Public Meeting Regarding First Chicago and Banc One
Thursday, August 13, 1998
Transcript of Panel Five
8 MR. BUSH: Ms. Smith, other parties and
9 concerned citizens, I'm speaking on behalf of the
10 Woodstock institute, a non-profit that promotes
11 reinvestment and economic development in lower
12 income communities and as a member of the Chicago
13 CRA Coalition. I'm also a member of the National
14 Community Reinvestment Coalition.
15 The proposed merger of two large companies
16 that would constitute the largest bank in the
17 Midwest raises serious concerns for residents of
18 low income communities and the organizations that
19 work with them.
20 The Community Reinvestment Act in its
21 21-year history has been much more honored in the
22 breach than in the observance, a fact that has
23 contributed to the economic decline of huge areas
24 of urban, small town and rural America.
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1 In the last few years, however, because of
2 a variety of pressures and opportunities, the Act
3 has produced very important improvements in home
4 lending to lower income and minority borrowers and
5 communities.
6 In Chicago, in many ways, the hometown of
7 community reinvestment activity, one of those
8 pressures and opportunities has been the practice
9 dating from 1983 of community organizations
10 requesting and persuading banks, small and large,
11 to commit to significant community reinvestment
12 goals for specific periods of time and then
13 monitoring the bank's progress towards those goals
14 on a regular basis.
15 On the announcement of this proposed
16 merger, the Chicago CRA Coalition which Woodstock
17 convenes, entered a dialogue with First Chicago NBD
18 to set new CRA commitments in the Chicago region
19 for the new bank. We believe that if implemented,
20 the provisions of the CRA agreement will constitute
21 a good CRA program for the new bank in the Chicago
22 region by improving the bank's record in lending
23 investments and services to the benefit of the
24 regions's lower income communities.
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1 My colleagues from the Chicago CRA
2 Coalition on this panel will speak to some of the
3 details of this agreement.
4 In my view, the highlights of the
5 agreement include the following items.
6 The bank committed to small business and
7 home loan goals based on a measure of its size and
8 market presence, namely a specific ratio of its
9 market share in lower income communities to its
10 market share in other communities. These ratios to
11 be achieved at stated rates from 1999 are 1.10 for
12 home loans and 1.15 for small business loans, and
13 this will result in massively increased lending.
14 The bank committed to open four full
15 service branches in lower income neighborhoods.
16 These neighborhoods are seriously underbranched on
17 a per capita basis compared to other
18 neighborhoods.
19 The bank committed to a high level
20 feasibility study of an affordable retail banking
21 account for lower income households which currently
22 do not have banking relationship with the goal of
23 establishing such an account.
24 The CEOs of both banks personally assured
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1 the Coalition that the new bank will have a
2 vigorous home mortgage operation in all its
3 markets. The agreement will be monitored like
4 other Chicago CRA agreements in regular meetings.
5 Unfortunately, Banc One has not negotiated
6 similar agreements in its current markets which
7 leaves it without a detailed and adequate CRA
8 plan. Absent such an agreement, we do not
9 understand how the Federal Reserve Board can
10 evaluate whether the merged institution will in
11 fact meet the convenience and needs of its
12 communities.
13 We note that the recent spate of so-called
14 mega commitments by such institutions as Nation's
15 Bank, Bank America, Travelers and Citicorp raises
16 precisely the same problem.
17 In the case of both those mergers, more
18 than half the dollar commitment so proudly
19 announced were for products not targeted to lower
20 income communities. The commitments were not
21 broken down by market area nor established with
22 reference to such concrete objective measures as
23 market share ratios.
24 Detailed CRA plans and sound community
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1 agreements should be a necessary part of an
2 adequate bank merger application. Agreements
3 between citizens and their institutions is after
4 all a hallmark of a Democratic society.
5 The First Chicago NBD agreement for the
6 Chicago region contains community reinvestment
7 details that should be standard for all bank
8 applications as Congressman Davis argued this
9 morning. The bank regulators should demand such
10 details as a matter of course.
