Public Meeting Regarding Norwest Corporation and Wells Fargo & Company
Thursday, September 17, 1998
Transcript of Panel Thirteen
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3 MS. YOUNG: Oh, okay. Okay. My name
4 is Zula Young. I work and I live in St. Paul.
5 I'm the Vice President of Rondo Community Land
6 Trust, the Board of Directors. And I wish to
7 thank the Federal Reserve for giving me the
8 opportunity to speak on the proposed merger
9 and -- between North -- Norwest and Wells Fargo
10 Company.
11 I'm a single parent who has had the
12 opportunity to purchase the first completed land
13 trust home in St. Paul. I grew up in the
14 neighborhood where my home is located. I'm very
15 active within my community. I'm also an
16 organize -- organizer of the Community Guidance
17 Project called SAGE. I'm a member of the
18 Summit-University Weed & Seed Project. And I
19 work as a paraprofessional in the public school
20 systems.
21 The land trust model is fairly new to the
22 Twin Cities and Minnesota. And Norwest was the
23 first and to date the only mortgage company
24 willing to take a chance with Rondo Community
25 Land Trust and separating the land from the
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1 building and agreeing to the ground lease
2 documents. The land trust model is unique in
3 its limits -- and it does limit the equity, but
4 it provides a long-term 99-year affordable
5 housing for low and moderate-income families.
6 Norwest was willing to put the extra time in to
7 understand the land trust model that works and
8 the ability to make lending decisions here in
9 the community. They have had the ability to say
10 yes to new ideas at a local level. Norwest has
11 not done land trust mortages before mine, but
12 because of Rondo Community and Norwest, I had
13 that opportunity to own my own home now.
14 Our relationship with Norwest is built
15 around people. And we work on a -- that we work
16 with on a regular basis and also affordable
17 housing. Rondo has developed a trusting working
18 relationship with some individuals at Norwest
19 Corporation. We deal with Carl Swindinberg of
20 Norwest Mortgage; Sally Burke from Norwest Real
21 Estate Management Services; Mary Gabler, Norwest
22 Twin City Community Development; and Bill
23 Canfield, Norwest Mortgage.
24 Rondo would like and hope and expect the
25 Norwest philosophy will continue that allows us
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1 to work with Carl, Sally, Mary and Bill after
2 the merger. And it's the individual people
3 within an already very large corporation that
4 makes it work now. And these are the people
5 that help it work in the future.
6 Norwest was willing to take a chance with
7 their ground leased. And we hope the Norwest
8 philosophy to continue that allows people within
9 the corporation to listen to new ideas, such as
10 land trust, and act on them also on a local
11 level. While Rondo Community Land Trust is a
12 small housing organization in St. Paul, we are
13 providing affordable housing one house at a
14 time. And so far Norwest has been there one
15 mortgage at a time. When the shortage of
16 affordable housing is better understood at both
17 the local and national level, there is more
18 willingness to provide funds to build and
19 renovate affordable housing. And we all
20 increase our production levels. And when that
21 day comes, we hope the Norwest philosophy of
22 working with neighborhood housing
23 organizations -- organizations -- excuse -- to
24 be there with us. And we want to see Norwest
25 Mortgage expand the use of the land trust and
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1 affordable mortgages throughout the country.
2 And we believe the philosophy of local
3 decision-making and a regional approach will
4 insure Rondo Community Land Trust will have the
5 same working relationship we now have with
6 Northwest -- I'm sorry -- Norwest. You know I'm
7 nervous. Bear with me.
8 So we hope that as the merger talks
9 continue both here and in Washington that
10 Norwest and Wells would commit to the
11 following: One, a defined regional approach
12 which will be established throughout the
13 country, a regional system that allows real
14 decision-making within each area for -- and,
15 two, Carl, Sally, Mary and Bill should keep
16 their current phone numbers without an 800
17 prefix. While some departments in Norwest are
18 currently centralized, every effort should be
19 made that allows for decision-making at a local
20 level. And, three, to continue to take risks,
21 listen to the ideas within the low-income
22 community because that is where the answers are
23 to solving our housing shortage.
