[House Hearing, 108 Congress]
[From the U.S. Government Publishing Office]
BANKS, MERGERS, AND THE AFFECTED COMMUNITIES
=======================================================================
FIELD HEARING
BEFORE THE
COMMITTEE ON FINANCIAL SERVICES
U.S. HOUSE OF REPRESENTATIVES
ONE HUNDRED EIGHTH CONGRESS
SECOND SESSION
__________
DECEMBER 14, 2004
__________
Printed for the use of the Committee on Financial Services
Serial No. 108-117
U.S. GOVERNMENT PRINTING OFFICE
20-952 WASHINGTON : 2005
_____________________________________________________________________________
For Sale by the Superintendent of Documents, U.S. Government Printing Office
Internet: bookstore.gpo.gov Phone: toll free (866) 512-1800; (202) 512�091800
Fax: (202) 512�092250 Mail: Stop SSOP, Washington, DC 20402�090001
HOUSE COMMITTEE ON FINANCIAL SERVICES
MICHAEL G. OXLEY, Ohio, Chairman
JAMES A. LEACH, Iowa BARNEY FRANK, Massachusetts
RICHARD H. BAKER, Louisiana PAUL E. KANJORSKI, Pennsylvania
SPENCER BACHUS, Alabama MAXINE WATERS, California
MICHAEL N. CASTLE, Delaware CAROLYN B. MALONEY, New York
PETER T. KING, New York LUIS V. GUTIERREZ, Illinois
EDWARD R. ROYCE, California NYDIA M. VELAZQUEZ, New York
FRANK D. LUCAS, Oklahoma MELVIN L. WATT, North Carolina
ROBERT W. NEY, Ohio GARY L. ACKERMAN, New York
SUE W. KELLY, New York, Vice Chair DARLENE HOOLEY, Oregon
RON PAUL, Texas JULIA CARSON, Indiana
PAUL E. GILLMOR, Ohio BRAD SHERMAN, California
JIM RYUN, Kansas GREGORY W. MEEKS, New York
STEVEN C. LaTOURETTE, Ohio BARBARA LEE, California
DONALD A. MANZULLO, Illinois JAY INSLEE, Washington
WALTER B. JONES, Jr., North DENNIS MOORE, Kansas
Carolina MICHAEL E. CAPUANO, Massachusetts
DOUG OSE, California HAROLD E. FORD, Jr., Tennessee
JUDY BIGGERT, Illinois RUBEN HINOJOSA, Texas
MARK GREEN, Wisconsin KEN LUCAS, Kentucky
PATRICK J. TOOMEY, Pennsylvania JOSEPH CROWLEY, New York
CHRISTOPHER SHAYS, Connecticut WM. LACY CLAY, Missouri
JOHN B. SHADEGG, Arizona STEVE ISRAEL, New York
VITO FOSSELLA, New York MIKE ROSS, Arkansas
GARY G. MILLER, California CAROLYN McCARTHY, New York
MELISSA A. HART, Pennsylvania JOE BACA, California
SHELLEY MOORE CAPITO, West Virginia JIM MATHESON, Utah
PATRICK J. TIBERI, Ohio STEPHEN F. LYNCH, Massachusetts
MARK R. KENNEDY, Minnesota BRAD MILLER, North Carolina
TOM FEENEY, Florida RAHM EMANUEL, Illinois
JEB HENSARLING, Texas DAVID SCOTT, Georgia
SCOTT GARRETT, New Jersey ARTUR DAVIS, Alabama
TIM MURPHY, Pennsylvania CHRIS BELL, Texas
GINNY BROWN-WAITE, Florida
J. GRESHAM BARRETT, South Carolina BERNARD SANDERS, Vermont
KATHERINE HARRIS, Florida
RICK RENZI, Arizona
JIM GERLACH, Pennsylvania
Robert U. Foster, III, Staff Director
C O N T E N T S
----------
Page
Hearing held on:
December 14, 2004............................................ 1
Appendix:
December 14, 2004............................................ 75
WITNESSES
Tuesday, December 14, 2004
Antonakes, Hon. Steven L., Commissioner of Banks, Commonwealth of
Massachusetts.................................................. 62
Baldwin, Irene, Executive Director, Association for Neighborhood
and Housing Development........................................ 11
Campanelli, Joseph P., President and Chief Operating Officer,
Sovereign Bank New England Division and Vice Chairman of
Sovereign Bankcorp, Inc........................................ 37
Cofield, Juan, President, New England Area Conference of NAACP... 8
Finucane, Anne, President, Northeast Bank of America Corporation. 34
Flynn, Maureen, Deputy Director, Massachusetts Association of
Community Development Corporations, Inc........................ 4
Hagins, Florence, Assistant Director, Massachusetts Affordable
Housing Alliance............................................... 6
Nuciforo, Hon. Andrea F. Jr., Senator, Massachusetts State House. 60
Quinn, Hon. John F., Representative, Massachusetts State House... 57
Thall, Mathew, Senior Program Director, Local Initiatives Support
Corporation.................................................... 13
APPENDIX
Prepared statements:
Bachus, Hon. Spencer......................................... 76
Lynch, Hon. Stephen F........................................ 79
Murphy, Hon. Tim............................................. 81
Antonakes, Hon. Steven L..................................... 82
Baldwin, Irene............................................... 91
Campanelli, Joseph P......................................... 110
Cofield, Juan................................................ 270
Finucane, Anne............................................... 277
Flynn, Maureen............................................... 288
Hagins, Florence............................................. 307
Nuciforo, Hon. Andrea F. Jr.................................. 311
Quinn, Hon. John F........................................... 321
Thall, Mathew................................................ 328
Additional Material Submitted for the Record
Frank, Hon. Barney:
Written questions submitted for December 14, 2004 Boston
Field Hearing.............................................. 333
Responses to questions from Hon. Barney Frank................ 335
Watt, Hon. Melvin L.:
``Lending wisdom,'' The Boston Globe, January 20, 2004....... 339
``Bank of America to add 300 jobs,'' The Boston Globe,
December 11, 2004.......................................... 340
``Bill Tightens Bank Merger Rules in State,'' The Boston
Globe, December 4, 2004.................................... 342
``Mergers Pinching Smaller Nonprofits,'' The Boston Globe,
November 21, 2004.......................................... 344
``Bank of America to Cut More Jobs; Firm: Most Trims Will
Come From Outside The State,'' The Boston Globe, October 8,
2004....................................................... 347
``Hold Bank Accountable,'' The Boston Globe, September 1,
2004....................................................... 349
``Bye-Bye Big Bank, A Look At San Francisco Without Bank of
America's Headquarters Suggest Boston's Future Without
Fleetboston Isn't Easy to Predict,'' The Boston Globe,
February 1, 2004........................................... 351
Nuciforo, Hon. Andrea F. Jr.:
Southcoast Workforce Development Update, prepared statement.. 354
Inner City Press/Community on the Move & Fair Finance Watch,
prepared statement............................................. 371
BANKS, MERGERS, AND THE AFFECTED COMMUNITIES
----------
Tuesday, December 14, 2004
U.S. House of Representatives,
Committee on Financial Services
Washington, D.C.
The committee met, pursuant to call, at 10:12 a.m., at the
Federal Reserve Bank of Boston, 600 Atlantic Avenue, Boston,
Massachusetts, Hon. Spencer Bachus [presiding.]
Present: Representatives Bachus, Murphy, Frank, Watt,
Meeks, Lee, Capuano, Lynch. Also present was Representative
Tierney.
Chairman Bachus. Good morning. The Committee on Financial
Services will come to order.
Today is a full Committee hearing requested by Mr. Barney
Frank, Senior Ranking Member of the Committee, to examine the
economic impact of large bank mergers, with particular focus on
the two mergers we've had here in the Northeast. Gramm-Leach-
Bliley have other factors contributed to me a large number of
bank mergers we have seen recently.
Since the mid-'40s, there's been a decline of about 40
percent in the number of banking organizations; and the ten
largest U.S. banking organizations, they've increased their
deposit share or bank asset share from 20 percent to 46 percent
by the end of last year. So there has been a tremendous
consolidation in the industry.