11 It also contains in our opinion
12 commitments that reflect the size of the bank and
13 that will promote significant, safe and sound
14 community reinvestment in the Chicago regions's
15 lower income communities.
16 Thank you.
17 MS. SMITH: Thank you very much.
18 Mr. Wysocki, are you next or have we
19 changed the order.
20 MR. WYSOCKI: Good morning.
21 In 1977, over 20 years ago, I introduced a
22 community lending resolution at that year's
23 shareholder's meeting of the First National Bank of
24 Chicago.
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1 The resolution was based on the bank's
2 poor performance at that time that was documented
3 by the first year of the Home Mortgage Disclosure
4 Act data. The resolution was defeated by 98
5 percent of the shareholders in 1977.
6 I start with this point because I think it
7 exemplified the corporate arrogance of this time
8 that required Congress to pass the Community
9 Reinvestment Act that same year.
10 Now over 20 years and three First Chicago
11 mergers later, we are here to discuss this morning
12 the need for continued regulatory vigilance and
13 community advocacy on behalf of neighborhood
14 reinvestment and in this era of financial
15 modernization and merger mania.
16 I'm also here today to share with you the
17 strength of bank partnerships that have grown as a
18 result of CRA and are now providing access to
19 affordable credit and financial services to
20 revitalize local communities.
21 At the end of 1983 was when First Chicago
22 applied to acquire American National Bank, itself
23 proclaimed intent to be the premiere bank in the
24 Midwest. In staffing those CRA negotiations, they
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1 led to become the largest CRA lending agreement at
2 that time of 100 million over five years. That's a
3 million. Now we're talking billions.
4 We have progressed over the last 20
5 years. That commitment was renewed in 1989, and in
6 1990 a five-year evaluation of the Chicago's
7 lending program was conducted, and I wish to quote
8 from a conclusion.
9 "The fundmental test of the success of
10 neighborhood lending programs and of investment in
11 general is whether lenders, community groups and
12 community based development organizations can
13 develop and implement loan programs together in
14 partnership."
15 From my years of experience, the key
16 element to fostering and furthering such
17 partnerships is regular monitoring and reviewing of
18 progress so that continued dialogue can lead to
19 further product innovation and market penetration.
20 The key for both sides is learning to deal.
21 One example of product development through
22 our work with First Chicago is the financing of
23 mixed use real estate.
24 Chicago's neighborhoods are built around
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1 main streets with block after block of properties
2 with apartments above store fronts. Back in 1983,
3 no conventional lender offered financing for such
4 properties.
5 At the urging of the Chicago Association
6 of Neighborhood Development Organization,
7 First Chicago was the first lender to offer 20-year
8 fully amortized mortgages for the purchase and
9 rehab of such mixed use real estate.
10 In 1995, with the merger of First Chicago
11 and NBD, this neighborhood lending program was
12 renegotiated and it is part of the new commitment
13 of two billion dollars in community lending.
14 First Chicago agreed to do a pilot program of ten
15 percent down for mixed use buildings.
16 We all know that the affordable housing
17 has developed a variety of low down payment
18 programs for residential lending. This was an
19 effort to do this for mixed use real estate.
20 Now as part of our recent agreement, the
21 bank has found this to be good business and they're
22 committed to doing this as an ongoing loan product
23 in their portfolio and now they are willing to
24 pilot a low down payment mortgage for commercial
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1 real estate.
2 This new commitment will provide a wide
3 range of local ownerhsip, I want to emphasize local
4 ownership, not absentee ownership, and will extend
5 investment opportunities to to a whole generation
6 of other businesses.
7 My point is here this community credit
8 need was being addressed now by the private market
9 because the bank was willing to sit down and
10 jointly hammer out the design of this product.
11 It's good reinvestment, it's an example of the
12 value of CRA agreements.
13 Now, his testimony talked about the market
14 share analysis that Woodstock had done that is now
15 leading to aggressive goals for small business
16 lending. The purpose of these observations is to
17 make this final point.