24 And I thank you for your time.
25 CHAIRPERSON SMITH: Thank you very
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1 much.
2 Mr. Ernest?
3
4 MR. ERNEST: Thank you. I'd like to
5 comment a little bit on Norwest's commitment to
6 agriculture. I'm a grain farmer. I grow corn
7 and soybeans. And, in fact, 24 hours ago I was
8 combining a terrific soybean crop.
9 What I'd like to do is I'd like to talk
10 very briefly about a number of kind of mega
11 trends that's happening in agriculture. And
12 some of the things that I'm going to ask you to
13 consider when you consider the -- the dynamic of
14 the merger between Wells Fargo and Norwest
15 Bank. Many of you have heard of Freedom to
16 Farm. Or now they're talking Freedom to Fail a
17 little bit in the paper. What's happening in
18 our business is we're becoming less dependent on
19 agriculture. And right now we're kind of going
20 through a series of streams of declining
21 payments from the government to get out of
22 agriculture. We don't know where we're
23 ultimately going to end up with Freedom to
24 Farm. What we have learned in the last two
25 years is the business is extremely cyclical.
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1 The highs are very high. The lows are very
2 low. Corn is $1.48 right now. 26 months ago it
3 was $5.08. So we're in a business and an
4 environment where we have to deal with a lot of
5 volatility. We're also in an environment that
6 is speeding up technology -- with technology or
7 having a biotech -- big technical pieces of
8 equipment. And we have extremely high capital
9 needs.
10 We're in a business that's really
11 changing. And being a customer of Norwest for
12 approximately 15 years and looking at
13 agriculture and looking at all these things that
14 are happening, there's a key element that --
15 that I think has become apparent. And that's
16 what I want to speak to today.
17 We in production agriculture, the people
18 that grow the crop and have to endure these
19 cycles, cannot have fair-weather lenders. We
20 need people that are going to be with us in good
21 times and bad. We need people that are
22 committed to agriculture. We need people that
23 agriculture is a very big part of their
24 business. In fact, when the combination of
25 Wells Fargo and Norwest originally was announced
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1 in our neck of the woods, which is down by
2 Mankato, I was not real comfortable about the
3 whole thing because I knew Norwest's commitment
4 to agriculture. And I knew nothing about Wells
5 Fargo. Well, I was delighted to learn that
6 Wells Fargo is the number one ag lender in the
7 United States. And it seems to me if you put
8 the number one ag lender in the United States
9 and the number two ag lender in the United
10 States together, you're going to have a pretty
11 formidable bank that could really help
12 agriculture. And, in fact, I, for one, will be
13 extremely disappointed if, as a by-product of
14 this merger, if we do not get some new financial
15 services, some innovative financial services.
16 And I believe the combination of these two
17 elements are going to really help production
18 agriculture.
19 There's no way, with the commitment of
20 Wells Fargo and Norwest and how big agriculture
21 is a part of their business, that they can be a
22 fair weather lender. And we cannot endure fair
23 weather lending in these cyclical environments.
24 The other thing that is happening in our
25 business is we no longer grow a generic crop.
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1 We grow specialty crops. We grow waxy corn. We
2 grow high-oil corn. We grow all these -- these
3 products. What works here does not work 100
4 miles from here. What works 100 miles from
5 there doesn't work beyond the road. What that
6 speaks to is we need local control and we need
7 local decision-making and we need people that
8 can be local and understand our business. And
9 in my judgment working with Norwest over the
10 last 15, 16 years, that's probably been one of
11 their greatest strengths. And I am hopeful that
12 that will continue. And -- and I'm confident it
13 will.
14 So in conclusion, as a producer and a small
15 businessman and a consumer of credit, I'm
16 excited about the merger. And I believe the
17 merger can be very positive for agriculture.