In fact, three of our banks, Bank of America, who will have
a witness testify today, along with JPMorgan Chase and
Citibank, are actually bumping up against the 10 percent
deposit limit of Riegle-Neal.
We're going to shorten our time for opening statements
because we have three panels. Our first panel will be consumer
advocates and public-interest advocates; our second panel will
be representatives of the banks involved. We will have
representatives from Bank of America and also from Sovereign
Bank; and our third panel will have a state senator, state
representative and a banking commissioner from the State of
Massachusetts.
Because we do want to get right to our witnesses, we're
going to constrict our opening statements. I'll submit my
entire opening statement for the record.
I would note that Bank of America and Fleet Boston did
announce that they were stepping up their CRA commitments over
a ten-year period as a result of the merger, and I'm sure there
will be testimony on that and how that's going.
[The following information can be found on page 333 in the
appendix.]
Chairman Bachus. With that, Mr. Frank?
Mr. Frank. Thank you, Mr. Chairman. I want to express my
very deep personal appreciation. We often say that, but on
occasion we really mean it; and this is one of them.
To the chairman of the full Committee, Mike Oxley, and to
my colleague, Spencer Bachus, it is a refutation of the notion
that partisanship has totally seized control of Congress that
the Republicans, who are in the majority, agreed to this
important hearing.
I am deeply appreciative to Chairman Oxley and his staff
for this, to my two colleagues, Spencer Bachus and Tim Murphy,
who at some inconvenience to themselves, at a time when frankly
our workload is not supposed to be the highest, agreed to come
here.
I want to express my appreciation also to other of my
colleagues who joined us from elsewhere: Congressman Watt from
North Carolina, Congresswoman Lee from California, Congressman
Meeks from New York, as well as my Massachusetts colleagues who
have joined us.
This is a very important issue, both specifically and
generally. Obviously the impact of the Bank of America purchase
of Fleet is of great significance to Massachusetts, and indeed
to the rest of New England; but this is also symptomatic of a
national set of issues. And this is not a hearing only about
Bank of America; we will be hearing from one witness who has
had dealings with JPMorgan Chase, which was mentioned by the
chairman. These are not personal issues; there are very
significant public policy issues here.
I just want to add one thing. One of the concerns that I'm
sometimes asked to address is, well, what business is it of you
and other elected officials to dictate or put pressure on a
private institution? How do you come to feel that you can tell
a bank, well, you've hired too few people or you haven't done
enough in this lending area.
The answer is, in part, that banks are a very important
part of our free market system, and they perform an essential
role. I think virtually every one of us on this panel has
cooperated with the banks in things like allowing them to
truncate checks, and we've tried to reform deposit insurance.
We are very much interested in a better functioning of the
banking system in the interest of the economy as a whole, but
let's also be clear: Banks have deposit insurance guaranteed by
the federal government. They have access to the discount window
in the Federal Reserve system. Banks are protected against
competition by the restrictions on entry. In other words, banks
are a very important part of our system, and they receive a
great deal of protection and assistance from the government.
In return, Congress passed and the President signed the
Community Reinvestment Act which imposes certain reciprocal
restrictions; so when we discuss these things, it's in that
context. It does not mean that we don't recognize that banks
are essential to the functioning of our free market economy. It
is that we recognize also that, given the advantages that we
give banks so that they can perform that function, it is
important that there be something in return.
I appreciate that, Mr. Chairman, and I thank you for
holding this important hearing.
Chairman Bachus. Thank you, Mr. Frank.
Chairman Bachus. Mr. Watt?
Mr. Watt. Thank you, Mr. Chairman.
We actually agreed not to make opening statements in the
interest of time to get some witnesses who have some time
problems to not just sit here and listen to all of us, but I
asked them to give me one minute to make two disclosures, just
in the interest of full disclosure.
First of all, one of the institutions that's represented
here is based in my Congressional district, and that's Bank of
America. So I wanted to welcome them, although I don't have the
right to be welcoming anybody to Boston; but at least so that
everybody would know that the home base of Bank of America is
actually physically located in my Congressional district.
The second disclosure is that Juan Cofield, one of the
witnesses on the first panel, who's over the NAACP branches
here in this area, and I were classmates at the University of
North Carolina. We in fact, between me, Juan, and James, his
brother, represented one-fourth of the African-Americans in a
class of over two thousand students when we started
undergraduate school; and when we finished, we probably
represented about one-half of the people in that class, because
through attrition, some of them had gone and done other things.
So we go back a long way, and I want to welcome him and
thank him for being here personally. Thank you very much.
Chairman Bachus. Thank you, Mr. Watt.
Chairman Bachus. I'd also note for the record that
Charlotte also is about the second largest bank in my home
town.
Mr. Frank. Mr. Chairman, one last thing while we're
acknowledging home towns. I think we should note that we are in
the district of my colleague, Mr. Lynch; so our home
Congressman is also here.
Chairman Bachus. You might want to introduce the other
Members of the Massachusetts delegation.
Mr. Frank. Yes. We're joined by our Congressman John
Tierney, from north of here, who is not a Member of the
Committee, and we particularly appreciate his taking the time
to be here; Congressman Lynch, who is a Member of the
Committee; and Congressman Capuano, whose district is about a
block away.
Mr. Capuano. Across the street.
Mr. Frank. Across the street. I'm delighted to have my
colleagues here.
We have Congressman Meeks from New York; Congresswoman Lee
from California, who also has a claim of former host, because
the Bank of America name came from the Bank of America which
was originally in the Bay Area. So Congresswoman Lee from
Oakland has a piece of that claim.
Chairman Bachus. We also have Mr. Murphy, who's from
Pennsylvania; and Sovereign Bank is in your district.
Mr. Murphy. Mellon.
Chairman Bachus. Now that we've had those exciting opening
statements, we'll turn to our first panelist, Ms. Maureen
Flynn, deputy director of the Massachusetts Association of
Community Development Corporations; Ms. Florence Hagins,
director of Massachusetts Affordable Housing Alliance; Mr.
Cofield, who has already been introduced. Juan Cofield?
Mr. Cofield. Right.
Chairman Bachus. New England Area Conference of NAACP; Ms.
Irene Baldwin, executive director of the Association for
Neighborhood and Housing Development; and Mr. Mathew Thall,
senior program director of Local Initiative Support
Corporation.
So we welcome you all, and at this time we will start with
Ms. Flynn and hear your opening statement. Then we will go to
Ms. Hagins and down the line.
STATEMENT OF MAUREEN FLYNN, DEPUTY DIRECTOR, MASSACHUSETTS
ASSOCIATION OF COMMUNITY DEVELOPMENT CORPORATIONS, INC.
Ms. Flynn. Thank you, Chairman Bachus, Congressman Frank
and Members of the Committee, especially the Massachusetts
delegation, for being here today. We appreciate your holding a
field hearing in Massachusetts on the recent mergers.
Before I start, I wanted to make clear that my testimony
today includes the comments and the input of two other members
of our statewide coalition on CRA issues, which is the Fair
Housing Center of Greater Boston and the Lawyers' Committee for
Civil Rights. They cannot testify today, but my comments
include their comments.
I will address my comments in the order of the questions
that were asked to us as a panel, and I have submitted written
testimony; so this is a summary of what I've said in my written
testimony.
First, regarding job loss: As a group that represents low-
and moderate-income communities across Massachusetts, we are
most disturbed by the job losses sustained by southeastern
Massachusetts because of the most recent Sovereign acquisition
of Seacoast Bank. The merger resulted in the elimination of 350
jobs in southeastern Massachusetts.
The recent Bank of America acquisition of Fleet Bank
resulted in the loss of key bank positions and employees who
were able to make a positive connection between Fleet Bank and
the communities that they serve. In addition, Bank of America
has effectively reduced its CRA staff, so that there is just
one CRA officer now for two states, Massachusetts and Rhode
Island.
Secondly, regarding the extent to which acquiring banks
have entered into commitments during the merger process: On
December 1, 2004, Sovereign Bank signed a new five-year
community investment agreement. The details of that agreement
are included in my written testimony.
The agreement, in essence, contains all of the provisions
which the community coalition that worked with them on the
agreement requested, most importantly, commitments to
affordable housing, small business lending, a Massachusetts
advisory council and goals on diversity in hiring and awarding
contracts.