18 The Federal Reserve Board should exercise
19 its regulatory authority to assure that Banc One
20 adopts the First Chicago NBD approach to community
21 reinvestment throughout its service area.
22 As Mayor Goldsmith said this morning, this
23 is an issue of attitude, and the corporate
24 arrogance or refusing to negotiate CRA agreements
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1 whether in Indian or Ohio in this case or in the
2 case of the Nation's Bank's merger with Bank of
3 America should be unacceptable as a matter of
4 Federal Reserve Board policy.
5 So while endorsing our agreement with
6 First Chicago NBD and being pleased that Banc One
7 is willing to honor it, I am disappointed that
8 Banc One is unwilling to engage themselves in
9 designing similar agreements in other markets.
10 As Vice Chair of the Bank Regulation
11 Committee of the Federal Reserve Board's Consumer
12 Advisory Council I challenge the Federal Reserve
13 Board to only grant conditional approval,
14 conditioned on parity and market shares of specific
15 geographical markets. Let the market work. Use
16 your regulatory authority to make sure it works in
17 every market.
18 Thank you.
19 MS. SMITH: Thank you very much.
20 Mr. Jackson.
21 MR. JACKSON: Good morning. Good morning,
22 Ms. Smith, Ms. Williams and Mr. Alvarez.
23 My name is Kevin Jackson. I'm Executive
24 Director of the Chicago Rehab Network, a
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1 20-year-old coalition of 43 non-profit housing
2 development organizations in Chicago. We are a
3 member of the steering committee of the CRA
4 Coalition here and the Chair of the Housing Task
5 Force.
6 Financial institution's responsiveness to
7 individuals and families in local neighborhoods is
8 at the heart of the importance of the Community
9 Reinvestment Act. Recognition of this is clear
10 from the proceedings today. Public involvement in
11 the decisions that impact communities, regions in
12 the country is fundmental to the Democratic process
13 and and ultimately despite its difficulties at
14 times, a good thing.
15 We congratulate the Federal Reserve Board
16 Bank for calling this hearing and acknowledging the
17 importance of all the people gathered here today.
18 We would also congratulate ACORN helping to create
19 the momentum item that resulted in this hearing in
20 the first place.
21 And finally, we congratulate First Chicago
22 NBD on demonstrating the utility and possibility of
23 CRA agreements that mean good business for the
24 institution and our communities.
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1 The Chicago Rehab Network has a long
2 history with the First National Bank of Chicago.
3 In 1984 when First Chicago acquired American
4 National Bank, we were a part of that coalition
5 that negotiated the first neighborhood lending
6 agreement.
7 Since then, we have sat on the quarterly
8 Review Board, packaged hundreds of multi-family
9 loans and provided detailed input on community
10 credit needs.
11 When First Chicago merged with NBD three
12 years ago, we were a part of that CRA Coalition
13 that negotiated a detailed CRA agreement.
14 As I stated in my opening, CRA is vital.
15 The process that led to our present CRA agreement
16 with First Chicago NBD and Banc One if it continues
17 occurred because CRA strengthens our government's
18 mediating role between the private sector and the
19 common good.
20 The CRA agreement reached by and the
21 proposed merger of First Chicago NBD and Banc One
22 is a model for CRA agreements in both its process
23 and substance.
24 After the merger was announced, the CRA
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1 Coalition moved to hold a public meeting and had
2 task force meetings to gather substantive input
3 from community organizations throughout the
4 region.
5 The Housing Task Force met three times to
6 develop the framework. We then met many times with
7 the First Chicago NBD and Banc One staff from the
8 highest levels on down.
9 For the first time in CRA negotiations, we
10 were able to use a market share analysis to develop
11 mortgage lending targets. As a result, over the
12 next six years, First Chicago NBD has committed to
13 increasing their residential lending by more than
14 8,200 loans over current levels.
15 In 1995, First Chicago established a
16 $100,000 downpayment pool for home buyers in
17 Chicago's empowerment zones. With this agreement,
18 the pool has been increased to 900,000 and extended
19 to more low and moderate income areas.