18 And I would encourage you to consider these
19 aspects that I just discussed when you're
20 considering the merger.
21 Thank you.
22 CHAIRPERSON SMITH: Thank you very
23 much.
24 Mr. Koy?
25
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1 MR. KOY: Thank you, ma'am. My name
2 is Chantha Richard Koy. I'm a mortgate
3 counselor with the Powderhorn Resident Group.
4 Powderhorn Resident Group is a nonprofit
5 corporation -- community corporation. And the
6 relationship with PRT, which is what we call
7 short for Powderhorn Resident Group, PRT, with
8 Norwest is through a variety of thing. One is
9 through the development of multi-family housing
10 for the low-income people in the Southeast Asian
11 community. Norwest has been a great asset for
12 our community and has been blessed for our
13 Southeast Asian people that get -- receive
14 financial -- directly financial support from
15 Norwest. The added relationship that we have
16 with Norwest is the Home Buyer Education Program
17 and Counseling Program for all -- not just for
18 Southeast Asian community, but for all the
19 community at large. We just design for low to
20 moderate-income people to understand the process
21 of buying a home. Beside that, Norwest has been
22 a leader in -- in term of developing and
23 supporting, you know, affordable housing in the
24 community home buying program. Muffy Gabler
25 have spent tremendous of time -- and other
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1 mortgage counselor and other loan officer and
2 underwriter from Norwest have spent tremendous
3 of time in our community to study what type of
4 program should be created and should be
5 established in term of reaching the goal of
6 affordable housing in our community.
7 So I strongly speak not just on behalf of
8 the Powderhorn Resident Group, but also on
9 behalf of my Cambodian community that we have
10 been -- received a lot of support from Norwest.
11 We hope and I hope that the merger with Wells
12 Fargo will bring more prosperity for our
13 community and more opportunity, more program,
14 you know, in term of affordable housing and home
15 buying education program and establish more --
16 more -- you know, expanding the existing
17 mortgage program that Norwest have with just the
18 CHOP Program, one of the leader in our, you
19 know, mortgage lending community and hold
20 that -- to expand that to our community.
21 And that's all I have to stay today. Thank
22 you.
23 CHAIRPERSON SMITH: Thank you very
24 much.
25 Ms. Vitela?
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2 MS. VITELA: Thank you. My name is
3 Mary Vitela. I have been a realtor going on ten
4 years now. I'm currently with Stevens Realty in
5 St. Paul. I am here to speak on the Community
6 Homeownership Program. This program is
7 available through Norwest in Minneapolis and
8 St. Paul. I support this program strongly
9 because I use it in about 95 percent of my
10 business. The basis of my business is by word
11 of mouth or referrals or past clients. These
12 clients refer their relatives and their
13 coworkers to me. So it is very important that I
14 am able to help these new buyers. My clients
15 are mostly from the West Side of St. Paul. Some
16 of them have a limited understanding of the
17 English language and some of them only speak
18 Spanish. For this reason, and because I am
19 fluent in Spanish, the majority of my business
20 comes from the Hispanic population. They rely
21 very strongly on any information I relate to
22 them. I use the Community Homeownership Program
23 because I feel it is the best for my clients.
24 Some of the most important highlights are
25 it's a conventional mortgage with five percent
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1 down. And extremely important is that it has no
2 private mortgage insurance payment. This
3 insurance can add an average of 38 to $42 to the
4 mortgage payment. And to some people that are
5 working two jobs, this can -- is a large
6 amount. In over the life of the loan, it can
7 become a considerable amount. Because of the
8 five percent down and no insurance on top of the
9 mortgage, the buyer starts the loan off with
10 some equity. The mortgage being lower, they
11 have lower monthly payments. Also through this
12 program, the seller can contribute to some of
13 the closing costs. And the bank also has
14 special funds available to help with the down
15 payment. And, therefore, the buyers need less
16 of their own money to purchase a home. Also
17 because of the 38 percent qualifying ratios,
18 more low to moderate-income people are able to
19 qualify for a nicer home.