Could Sovereign do more to mitigate the effects of its
acquisition of Seacoast Bank, especially for southeastern
Massachusetts? Absolutely. Does the agreement contain a plan
for mitigating the effects of job loss? No.
Our work is not finished on the merger, and neither is
theirs. We intend to work with them through the framework of
this agreement and through the advisory council so that
Sovereign Bank becomes a true partner and leader in
southeastern Massachusetts. The fact that we have an agreement
with them and an advisory council makes that continuing work
possible.
As for Bank of America, in November of 2003, just after
Fleet Bank announced that they were accepting an acquisition
proposal by Bank of America, our community coalition proposed a
Massachusetts-specific community investment plan to the bank
based on what we understood are the community credit needs of
our state. This proposal contained almost identical categories
as those contained in previous Sovereign agreements and
Citizens Bank agreements.
In February, after several meetings and intense discussions
with Fleet Bank and Bank of America officials, the bank agreed,
in writing, to a written Massachusetts plan. In the first few
months of this year, Bank of America agreed to make several
commitments on areas contained in our proposal, which I have
again outlined in my written testimony.
We very much appreciate Bank of America's commitments to
date and think the commitments are a good first step in
partnering with Massachusetts communities. However, more than
one year after Bank of America announced their plan to acquire
Fleet, there are four extremely important outstanding issues on
which Bank of America has not yet agreed to make commitments or
set goals: Small business lending goals by loan type and area,
goals for diversity in hiring, goals for diversity in awarding
contracts, and the establishment of a formal Massachusetts
community bank advisory council.
Without these goals set, Bank of America's promise to us
hasn't been met. Without these goals set, there can be no
written community investment agreement or plan with Bank of
America that adequately attempts to serve the credit needs of
the citizens of Massachusetts.
The information that Bank of America released to us this
past Friday regarding their Massachusetts business strategy is
not a plan for addressing the credit needs of low- and
moderate-income individuals in Massachusetts; and in fact, the
words ``low- and moderate-income'' only appear once, in the
last sentence of the last paragraph of the last page of the
document.
The information gives us a general idea about how the bank
will conduct its business. What we want to know is how they
plan to meet the credit needs of low- and moderate- income
individuals and communities based on the categories set out in
the CRA regulations. It's that simple.
As we mentioned, we appreciate the commitments that the
bank has made to Massachusetts so far. However, Sovereign Bank
and Citizens have been able to meet the standard established by
our state in terms of being parties to solid community
investment agreements. We only ask that Bank of America meet
that standard as well, or even, as their advertising campaign
suggests, that they try to achieve a higher standard reflective
of their preeminent ranking in the financial services industry.
Lastly, regarding whether current laws provide sufficient
criteria for the review of the impact of bank mergers on
communities, we feel that they do not, and they are inadequate
to ensure communities' interests post-merger.
First, CRA regulations should include an assessment of how
well banks have met the credit needs of communities of color.
Second, there are two inadequacies in the Bank Holding
Company Act which require that in determining whether to
approve an acquisition application, bank regulators must assess
whether the merging banks have complied with the CRA law in
meeting the credit needs of a community.
The assessment under the law requires that the regulators
only look to the past record of the two merging banks on CRA
issues, not how they are going to meet CRA in the future after
they have merged.
Secondly, there is no requirement that the regulators
compare the performance after the banks have merged on whether
they have met the requirements under the law under CRA and the
Bank Holding Company Act; and therefore, there's no incentive
for banks to take into account any diminishing of services,
investment or lending post-merger.
So again, we thank the Committee very much for allowing us
to submit testimony on these very important issues and for your
coming to Massachusetts to hear us on these issues.
Chairman Bachus. Thank you.
[The prepared statement of Maureen Flynn can be found on
page 288 in the appendix.]
Chairman Bachus. Ms. Hagins?
STATEMENT OF FLORENCE HAGINS, ASSISTANT DIRECTOR, MASSACHUSETTS
AFFORDABLE HOUSING ALLIANCE
Ms. Hagins. Thank you for the opportunity to testify today,
Chairman Bachus, Congressman Frank, and other Members of the
Committee. We appreciate the willingness of the Committee to
come to Boston for this field hearing. We particularly thank
Congressman Frank for his strong support for the CRA and his
successful efforts to encourage banks to make specific
commitments to the community they serve.
My name is Florence Hagins, and I am the assistant director
of the Massachusetts Affordable Housing Alliance. MAHA is a
non-profit organization that works to increase public and
private sector investment in affordable housing and to break
down the barriers facing first-time home buyers.
We have signed multi-year CRA agreements with most major
banks in the state detailing commitments to the SoftSecond
program, which is the state's most affordable mortgage project,
and has helped over 7,700 low- and moderate-income home buyers
buy their first home. As the leading anti-redlining program in
Massachusetts, we have also worked closely with groups such as
the Mass. Association of CDCs, Fair Housing Center of Greater
Boston, and Lawyers' Committee for Civil Rights.
On January 13, 2004, Bank of America signed an agreement
with MAHA for 3,000 SoftSecond loans in Massachusetts over the
next ten years. In addition, Bank of America made public
commitments to other housing programs. They agreed to remain a
member of the Federal Home Loan Bank of Boston. They agreed to
remain fully invested in the Massachusetts Housing Investment
Corporation.
Bank of America agreed to convert a portion of its loan
commitment to the Massachusetts Housing Partnership to an $18
million grant; and Bank of America agreed to participate in the
Massachusetts Basic Banking program by offering low-cost
checking and savings accounts.
On housing, Bank of America has made the right commitments.
Bank of America has a chance, as they enter this market, to be
the lender of choice for low- and moderate-income residents in
Massachusetts, but it will take an aggressive commitment to
better serve these markets.
Bank of America needs to hire more loan originators from
diverse backgrounds; increase its marketing in low- and
moderate-income neighborhoods; and provide good and timely
customer service throughout the mortgage process.
We have had discussions with Anne Finucane of Bank of
America, and we are in agreement that staffing levels for loan
originators need to be significantly increased in the Boston
market. We appreciate the commitment that Bank of America has
made to increase its staffing levels in the mortgage area.
Chairman Bachus. Ms. Hagins, we're told that people in the
back of the room can't hear; so I'm going to ask the panelists
to pull the mike a little closer to you.
Mr. Frank. Put it right in front of your mouth.
Ms. Hagins.In addition, Bank of America senior management
will need to emphasize the importance of increased production
in the SoftSecond program.
In the first eleven months, we have seen mixed results
under the Bank of America SoftSecond agreement. Bank of America
has exceeded its commitment of 150 loans outside of the city of
Boston by closing 165 mortgages, making them the number one
lender in the program statewide.
In Boston, however, the numbers tell a far different story.
Bank of America has closed 52 loans in the city of Boston
against the commitment of 100 loans, making them only the third
largest SoftSecond lender in the city of Boston.
MAHA has also reached agreement with Sovereign Bank prior
to its merger with Seacoast for commitments to the SoftSecond
loan program. Sovereign has committed to a total of 575
SoftSecond loans during the next three years.
In 2004, Sovereign's commitment is for 75 loans in Boston
and 100 outside of Boston. Through November 2004, they have
closed 144 loans throughout the state, which makes them the
second largest SoftSecond lender in Massachusetts. During the
merger process, Sovereign officials were also willing to make
specific commitments to New Bedford and the south coast region
of Massachusetts.
We offer the following comments on the adequacy of the CRA.
One weakness of CRA, or at least as it is enforced by
federal regulators, is that banks are not compelled to enter
into signed written agreements with community groups. Many
choose instead to make public commitments which do not include
much in the way of detail.
Any other serious relationship between a bank and its
customers, partners and vendors is typically in the form of a
written agreement. CRA commitments should be no different.
CRA is a law that needs to be expanded to cover mortgage
companies as well as banks. In Boston in 1990, banks controlled
by CRA controlled 78 percent of the mortgage lending market.
Last year, the bank market share percentage had slipped to 23
percent. Yet banks covered by CRA lend to lower-income and
minority borrowers at a rate more than double that of largely
non-CRA-covered mortgage companies.
We oppose the move by the Office of Thrift Supervision and
the FDIC to raise the small-bank threshold from $250 million to
$1 billion, allowing many banks to eliminate the investment and
service components of the three-pronged CRA test.