20 In discussing credit needs with
21 organizations in Chicago, there was a sense that
22 particularly in this time of mega mergers and
23 predatory lending, simply establishing lending
24 targets is barely adequate.
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1 Without a thorough analysis of the credit
2 needs of low and moderate income communities on
3 which to base lending targets, there will continue
4 to be unmet needs and borrowers who are forced to
5 get inferior high cost credit products.
6 First Chicago NBD has committed to
7 participate in the design and development of an
8 analysis of credit that serves needs in low and
9 moderate income communities and to contribute to
10 its implementation.
11 They further agreed to work with the
12 Chicago Rehab Network to expand the impact of the
13 City of Chicago Department of Housing second
14 Five-Year Affordable Housing Plan approved by the
15 City Council this past July.
16 We were particularly concerned to read in
17 the merger application that Banc One had
18 discontinued its mortgage lending business except
19 for the convenience of its customers and its CRA
20 division.
21 We believe that mortgage lending at all
22 income levels is the foundation of community
23 development and a bank's investment in a
24 community.
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1 After discussion with both bank's CEOs and
2 many of the senior staff, the bank announced that
3 through their best practices evaluation of the
4 bank's business, they would resume full mortgage
5 lending throughout the Banc One system.
6 This is one of two system-wide commitments
7 we see from Banc One. The second is that the bank
8 will conduct a credit analysis on all am applicants
9 to the subprime lending unit and refer them to
10 appropriate loan products.
11 The process I have described created a CRA
12 agreement that is responsive to the service and
13 credit needs of low to moderate income communities,
14 businesses and households in Chicago and the
15 region.
16 With this agreement, we have a solid
17 foundation to build on for the next six years. The
18 same type of commitment must be made to low or
19 moderate income people in communities throughout
20 the Banc One system.
21 In the end, the communities in which the
22 members of the Chicago Rehab Network operate are
23 not unlike communities throughout this country
24 starting to build better neighborhoods through
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1 affordable housing and economic development and
2 fighting the growing tide of an ever growing
3 economic disparity.
4 Our mission at the Chicago Rehab Network
5 is to promote community development without
6 displacement in our communities requires us to
7 stand in solidarity with communities across this
8 country in their relationship to financial
9 institutions.
10 We believe that First Chicago NBD's
11 leadership here should be replicated throughout the
12 country, and we call on the Federal Reserve Board
13 to ensure that same type of commitments and process
14 is made to all low and moderate income people and
15 communities.
16 Thank you.
17 MS. SMITH: Thank you very much.
18 MS. RAND: Dory Rand. I'm a staff attorney
19 with the National Clearinghouse for Legal Services,
20 a non-profit organization based here in Chicago.
21 We represent tens of thousands of low
22 income people on welfare and housing policy issues
23 through our poverty law project, and we also
24 provide support to the poverty law community and
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1 others through our Web site, our printed
2 publications, our library and our training and
3 information services.
4 I'd like to focus my comments this morning
5 on something that Congresswoman Carson mentioned
6 earlier, and that is the advent of electronic
7 benefit transfer of government benefits and what
8 banks can and should do to serve the community
9 needs of low income people who receive government
10 benefits and who do not have bank accounts.
11 As a staff attorney with the Poverty Law
12 Project and editor of its Welfare News, I've been
13 monitoring the development and implementation of
14 electronic delivery systems both, EFT and EBT.
15 Illinois Link is the Illinois electronic
16 benefit transfer program for the delivery of cash
17 and food benefits in Illinois. EFT is the federal
18 program that are for electronic fund transfer of
19 government benefits such as Social Security,
20 Supplemental Security Income or SSI, Veteran's
21 benefits and Railroad Retirement benefits.
22 These EBT and EFT programs produce
23 tremendous cost savings for the federal and state
24 governments, and they also help to reduce misuse of
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1 benefits and they provide some security and
2 convenience advantages for clients, but their
3 advantages could be multiplied if people who
4 receive government benefits had their benefits
5 directly deposited into bank accounts.
