diego and board of supervisors,
16 endorsed conceptually and financially with the
17 commitment of public funds to the development or the
18 enhancement of those plans. Last year these plans
19 generated $601 million into San Diego's low income
20 communities.
21 CRA investment in San Diego is saving our
22 neighborhoods from significant decline. That represents
23 a ten-to-one leverage of public funds. We strongly
24 endorse the benefit of localized reinvestment planning
25 by national banks.
26 As a famous member of congress once said
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1 about the electoral and democratic process, he said, Tip
2 O'Neil said, "All politics are local." We think that
3 that axiom should apply to the emergence of the national
4 bank as well.
5 Thank you very much.
6 MR. FRIESON: Mr. Devine?
7 MR. DEVINE: Yes?
8 MR. FRIESON: May I ask you a question,
9 please?
10 MR. DEVINE: Yes.
11 MR. FRIESON: Is it your view that the board
12 would have the authority, under the Community
13 Reinvestment Act, to require the type of funding for
14 your nonprofit organization that you described?
15 MR. DEVINE: It is my view that the board can
16 impose any conditions it wants in this merger and get
17 approval from the applicants. That's simply, those are
18 the facts of the matter.
19 Whether the specific legality of the
20 Community Reinvestment Act either mandates or requires
21 or allows you to do that, I am not an attorney, I don't
22 know.
23 I think that if the Board of Governers impose
24 as a condition of merger that the golden parachute
25 payments be matched by a contribution to a nonprofit
26 organization chartered under the purposes that we've
345
1 established and similar stock options, that those
2 conditions would be agreed to.
3 MR. FRIESON: And I have a request from
4 Mr. Lewis. Could you provide us with a little more
5 information about this litigation in Texas over the
6 deposit?
7 MR. LEWIS: Yes, sir.
8 MR. FRIESON: Do you have a cite to the
9 litigation?
10 MR. LEWIS: I can provide it for you. It was
11 a -- it's a clipping I have in the newspaper.
12 MR. FRIESON: That's fine, if you can provide
13 it to us.
14 MR. LEWIS: I will. The Texas regulators are
15 currently looking into it. The State Attorney General,
16 Dan Lundgren, a case that is pending, settlement in the
17 Superior Court of San Francisco, attacks the issues of
18 fraud and mispayment, overpayment and the fees -- and
19 fees.
20 MR. FRIESON: Thank you very much.
21 MR. LEWIS: You are welcome. Thank you.
22 (Pause in proceedings.)