We support expanding CRA to include disclosure of race
information on small business loan data and to specifically
include areas such as diversity in employment and procurement
for minority- and women-owned business enterprises.
We thank you for the opportunity to testify today and we
would be happy to answer any questions.
Chairman Bachus. Thank you.
[The prepared statement of Florence Hagins can be found on
page 307 in the appendix.]
Chairman Bachus. Mr. Cofield?
STATEMENT OF JUAN M. COFIELD, PRESIDENT, NEW ENGLAND AREA
CONFERENCE OF NAACP
Mr. Cofield. Good morning. I'm Juan Cofield, president of
the New England Area Conference of the NAACP. The acronym for
the New England Area Conference is NEAC and you will hear me
referring to NEAC.
NEAC is the coordinating and governing body for the
branches of the NAACP in the states of Rhode Island,
Massachusetts, New Hampshire, Maine and Vermont. I want to
express my sincere appreciation to Chairman Bachus, Ranking
Minority Member Congressman Frank, and the other Committee
Members for conducting this hearing here in Boston today. This
hearing, in and of itself, has already had an impact on the
delivery of banking services in this community.
NEAC is part of a loose coalition of non-profit
organizations called the Community Advisory Committee, the
acronym being CAC, formed to advocate for people of color and
low- and moderate-income people in pursuit of improved banking
services.
In general, my testimony is supported by the CAC. More
specifically, I wish to indicate that the general thrust of my
testimony has the support of the Lawyers' Committee for Civil
Rights Under Law of the Boston Bar Association and the Fair
Housing Center of Greater Boston.
To put my testimony in context, I would like to provide for
you the vision and mission of the NAACP. The vision of the
NAACP is to ensure a society in which all individuals have
equal rights and there is no racial hatred or racial
discrimination. The mission of the NAACP is to ensure the
political, educational, social and economic equality of all
persons and to eliminate racial hatred and racial
discrimination.
NEAC and the CAC requested two commitments from Bank of
America which relate to the bank's employment at all levels of
people of color and women and the procurement of goods and
services from businesses owned by people of color and women.
Statistical data will clearly show that the percentage of
people of color and women employed by Bank of America at all
levels, nationally and in Massachusetts, is not matched by
these categories of citizens' percentage of the population. An
even worse disparity is reflected regarding the percentage of
goods and services purchased from people of color and women.
NEAC and the coalition have requested that Bank of America
set a goal and develop a plan such that the bank's employment
at all levels again of people of color reflect the percentage
of people of color in the general population in the
Commonwealth of Massachusetts. A similar request has been made
regarding the bank's procurement of goods and services.
These disparities are certainly not unique to Massachusetts
and Bank of America alone did not create the disparity in
Massachusetts or in our great nation. It is a problem of our
American society and economy.
However, Bank of America must be part of the solution. The
lack of employment and business opportunities has contributed
to economic destabilization in communities with a dominant
population of people of color.
The Community Reinvestment Act begins by reciting
Congress's three findings in passing the law. First, banks are
required to serve the convenience and needs of the communities
in which they are chartered to serve. Economic stabilization is
a dire need in many communities of color. Adequate employment
and business opportunities will greatly contribute to
stabilizing these communities.
Since Bank of America in its normal course of business
provides employment opportunities and opportunities for
businesses to sell the bank goods and services, NEAC and the
CAC maintain that the bank has an affirmative obligation under
the CRA to provide these same opportunities on an equal basis
to communities with dominant populations of people of color.
I aver that further evidence of Bank of America's
affirmative obligation to provide employment and business
opportunities is found in the investment test of the CRA
regulations for large banks. The investment test evaluates the
bank's community development investments. Of the four measures
of a bank's investment, two are directly relevant: the bank's
responsiveness to community development needs and the degree to
which investments are not provided by other private investors.
Bank of America can present no reasonable argument that
providing equal access to jobs and business opportunities in
destabilized communities with a dominant population of people
of color is not addressing a community need. Further, these
investments are not being sufficiently provided by other
private investors. NEAC and the coalition have sought a
reasonable investment plan of employment and business
opportunities from the bank to address these stark community
needs.
To this point, Bank of America has not presented NEAC and
the coalition with such a plan. Up to Thursday morning,
December 9, discussions with the bank had been quite
disappointing, to say the least. But on Thursday morning, I had
a lengthy discussion with two senior bank officials: Doug
Woodruff, president of CD Banking, Bank of America, and William
Fenton, senior vice-president of Bank of America here in
Boston. I am more hopeful today, as a result of that
conversation, than I was prior to last Thursday, December 9.
The bank's attitude has been that it is developing a
national plan and that Massachusetts will fit within that plan.
It is a one-size-fits-all approach. However, this approach, in
my humble and lay opinion, is not what the CRA intended to
require.
CRA is the acronym for Community Reinvestment Act and not
the Country Reinvestment Act. Any plan developed by the bank
should be specific and tailored to the needs of the communities
which each of you, our most honorable Congressmen, represent if
the bank is providing banking services in your district.
By contrast, I would like to point out what Bank of
America's two largest competitors in Massachusetts are doing.
Sovereign Bank of New England and Citizens Bank
Massachusetts have made a commitment and are developing plans
for their respective banks' employment at all levels and
procurement programs of goods and services, which reflect the
diversity of the Commonwealth of Massachusetts.
These banks did not simply say, ``Come in and let us show
you what we plan to do.'' These commitments were the result of
an openness of attitude, a willingness to provide the best
service to the communities which they serve, and an extended
period of negotiations.
I know that each of these banks is proud of their
commitments. They feel that implementation of the commitments
will enhance their ability to serve the community.
Additionally, they believe that implementation of these
commitments will grow their revenue and profits.
In particular, and because you are reviewing Sovereign
Bank's acquisition of Seacoast Banks, I want to take this
opportunity to publicly state, on behalf of the New England
Area Conference of the NAACP and the other organizations whose
views are reflected in this testimony, that Sovereign Bank New
England has distinguished itself in developing a relationship
with the Community Advisory Committee.
The bank recently signed a comprehensive agreement with the
CAC which includes definitive language on workforce and
procurement diversity to reflect the ethnic and gender
diversity of the Commonwealth of Massachusetts. The bank, I
believe, is a prime example of a bank attempting to serve the
totality of needs of the community. The leadership of the bank,
of the Sovereign Bank of New England gets it.
I do urge you, the Financial Services Committee of the
House of Representatives, to move forward to strengthen the CRA
in three important aspects.
One aspect is to ensure that major nationwide banks develop
and implement plans that truly serve the totality of needs of
the communities they serve. The communities that you represent
will be the beneficiaries of such legislation.
Secondly, I would ask that you take action to provide
specific language in the CRA to address the issue of ethnic and
gender diversity. The issue of race continues as a serious
problem in our nation. It is not too much to ask that a bank,
in its normal course of business, be a part of the solution and
not a part of the problem. The interest of our nation will
certainly be enhanced.
Exactly eleven months ago today, I addressed the Federal
Reserve Bank of Boston at its public hearing regarding the
acquisition of Fleet Boston by Bank of America. At that
hearing, I urged the Federal Reserve to defer a decision on the
Bank of America's application for approval of the acquisition
until such time that a definitive plan was presented addressing
the full range of community needs. I continue to believe that
such action would have been the proper course and the proper
decision of the Federal Reserve Bank.
So third, I request that you strengthen the language of the
CRA to provide for such a plan prospectively.
In closing, I am honored and, again, I do appreciate the
opportunity to address the Committee on this important affect
of your work. Thank you very much.
Chairman Bachus. Thank you.
[The prepared statement of Juan Cofield can be found on
page 270 in the appendix.]
Chairman Bachus. Ms. Baldwin.
STATEMENT OF IRENE BALDWIN, EXECUTIVE DIRECTOR, ASSOCIATION FOR
NEIGHBORHOOD AND HOUSING DEVELOPMENT
Ms. Baldwin. Good morning, Chairman Bachus, Congressman
Frank, and other Members of Congress. I'm the executive
director of the Association For Neighborhood and Housing
Development.