6 Some of the examples include funds
7 deposited in bank accounts would be protected by
8 the Federal Consumer Protection Regulation E. EBT
9 funds are not protected by Regulation E.
10 Funds deposited in bank accounts have the
11 protection and insurance of the FDIC. EBT funds do
12 not.
13 People who deposit their government
14 benefits or employee checks can pay their bills.
15 People who don't have bank accounts have to pay
16 very high fees for check cashiers. They can be
17 used as references with landlords, utility
18 companies. People without bang accounts cannot use
19 banks as references.
20 People who deposit their money in bank
21 accounts that earn interest, can increase their
22 assets. And also people who establish a good
23 relationship with a bank can possibly build on that
24 relationship later as their income increases when
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1 they go to establish a home mortgage, a car loan.
2 They can save money in savings accounts to buy a
3 car, to get further education to help them escape
4 poverty.
5 But despite these many advantages of
6 having bank accounts, many low income individuals
7 do not have bank accounts, and there are a lot of
8 reasons for that.
9 Some of those reasons are that there are
10 not enough branches in low income communities,
11 there is not sufficient financial literacy among
12 many communities, there are not enough low cost and
13 free bank accounts. And also, bank practices of
14 screening applicants' credit histories further
15 limit access.
16 I think that banks can and should play a
17 major role in helping to address these problems by
18 ing more full service bank accounts and ATMs in
19 underserved communities, low income communities, by
20 conducting and funding financial literacy and
21 credit counseling programs and by developing and
22 marketing low cost and free checking accounts that
23 do not have credit screening.
24 To that end, I did participate as a member
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1 of the Chicago CRA Coalition Steering Committee in
2 the negotiations that led to the recent agreement
3 with First Chicago and Banc One, and I'm
4 particularly pleased that the banks agreed to open
5 at least four new full service bank branches in low
6 and moderate income communities, that they have
7 agreed to allocate $50,000 a year towards financial
8 literacy programs and that they're conducting a
9 high level feasibility study to develop low cost
10 bank accounts to serve the needs of individuals
11 with limited or poor credit histories or limited
12 experience in dealing with banks.
13 Financial chairman and CEO Verne Istock
14 sent a letter to the CRA Coalition expressing his
15 personal recognition of the need for these
16 financial services, his commitment to working on
17 developing an account that will serve those needs
18 and his willingness to continue to work with the
19 CRA Coalition on this.
20 I look forward to that, however, I have to
21 add that I am very troubled by Banc One's failure
22 to enter into similar agreements through all its
23 markets. If they really want to serve the needs of
24 the community, they must do that, and they could
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1 use our agreement here as an example.
2 Thank you.
3 MS. SMITH: Thank you very much.
4 Ms. Durban.
5 MS. DURBAN: Good morning. My name is Kate
6 Monter Durban. I am the Assistant Director of the
7 Cleveland Housing Network.
8 The Cleveland Housing Network is a
9 coalition of 17 CDCs spread across the city of
10 Cleveland, and our primary focus is affordable
11 housing development in those communities.
12 I am here to let you know that Banc One
13 and Banc One CDC have been a strong and consistent
14 partner in our work.
15 The Cleveland Housing Network to date has
16 rehabilitated about 2,000 houses across the city,
17 and we believe that that investment has absolutely
18 made a difference in turning the -- stemming the
19 tide of disinvestment in many of those
20 communities.
21 To date, Banc One has invested over four
22 million dollars in equity investments in the lease
23 purchase program which is the program that I'm here
24 to speak about today in part.
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1 The average income of lease to purchase
2 residents is about $12,000. The majority are
3 minority single moms with two to three kids, so
4 what we know as developers is the equity investment
5 in those partnerships are absolutely critical to
6 our ability to produce an affordable monthly
7 payment. So, you know, that kind of investment has
8 made our work possible.
9 And the other way that Banc One has
10 partnered with us is they have lent us technical
11 assistance in areas when we have asked for their
12 help.