20 The buyers that I help are buying homes for
21 the first time, the majority of them. They
22 basically do not know where to start in the
23 process of owning their own home and feel they
24 cannot afford their own home. They feel they
25 need thousands of dollars to buy and have no
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1 substantial money saved. These buyers usually
2 can pay for their rent and their household
3 expenses. But they have no credit cards, they
4 have no installment loans, and they have no debt
5 because they can't afford to have any debt.
6 They prefer to pay for cash. I mean, they
7 prefer to pay in cash for items as they need
8 them. Their employment outlook is usually
9 pretty good and constant. They are reliable and
10 extremely responsible and hard-working people.
11 They only need a little direction. They don't
12 understand the process.
13 They -- I feel that these buyers are
14 classic examples of the type of buyers that the
15 CHOP Program is designed to help. This program
16 has enabled me to obtain mortgages for my
17 clients that otherwise might not have been able
18 to buy a house. I have used this particular
19 program since 1991. Through the years, I have
20 developed a relationship with Norwest, and I
21 know their policies toward approve -- approval
22 of obtaining a mortgage. And I prepare my
23 clients to meet these policies. Whether they
24 are quickly approved or even if it takes a year,
25 the buyers have a goal, and they work toward
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1 it. I have gotten a 99 percent approval for
2 these people. Most of my -- the majority of my
3 buyers are satisfied. Satisfied buyers are very
4 appreciative of being homeowners. And they
5 believe it to be a dream come true. I feel that
6 Norwest has enabled them to establish roots in
7 the community, and all their help throughout the
8 years has been invaluable to me. I will
9 continue to use their services indefinitely,
10 especially if they continue to use this special
11 program, the CHOP Program, Community
12 Homeownership Program.
13 CHAIRPERSON SMITH: Thank you.
14 Mr. Vitela, were you going to make a
15 presentation?
16 MR. VITELA: No. I'm just here for
17 her.
18 CHAIRPERSON SMITH: For moral and
19 other support?
20 MR. VITELA: Right.
21 MS. VITELA: Yes.
22 CHAIRPERSON SMITH: Thank you.
23 If there are no questions from the panel,
24 this may also turn out to be the last panel. I
25 don't know whether we have any other witnesses
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1 who were coming to testify. Would you like for
2 us to -- should we wait for a couple of
3 minutes?
4 Is there anyone who has not signed up to
5 present testimony who would like to make a
6 statement from the audience? If not, we --
7 there are a couple of people who were scheduled
8 to be on later. We don't know whether they will
9 appear or not. Do you want to stay and --
10 MR. BINNING: I wonder if we should --
11 we should maybe take a quick break?
12 CHAIRPERSON SMITH: We're going --
13 we'll -- what we'll do is we'll take a break.
14 And then if -- and reconvene if they come
15 sometime relatively soon. It's 4:15 so we're
16 not -- we're not rushing off anywhere.
17 But I want to thank you. And thank you, as
18 the representatives of all of the panels who
19 have gone before, in the sense that we
20 appreciate your coming to present your views, to
21 sharing information with us, whether it has been
22 in support of the application that is before the
23 Federal Reserve or opposing the application.
24 The information that you have shared has been
25 important to the process. And we thank you very
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1 much for coming.
2 And with that, we will take a small
3 recess.
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5 (Whereupon a break was taken.)
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7 CHAIRPERSON SMITH: I'm reconvening
8 the meeting long enough to adjourn since no
9 other panelists have shown up and since we are
10 approaching or maybe have hit quarter of 5:00,
11 which is when they were due to be on the panel
12 if they were going to be on a panel. So thank
13 you all again for coming to this public
14 meeting. And we are adjourned.
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16 (Hearing concluded at 4:45 p.m.)
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