We're based in New York City and we're a coalition of 93
non-profit neighborhood housing groups. Our member
organizations work in low- and moderate-income neighborhoods
around the city, and they work extensively with almost all the
area banks on a range of community development initiatives.
My testimony today will focus on the JPMorgan Chase merger,
the community development commitments the bank made at the time
of that merger, and how they've been implemented over time.
At the time of its purchase of JPMorgan in 2000, Chase was
considered a leader in community development in New York City.
They were probably the dominant bank in New York City in
community development lending and investment. JPMorgan was also
very prominent in community development, and both banks were
very well respected by our member organizations.
We were very concerned about the JPMorgan Chase merger. We
couldn't afford to lose the activities or programs of either
bank, and we thought there was a very good chance that might
happen out of the merger, particularly in the case of JPMorgan,
which was the bank that was being picked up by Chase.
So we met with leadership of Chase during the time of that
merger, we met with a vice-chairman for the retail bank, two
executive vice-presidents, several other Chase staff, and about
a dozen community group representatives.
At that meeting, the bank made a number of commitments.
These are discussed in some detail in my written statement, but
essentially the bank promised to keep doing what it had been
doing in the two separate banks. We weren't asking for an
expanded commitment; we were just asking that they not roll
back or pull back from what they were already doing.
The main promises they had made to us were that all of the
banks' community development programs would be coordinated and
delivered through Chase's centralized community development
group. We felt the community development group was very strong,
and we wanted to make sure it survived the merger.
They also promised that the staff and programs of Morgan's
CDC would be preserved; and further, they promised again that
the separate levels of lending and investment of the two banks
would be maintained after the merger. Again, we weren't asking
them to do more; we were just asking them to promise not to do
less.
We left that meeting very satisfied with the promises the
bank made to us. We were confident that both Chase and Morgan's
programs would continue intact.
After the merger was approved, however, the bank honored
none of the commitments it had made to us. They almost
immediately eliminated important community development
programs, they cut their community development budget and
staffing levels, and they began to break up the community
development group.
So in this past year, when Chase then applied to purchase
Bank One, we again submitted written comments to the
regulators. These detail our experiences with the previous
merger and also discuss how, as a result of the bank cutting
back on programs, it was now less able to deliver services on a
neighborhood level than it once had been.
Neither the bank nor the regulators responded to our
written comments, including the issue we raised that Chase had
not honored previous commitments.
So based on these experiences, it is our belief that
current laws do not protect community interests after a merger.
My written statement cites a number of areas where current law
can be reformed. They're on Page 6 of my statement. Two of them
echo what other witnesses have already said today. Currently
regulators do not enforce CRA commitments, even those made in
the course of a merger. We would urge the banks be held
accountable for the CRA commitments they make.
Second, the application review process looks at past CRA
performance, but does not require that banks provide forward-
looking CRA plans. We would urge that banks develop detailed
specific CRA plans for each of their local markets as part of
their merger application. Again, additional recommendations are
in my statement.
With a continuing trend towards mega-bank mergers, what we
saw play out with JPMorgan Chase, we expect to see in other
banks, too. It's very timely that Congress consider this issue
and find ways to strengthen the CRA to better protect our
communities.
Thank you.
Chairman Bachus. Thank you, Ms. Baldwin.
[The prepared statement of Irene Baldwin can be found on
page 91 in the appendix.]
Chairman Bachus. Mr. Thall?
STATEMENT OF MATHEW THALL, SENIOR PROGRAM DIRECTOR, LOCAL
INITIATIVES SUPPORT CORPORATION
Mr. Thall. Members of the Committee, thank you for the
invitation and opportunity to testify. My name is Mathew Thall;
I'm the senior program director of the Boston Program of the
Local Initiative Support Corporation, or LISC. I've been in
that position for 13 years and previously was the executive
director of a CDC in Boston for a decade.
LISC is the largest non-profit community development
support organization in the United States. Since 1980, we have
invested approximately $5 billion in 2,400 community
development corporations working in and for low-income
neighborhoods. This investment has entailed 147,000 affordable
homes and over 22 million square feet of neighborhood
commercial retail and community facilities space. In Boston,
we've invested about $87 million over the past 24 years,
leveraging about $725 million of other public and private
investment, and helping to support over 6,000 affordable homes.
LISC does a good deal more than just finance community
development. We invest in building the capacity of CDCs and
non-profits. We often serve as a catalyst to change the local
system and attract new investments in community development. I
have included in my statement a few interesting examples of
this type of work in Boston, in Chicago, in Los Angeles and in
Winston-Salem.
I think I can say unequivocally that LISC would not have
been able to accomplish everything it has accomplished without
the Community Reinvestment Act. The CRA made it possible for us
to develop strong relationships with banks, in Boston and
nationwide. As the banking industry evolves, it becomes
increasingly important to maintain a strong CRA in order to
maintain those relationships and to continue the capital flow.
CRA has worked remarkably over the past 25 years fostering
and building public-private partnerships around community
development. It has helped to weave a network of federal
programs into private investment, including HOME, the low-
income housing tax credit, new market tax credit. It has been a
very, very powerful tool for building low-income communities.
Now that partnership is in jeopardy. LISC is deeply
concerned that a series of proposals from the FDIC and the
Office of Thrift Supervision would begin to dismantle CRA and
the public-private partnership CRA has represented.
OTS has already reduced the oversight of mid-sized thrifts
with assets between $250 million and $1 billion. The FDIC has
proposed to do the same for the banks it supervises as well as
to grant CRA credit for rural community development activities
that do not serve low-income people or places. Now the OTS is
considering letting institutions ignore investments and
services under CRA.
It is especially disturbing that OTS and the FDIC have
acted on their own, without coordination with the Federal
Reserve Board and the Comptroller of the Currency, discarding
over 25 years of joint policymaking on CRA. Fragmented
regulatory policies are not just confusing; they also invite a
race to the bottom as banks switch charters to the most lenient
regulation and the regulators compete to offer it. We fear that
other destructive proposals may follow until CRA loses all
significance. Struggling communities would suffer in many ways.
I have attached to my testimony a copy of an op-ed article
by LISC's chairman, Robert Rubin, the former Secretary of the
Treasury, and our president, Michael Rubinger, which appeared
in the New York Times on December 4, 2004. The article lays out
a compelling case for keeping CRA strong, and I request that it
be included in today's hearing record.
The Committee has invited me to comment on Bank of
America's performance to date on commitments that it made in
connection with the merger with Fleet Boston.
First, I should say that Boston LISC's experience with Bank
of America per se is still young. Bank of America has been a
very strong supporter of LISC prior to the merger. I refer the
Committee to the testimony of Michael Rubinger before the
Federal Reserve earlier this year.
Bank of America has been a major and generous supporter of
other LISC sites. Its staff have served on our local advisory
committees, which are the local boards. Finally, Bank of
America has directly financed and invested in CDC projects that
have been ``seasoned'' by LISC's investments.
While Boston LISC is still building a direct experience
with Bank of America, we have had many strong and positive
experiences with its legacy institutions: Fleet Boston,
BankBoston, Shawmut Bank, and BayBank, to name a few.
Several of Fleet's staff served on the Boston LISC advisory
committee board and committees. LISC has done a tremendous
amount of lending side by side with Fleet Boston in recent
years. We have not only provided predevelopment loans to CDCs
needed to get their projects ready to access financing provided
by Fleet Boston, we have remained in a number of projects as a
permanent lender with Fleet.
LISC would not stay in a deal as a lender subordinate to a
bank that it did not trust and hold in high regard.
Bank of America has honored and in some ways strengthened
the relationship we had with Fleet since the merger has
occurred. We are partnering with the bank and the city of
Boston on an initiative to address comprehensive community
development needs in the Bowdoin/Geneva section of Dorchester,
a neighborhood in Boston, a neighborhood that has often been
overwhelmed by problems of poverty and crime. This was an
initiative that the bank proposed, not LISC or the city.
Boston LISC is about to enter the final year of a $33
million campaign to raise and invest funds in the
neighborhoods, towns and cities in greater Boston. Bank of
America has honored Fleet's commitment to that campaign and has
reaffirmed its commitment to leadership of that campaign. We
are delighted that Anne Finucane will be taking the reins of
chairing that campaign in the next year.