13 For example, in 1990, the Federal Low
14 Income House Tax Credit was changed in such a way
15 that jeopardized our ability to transfer title to
16 our low income residents at the end of the 15-year
17 lease purchase period. Needless to say, we were
18 very concerned about the change in the federal law
19 and immediately began to mobilize trying to change
20 the law. We were unsuccessful and ultimately
21 turned to Banc One and Banc One CDC, specifically
22 Joe Hagen, and asked him if he couldn't help us
23 based on the relationships that he had built at the
24 IRS.
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1 So Joe, being the absolutely great guy
2 that he is, jumped into the fight with us,
3 established dialogue with the IRS, and in the
4 Summer of 1995, the IRS published a ruling
5 clarifying the law and once again clarifying our
6 ability to transfer title and home ownership to
7 families at the end of 15 years.
8 So for us, that was just an example of the
9 willingness of Banc One CDC to step in and use
10 their time and expertise to help us in a way that's
11 very critical to our organization's goals.
12 You know, undoubtedly, the work that we do
13 in Cleveland and our partnership with Banc One has
14 benefitted from the CRA agreement that has been
15 negotiated with the City of Cleveland.
16 The Mayor of the City of Cleveland through
17 these agreements has established a platform for
18 investment, and our work has absolutely benefitted
19 from that platform.
20 So for us, the bottom line is as
21 non-profit developers with the goal of affordable
22 housing development, we can't do it without
23 significant equity investment in our work, and
24 we've seen that from Banc One and Banc One CDC.
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1 Thank you.
2 MS. SMITH: Thank you.
3 Mr. McDaniel.
4 MR. McDANIEL: Thank you.
5 Good morning. I'm Mark McDaniel, and I'm
6 the President of the Michigan Capital Fund for
7 Housing.
8 The Capital Fund is a non-profit housing
9 corporation that was founded in 1993 for the
10 purpose of raising and providing investment equity
11 to create affordable housing in Michigan.
12 The fund's mission in providing equity is
13 to invest in projects that meet at least one of the
14 follow criteria: The development is located in a
15 distressed community, smaller-sized projects,
16 non-profit involvement as sponsors and serving
17 special needs populations.
18 With that mission, the fund has raised and
19 invested over $80 dollars in equity since 1993
20 creating over 2,000 units of affordable housing.
21 79 percent of those funds have gone into distressed
22 communities.
23 Through our relationship with the
24 Enterprise Social Investment Corporation, the
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1 Enterprise Foundation, and our financial
2 institution investors, the fund now offers a
3 multitude of financial resources to the development
4 community in Michigan. This includes permanent
5 debt financing, construction lending, technical
6 assistance, predevelopment loans and grants and
7 charitable activities contributions. As a result
8 of our growth and structure, we have come to
9 understand the banking industry much clearer.
10 I'm here today to tell you very simply
11 that the merger between Banc One and First Chicago
12 NBD is the best news that we've had in a long time
13 as an organization.
14 I know this is good news because this is
15 the first time that a merger has got the bankers on
16 our board grumbling. This is indicative that
17 Banc One will be very competitive and push other
18 banks to become more aggressive and more innovative
19 than they're used to being. That is in my view
20 what Banc One is bringing to Michigan, and that's
21 good.
22 Based on my 21 years of experience in
23 planning, housing development and community
24 development, I'm convinced that Banc One has a
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1 social and financial commitment to revitalizing and
2 supporting community investment and development
3 through its market area. This is true in our case
4 even when they weren't in the Michigan market.
5 In the formative stages of the fund, Joe
6 Hagan, the President of Banc One CDC, advised us on
7 how to structure the fund and selecting our board
8 members and working with developers as we started.
9 They have provided me with input whenever I've
10 faced -- have been faced with complex issues, which
11 I've found very unusual when compared to other
12 banks.
13 Banc One has invested $125 million in
14 several national equity funds managed by
15 Enterprise. They have invested $20 million in
16 funds managed by the Ohio Capital Corporation for
17 Housing. In addition, Banc One is providing bridge
18 financing to Ohio Capital. Their commitment to
19 Illinois, to Chicago, Cleveland, Delaware, Texas
20 and Milwaukee equity funds has been similar.
21 There are some who will say so what. Tell
22 that to the single mother living in a transitional
23 housing development who without Banc One's and
24 others' investments would still be suffering the
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1 beatings of an abusive boyfriend or be on the
2 street with nowhere to go. The same mother who has
3 got her life together because of this housing
4 opportunity is ready to move into a Habitat for
5 Humanity Home.
6 Tell that to the senior citizen in
7 Cleveland who was living as a hostage in her home
8 in a crime ridden neighborhood who as a result of a
9 Banc One investment was able to move into a new,
10 safe, secure senior community. She now has quality
11 of life in her golden years she never thought she
12 would have.
13 And finally, tell that to the young couple
14 with little ones who are forced to live in a
15 slumlord-owned house with no security, broken
16 plumbing and windows and lack of adequate heat who
17 with the help of Banc One's investment in a
18 national fund was able to find safe and decent
19 housing to raise their family in.
20 There are thousands of stories like this,
21 and I don't think those tens of thousands of people
22 who have benefited who say so what.
23 NBD is represented on our Board of
24 Directors and has as compared to other financial
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1 institutions been a significant but not as major of
2 a player as they could be.
3 We appreciate the support and effort that
4 they have put into the fund, and we especially
5 appreciate the personal efforts of people like ^
6 Jack Love whose works in the Detroit bank for what
7 he's been able to do and the rest of the staff in
8 promoting what NBD is able to do in Michigan.
9 There has never been a single bank merger
10 in Michigan where the lead bank has taken the time
11 or made the effort to discuss with the fund or
12 others how they can best get involved in the
13 community development in the state. Banc One is
14 the first one to do that with us, and we appreciate
15 that and believe it is indicative of how Banc One
16 will be committed to working in Michigan.
17 In closing, the Michigan Capital Fund is
18 exited and supportive of the proposed merger
19 between Banc One, First Chicago NBD. We are
20 looking forward to Banc One being one of our major
21 investors and supporters. This merger will not
22 only be good for the fund but most probably for the
23 less fortunate residents in Michigan who need
24 affordable housing.
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1 Thank you for your time, and I look
2 forward to the significant marriage between these
3 two entities.
4 MS. SMITH: Thank you very much.
5 Any questions from the Panel?
6 MR. ALVAREZ: I have one question.
7 A couple of speakers spoke about the
8 agreement in terms of market share, Banc One
9 bringing up its lending to certain market share in
10 various communities. I was curious what data was
11 used to compute market share and what the benchmark
12 is that you're asking them to bring their level up
13 to.
14 MR. BUSH: We're happy to see that some of your
15 regulators are now using this market share, so you
16 can perhaps talk to them too. It's a very simple
17 notion, and the notion is that if a bank is making
18 equal effort in low income neighborhoods, its
19 market share in low or middle income neighborhoods
20 will approach its market share and indeed exceed
21 its market share in middle and upper income
22 neighborhoods so that ratio will be 1.0 or
23 greater.
24 And we use Mortgage Act Disclosure data in
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1 this case for the six-county region in Metropolitan
2 Chicago to calculate market share for
3 First Chicago.
4 MR. ALVAREZ: So it's a comparison of lending
5 in low and moderate income areas to middle and
6 upper income areas or --
7 MR. BUSH: It's a comparison of a bank's market
8 share in moderate and low neighborhoods to low.
9 Using small business data, same analysis.
10 MS. SMITH: Thank you very much for coming this
11 morning.
12 We are going to take a short break, maybe
13 of the order of five minutes.
14 And unless Panel 6 has appeared in the
15 meantime, we plan to move to Panel 7, but it just
16 depends. My managers will tell me what to do.
17 (Whereupon, a short recess
18 was taken.)
19 MS. SMITH: I think we're ready to reconvene.
20 Could we have Panel 7, please? Six we're skipping
21 because they weren't here. Well, we're ready to
22 start, so why don't we? We'll go to Mr. Hagaman,
23 and the others will join us as they can.
24 Mr. Hagaman, we can start.