In terms of concrete, measurable commitments, I believe
that the merger of Bank of America and Fleet has definitely
made substantially more resources available locally for
community development. As part of the merger discussions, Bank
of America agreed to convert a portion of a statutorily
mandated loan to the Massachusetts Housing Partnership into an
$18 million grant. There is no statutory or regulatory basis
for securing this type of grant from an acquiring bank under
Massachusetts law.
Certainly, our very talented and sophisticated advocates
deserve much of the credit for this commitment. However, Bank
of America was under no legal obligation to make such a
commitment. And as far as I know, an $18 million grant by a
bank to a state agency for community development and housing is
unprecedented in this country.
$18 million for project financing, project and
organizational support and technical assistance to non-profits
will make a tremendous difference for a long time to come in
supporting our collective efforts to develop more affordable
housing and stronger communities.
I congratulate the Bank of America for this financial
pledge, and I hope the bank will be recognized for this
commitment and consulted on how these funds can be most
effectively deployed throughout the Commonwealth.
Thank you again for the opportunity to testify.
Chairman Bachus. Thank you.
[The prepared statement of Mathew Thall can be found on
page 328 in the appendix.]
Chairman Bachus. At this time, we will entertain questions
for our panel, and I'll pose the first question.
We've heard testimony about commitments and pledges made by
Bank of America. My first question would be, are you satisfied
with the commitments and pledges? Not that they haven't been
honored yet. We won't know whether they're honored until two,
three, four years from now. But are you satisfied with the
level of commitments and pledges?
And I'll start with you, Ms. Flynn.
Ms. Flynn. We're very satisfied with the commitments that
have been made to date. The commitment, as Matt mentioned, to
MHP is a great resource for non-profits to build affordable
housing in Massachusetts. Their commitment to become a member
of the Federal Home Loan Bank and other commitments that
they've made to the SoftSecond program, they're wonderful.
But the commitments aren't complete, and so we have
outstanding requests that we've made to the bank that they have
not agreed to yet, and I've outlined them. Those are basically
four----
Chairman Bachus. It does seem to me that the level of
commitments and pledges has been--I think there's even
agreement on this panel, that if they honor the pledges and
commitments they've made, that would be very significant.
Ms. Flynn. In the areas of mostly affordable housing and
investment in housing, but there's still outstanding
commitments that they need to make.
Chairman Bachus. A lot of that is that this merger was
already approved, so there's no obligation for them to do so.
Ms. Flynn. Well, under the CRA regulations, part of the
lending test asks how they've met credit needs for small
business lending.
Chairman Bachus. Right, the service and investment.
Ms. Flynn. And those goals haven't been established yet by
the bank.
Chairman Bachus. But in some ways, I think I've heard
testimony that maybe their commitments will go even beyond
maybe what Fleet Boston was doing. Is that correct?
Ms. Flynn. We don't know, because they haven't outlined, in
terms of small business lending, what those commitments are.
Chairman Bachus. My second question is, Ms. Baldwin talked
about Chase and the fact that JPMorgan Chase made certain
commitments, and I guess these are conversations with the bank
officials. Were those reduced to writing, the ones that you say
were not honored?
Ms. Baldwin. In the case of JPMorgan Chase, it was just a
meeting. I summarized the commitments in writing, but they
didn't put it in writing. I did, and sent it to them, and sent
it to the regulators.
Chairman Bachus. You know, when you don't have it in
writing, you learn in life that----
Ms. Baldwin. Yes.
Chairman Bachus. Have they denied that there were such
conversations?
Ms. Baldwin. No, they never denied. I should have pointed
that out. And usually we do get them in writing. Usually the
bank--we tend to be a little informal, because even if we had
it in writing, we're not in any place to enforce it; so we tend
to rely on the word and the good faith of the bank leadership.
And this was the first experience I had where the bank just
sort of blatantly didn't do what it said it would do.
Chairman Bachus. But it's my understanding that some of
this they submitted to the Federal Reserve, saying this is what
we intend to do, which may not be a commitment. Is that true?
Ms. Baldwin. At the hearing on the most recent merger, they
made a very broad-based commitment for $800 billion over ten
years; and, I mean, I'd speak a little bit about how
satisfactory those commitments are.
We have a one-page--all I know about that commitment is
what I've seen at the Chase website. It's one page, and I don't
know the details of it, so I don't know what they're going to
be doing in New York City, which is how I define my community.
Chairman Bachus. So the Federal Reserve, in reviewing
these, is not asking for any specificity in the commitments or
pledges or asking for any----
Ms. Baldwin. I don't believe they even asked for
commitments going forward, no.
Chairman Bachus. Just review and see what they have done?
Ms. Baldwin. I think so.
Chairman Bachus. Let me close with this. One thing that
Bank of America has done that we had at Wachovia Trust--which
is the second largest bank in the state of Alabama, and they
actually made no commitments to preserve employment levels.
They actually said, you're going to lose over a thousand
employees, which is obviously a discomfort. But we see that
going both ways, businesses where one buys another.
You've got a commitment here, at least a representation
that's been made to the public through the press by the Bank of
America, I believe, that the employment rate, or the employment
totals in the State of Massachusetts by 2006 will be at
premerger levels, which is a pretty substantial pledge or
commitment. Do you wish to comment on that?
And I know, Mr. Cofield, you've asked that, as they do,
that they try to either preserve or be fair to both gender and
race in doing that. But any comments there?
I mean, that to me is a substantial at least representation
that it is their intention that jobs won't be lost. Now, there
may be some higher-paid jobs that are lost and lower-paid jobs
that are replaced. Any comment on that?
Mr. Cofield. I can't comment on the pledge of the overall
job creation. That, I think, more than anything else, was a
release in the papers and not necessarily a pledge to the
community advisory group.
Chairman Bachus. Of course, from a public relations
standpoint, if it is released to the press and told by the
press and it's out there, it's acknowledged by them, at least
they're subject to----
Mr. Cofield. Sure, and I understand that, and I appreciate
that.
The concern that I expressed about employment and
procurement being reflective of the community is an important
one; and I contrast Bank of America, who has not to date been
willing to make any commitments or have any serious
discussions, I would argue, about these two issues, I contrast
that attitude with their two largest competitors here in
Massachusetts. Those two largest competitors have had serious
discussions with us, negotiations that resulted in commitments
in those two areas that are reflective of the diversity of
Massachusetts.
That's important, and I have to say that I think that's a
function in part--I certainly appreciate the leadership of the
banks, and I think there is a lot of credit that is due the
leadership of these two banks, and in particular Sovereign Bank
of New England.
But I also think it's a function of a bank that doesn't
have to answer day in and day out to a community. If a bank is
nationwide, it might be a little less receptive to responding
to community needs in this manner; and I would hope that you,
the Committee, would give that serious concern, because again,
as I said, the CRA stands for Community Reinvestment Act and
not a country-wide reinvestment act.
Thank you.
Chairman Bachus. And there certainly is a perception, I
think, and a tendency, I think, for us to believe that a bank
that is not locally owned or controlled may have a tendency not
to be responsive.
At this time I'll recognize Mr. Frank, Congressman Frank,
whose efforts, I think, in regard to these mergers have already
lessened the impact, the negative impact on the community; of
him and the Massachusetts delegation as well.
Mr. Frank. Thank you, Mr. Chairman. I guess lessening the
negative impact is my goal for the next few years----
[Laughter.]
Mr. Frank.----so it's good to have had that experience.
Chairman Bachus. Or enhancing the positive.
Mr. Frank. You do what you can in life.
Let me say, first, I have a couple specific questions for
Mr. Thall. I very much appreciate your thoughtful warnings
about what will happen to CRA.
I've been a big CRA supporter; in fact, I put that article
by Mr. Rubinger, into the Congressional Record. I was
particularly struck by Ms. Hagins' comment that lending to low-
income in general, and minority low-income mortgage groups, in
mortgages, is twice as great for people covered by CRA as for
people who aren't. This is very relevant data for us.
And as you point out, because of changes in the financial
sector, more and more mortgages are being granted by people who
are not banks, and the banks who are under CRA are competing
with them. I do think that's something we should be addressing,
that there ought to be an extending of that CRA requirement,
because I think it has had virtually no negative effect and
some positive effect.
So I will tell you that I did have a conversation with Mr.
Powell from the FDIC, and he indicated to me that he accepted
the fact that deciding that all rural activity was
automatically CRA was not a good policy; and I think we may be
able to at least re-establish that test, that low-/moderate-
income test as a prerequisite in the rural area, but I
appreciate that.
Let me just say one of the things about Sovereign which I
appreciated, and that is, Ms. Flynn mentioned one of the
important things for us is the affordable housing program of
the Home Loan Bank system, which is a program created by this
Committee under the really superb leadership of the late Henry
Gonzalez, who was then Chairman. We created this program where
a certain percentage of the profits of the regional Home Loan
Banks have to be put into an affordable housing program.
With regard to Bank of America, the problem with the
mergers goes to where the bank is headquartered, because when
this program was set up, people weren't thinking that--I guess
this used to be called the Banking Committee, and then it was
changed to Financial Services.
Somebody said, are we ever going to change the name back? I
said, yeah; but by that time, we may change it to the Committee
on the Bank.
[Laughter.]
Mr. Frank. What you have with the mergers is that there's
now a disconnect between economic activity generated by a bank
in a particular region and the Federal Home Loan Bank that gets
the credit for that, because it goes to the headquarters of the
bank.
Now, one of the things that B of A did, and Maureen Flynn
correctly gave them credit for that, was voluntarily to agree
to take out an additional charter in the Boston area so that
the money generated by B of A will go to the affordable housing
program. Sovereign, to its credit, was willing to do that,
because as a unitary thrift, as I understand it, they can't do
it as easily. They've been working with us, and I'm very
appreciative of Sovereign's working with us to try and enhance
that.
But now on Bank of America, let me say, I guess you get the
question: Is the glass half empty or half full? And the answer
is yes.
[Laughter.]
Mr. Frank. As Maureen Flynn pointed out, with regard to
housing, I am very pleased that Bank of America has been very
responsive. I said to others, housing is probably the greatest
thing we need here in our area because of the extraordinary
housing prices; but we do need economic activity to go along
with it.
Part of this may be a question of cultural difference. I
understand for Bank of America to come into New England,
sometimes things are done a little differently here. During the
Democratic Convention, when some journalists were asking me why
things seemed to be so hard-edged, people dealing with each
other, I said, well, at some point we tend to do everything
like we drive, in which you cut no one else any slack, but you
get highly indignant if people don't cut you some.
On the other hand, we have some real concerns here, and the
economic one is real; and I must say, it has not seemed to me
that what you were asking for was unreasonable.
Let me ask both Mr. Cofield and Ms. Flynn: It seems to me
that, in part, the issue is not so much the quantity of what's
being requested, it hasn't been that people have said that's
unreasonable; it's kind of a cultural objection to having it be
specific. Am I correct? Does that seem to be part of our
problem?
Ms. Flynn. Yes, that's correct. We're not arguing about the
amounts of commitment, especially on the small business lending
piece; but we want to know, where is the small business lending
going to be made?
So, are there going to be loans in low- and moderate-income
areas as the CRA calls for? Are there going to be loans of less
than $100,000, again which is something that banks have to
report on under the CRA regulations? And are there going to be
loans--and this is perhaps the most important aspect to us--to
companies with less than $1 million in revenue?
As CDCs, we have small business technical assistance
programs for many of our CDCs that help very small businesses
start and grow, and often those small businesses have a hard
time getting credit. That's what we're looking for, is to meet
the credit needs.
Mr. Frank. Let me say, I understand there's a tendency,
always has been, to withdraw in a little bit of anger when
people question our bona fides. I guess I would urge the banks
that, you're dealing with people who have no particular reason
to know you; maybe their life experience with large financial
institutions hasn't been among their seven favorite memories.
I would hope that the banks and Bank of America, would
distinguish between--if you're being asked to do something
unreasonable, let us know. And I would say to Mr. Cofield,
obviously when we ask for a commitment in terms of percentages
in diversity in both hiring and procurement, obviously we also
have an obligation to make sure that we can show that it's
reasonable, and be available to help achieve those goals. We
understand naming the goal doesn't mean that you're
automatically going to be able to achieve it. You have to work
together towards it.
But I would hope that people would not stand on the kind of
ceremony and be offended at being asked to prove the bona
fides. These are not personal relationships; this is not proof
you love me. This is what has been an arm's-length situation,
and there have also been these kinds of series of mergers, as
Mr. Thall read off the list of entities that are now under the
Bank of America roof. That's where we are.
Let me just ask a question of Ms. Baldwin, because you've
been talking about the negative effects of the JPMorgan Chase
merger on community reinvestment. What about, now, the addition
of Bank One? Because this very big bank has just gotten bigger.
What's the experience been? I know Bank One hasn't been
operating in your area, but I know in the Midwest, it's
particularly in that area, where the Chairman of our Committee
is. What have you heard about the addition, or has that caused
further problems; do you know?
Ms. Baldwin. It's a little early. Actually, technically
Chase is buying Bank One, although it's playing out as if Bank
One had bought Chase.
One of our concerns is that the retail headquarters is
going to move to Chicago, and the difficulties we have now
working with Chase on a neighborhood level we're just concerned
might be more difficult if everybody we speak to is coming out
of Illinois.
Mr. Frank. Let me just comment on that. I would hope all
the banks would understand that it's a natural human tendency
to feel more comfortable with people who are nearby, with
people whom you know, who you think know you.
When these mergers happen and headquarters get moved
further and further away, I hope the banks will understand that
it is important to reassure people. They tell us there isn't
going to be any real difference, et cetera. Well, then you
shouldn't be reluctant to let people know, because the degree
of unease that is cascading here is very significant.
Thank you, Mr. Chairman.
Chairman Bachus. Thank you, Mr. Frank.
At this time, Mr. Murphy?
Mr. Murphy. Thank you, Mr. Chairman; and thank you,
panelists, first of all for the people that you represent, the
thousands, perhaps millions that you represent, and your care
and concern about them.
I'm pleased you bring these issues before this panel,
because although this is the Committee on Banking and Financial
Services, ultimately our concerns reach down to individuals
like you represent to make sure that people have opportunities
always to live under an equality of law and have opportunities
to climb upwards.
I'd like to start out by asking if any of you were
individually involved in some of the discussions referred to
before, with Sovereign Bank and Citizens Bank.
Ms. Flynn. Yes. Actually, our three organizations were all
involved in all of those negotiations.
Mr. Murphy. Let me ask about this: How long did that
process take from the time that the merger actually was
finalized at the board until you achieved some results and
agreements on this?
Ms. Flynn. Well, the Sovereign negotiation wasn't pursuant
to a merger; it was an extension of a previous commitment that
they made. That agreement was almost complete a year after it
began, but then it took a little longer than that, because
there were some----
Mr. Murphy. A couple years?
Ms. Flynn. Almost two, I think.
And the Citizens one, I believe it was a lot shorter than
that, but I'm not sure.
Mr. Murphy. How much shorter, would you say?
Mr. Cofield. Six months to a year. In a general sense, that
was a general commitment made pretty quickly in both cases, and
getting down to the specifics took longer in both cases.
One of, I think, the important distinctions is an attitude
about working with the community groups. We saw it with
Sovereign and Citizens Bank pretty quickly, if not immediately.
There was an openness and an attitude that we were trying to
get to a goal, and it was just a series of negotiations.
I have not seen that with Bank of America until this past
Thursday, December 9; and as I said in my opening remarks, you,
by coming here and having this hearing, has had an impact in
and of itself.
Mr. Murphy. I have a feeling that's why we're here.
[Laughter.]
Mr. Murphy. I want to ask, try and lay this out: This
merger really didn't begin until March of this year, so it's
about eight months--excuse me; it wasn't really finalized until
March of this year, so really it was eight months away.
Ms. Flynn. But we submitted our proposal in November right
after the acquisition was announced.
Mr. Murphy. And during that time, between when the intent
of the acquisition was announced and when it was finalized,
were there any discussions that took place at all.
Ms. Flynn. Yes.
Mr. Murphy. So they didn't shut you out. I just wanted to
make sure of that.
Ms. Flynn. But the discussions were around whether they
were going to do a plan. The discussions with Citizens and
Sovereign were about an agreement, a partnership, between the
bank and the community.
Mr. Murphy. Was there somebody even assigned to talk with
you in these negotiations?
Ms. Flynn. With Sovereign and Citizens? Yes.
Mr. Murphy. But also with Bank of America?
Ms. Flynn. Yes.
Mr. Murphy. I just want to make sure I'm understanding,
because what you're describing is very, very important. In
part, I want to make sure we're not--like we're in the third
inning; we're not judging what's going to happen in the ninth
inning.
But the other issue is, what you're describing is an
important--I don't know if ``attitude'' is the right word, but
an attitude of openness that you would like to see more of, at
least as things have begun to happen.
Yes, Ms. Hagins?
Ms. Hagins. To be fair, when they came and met with us in
November--this is Bank of America--we talked to them about the
SoftSecond mortgage program, which Fleet had already been doing
for a number of years since they came into Massachusetts. We
had an agreement almost within a couple of weeks in November
with the SoftSecond mortgage program.
Mr. Murphy. That's good to hear.
Ms. Hagins. Because it's a mortgage product that works
well.
Mr. Murphy. So in some areas, they did move rather quickly;
in other areas, you want to see their continued progress moving
some of these, particularly the hiring practices and the
availability of mortgage--I know in Pittsburgh, we went through
some of this when Mellon Bank sold off all their branches to
Citizens Bank.
It was locally of concern to them, the very same thing:
What would happen to the local commitment? Who would be hired,
and what jobs would be lost?
We found that, over time, growth was taking place. We also
worried about the impact on all the other banks headquartered
in the Pittsburgh region, some fairly sizable banks; wondered
what would happen with those. Over time, I've seen a number of
these things work out, and to a large extent because folks like
yourselves remain vigilant to that.
I see my time is up. Thank you, Mr. Chairman.
Chairman Bachus. Thank you.
And, Mr. Watt, before you ask your questions, what we've
done on this thing, normally what we would do is go by the
Committee Members and those off the Committee; but the
Committee felt like the Members from Massachusetts, whether
they're on or off the Committee, we would go by seniority of
all the Members here.
So the order will be Mr. Watt, Mr. Capuano, Mr. Meeks, Mr.
Tierney, Ms. Lee--Capuano, Meeks, Tierney, Lee and Lynch. So
that will be the order.
Later, as Members outside the state like Ms. Lee may have
to catch a plane, we will allow them to go before other
Members.
So at this time, Mr. Watt?
Mr. Watt. Thank you, Mr. Chairman. You've just reminded me
how old I'm getting, if you start looking at it in those terms.
[Laughter.]
Mr. Watt. I've made five points that I want to try to make,
not necessarily around questions.
First of all, I want to applaud Barney's role,
Representative Frank's role, in this whole process.
Many of you probably don't know that the first news I got
of the Bank of America/Fleet merger was from Barney. I had been
in Detroit at a Democratic presidential debate, and I had been
traveling all weekend, and then I was going from Detroit to
Chicago for a meeting at the Board of Trade. The first person I
ran into when I got to Chicago that morning was Barney Frank,
with this white look about him, saying, your bank has taken
over my bank.
Fortunately, the first time I had heard that, I heard it
from folks in Florida when Bank of America went to Florida; I
had heard it from folks in Texas when they went to Texas; I had
heard it from folks in California when they went to California;
and I had heard it in other contexts when First Union and
Wachovia had gone to other places. So it's kind of a unique
experience.
Chairman Bachus. We were also getting tired of it, you
know.
[Laughter.]
Mr. Watt. But Barney's role in this, from that moment, we
worked together to try to make sure that the commitments that
were being made were genuine and that Bank of America lived up
to the commitments that it made; and I want to applaud Barney's
role in making sure that these hearings and the specifics of
these commitments get lived up to.
Second, I want to applaud the panel this morning because
you didn't come in talking about generalities; you recognized
that specific commitments are talked about in communities where
banks and people live; so every one of you, as you went down
the roll, talked about the specifics of the communities that
you represent.
I think that's an important challenge to make to Bank of
America, because the comment about CRA not standing for Country
Reinvestment Act but Community Reinvestment Act is an important
one.
Third, I want to say that we have, in a sense, taken a lot
of these kinds of things for granted in our Charlotte
community, in our North Carolina community, from Bank of
Charlotte to North Carolina National Bank to NCNB to Nations
Bank to Bank of America.
There have been a certain set of expectations that we
haven't even tried to document in our communities, because we
have seen the dramatic impact that a financial institution,
with good intentions and with lots of resources--in fact, three
financial institutions--Bank of America, Wachovia and First
Union, and now the combination of those two after the merger--
can have on a community.
Bank of America and First Union and Wachovia have had
transformative impacts on the skyline and the community fabric
and the employment fabric and the procurement fabric of our
communities in ways that--I mean, I could go on and on,
including the neighborhood in which I live, when I was on the
NCNB Community Development Corporation board, stabilizing that
community.
But it's all been an assumed part of what would happen
rather than a contractual part. And when Barney was talking
about the specific written commitments, I could understand the
difference, because it hadn't always been about signing an
agreement; it's been about seeing the results of those
commitments without even having the benefit of an agreement.
But Bank of America needs to understand that as it expands
to other parts of the world where they don't have the benefit
of that good will, there needs to be a different dynamic; and
the same kind of commitments that have been made or the same
kind of performance that has been reflected in our communities
that we have taken for granted will be now expected to be
reduced to writing and delivered upon in different locations in
a different kind of framework. That's the cost of becoming a
national bank: the lack of community confidence that it will
just happen.
So my final point--and I'll follow this up with questions
to the Bank of America representatives when they come--is that
the commitment to CRA, the lending commitment to serve the
credit needs of a community, the commitment to employment, the
commitment to procurement, it seems to me has to be as basic a
part of a merger and results evaluation of a financial
institution as serving the wealthy investment people--I notice
we're moving 300 jobs here to serve the wealthier people--or it
has to be as basic a part of the commitment as, what happens at
the bottom line?
Because that's what we expect banks to do in this country;
and while it's not mandated except in the CRA from the lending
perspective, there is an expectation that banks and every
institution in our society will do their part to eradicate the
disparities that exist in employment opportunities and business
opportunities and small business opportunities and procurement
opportunities because those disparities continue to exist.
So I didn't ask a question; I made a series of comments.
But I hope this helps put in context that national statistics
don't always tell the story of community reinvestment.
Community reinvestment is evaluated in communities in which
institutions live and work, and those specific kind of
expectations have to be a part of achieving the global CRA and
community expectations that we all want to have, do have,
sometimes in not so supportive political climates or economic
climates, but the expectations and aspirations are still there.
Chairman Bachus. Thank you, Mr. Watt.
Mr. Capuano, you're recognized for any comments or
questions you might have.
Mr. Capuano. Thank you, Mr. Chairman.
First of all, I want to welcome you all here to Boston. We
tried to do the best we could with weather, but hopefully it
won't snow before you leave.
I want to thank all the panelists for being here, and I
also want to make a brief commentary first.
We're going to talk a lot about the future, but there's
also one segment of the people impacted by this merger that are
not directly represented here, and that's the employees of the
former Fleet and the new soon-to-be, or actually now, Bank of
America. And I will have some questions for the people who
represent the bank later on.
But I actually think it's too bad that we don't have
somebody that we could talk to about employees, and that's a
function of the fact that the financial services industry is
not very well unionized. Therefore, they don't have spokesmen.
And I take this opportunity to encourage those people that work
for various large institutions like that to get together so
that people like me can have a representative to ask questions
that you're not really qualified to answer.
I also want to make a point--and I know that people on the
panel know, but I want everybody to make sure that we are very
clear--though we've said some good things about other banks,
Citizens is run out of Scotland; Sovereign is run out of
Pennsylvania. They are not local banks.
I actually find it refreshing that although they are not
technically local banks, we treat them as if they are. I think
that's a function of leadership, and more importantly, the
authority that the local leadership has been given by their
various corporate boards to actually run it as a local bank,
and I think the question is still there relative to the Bank of
America.
They have appointed some people that are local and that, as
far as I'm concerned, are very good people that we can work
with. I think, for me, the question is, do they have the
authority to really act as a local bank? I think that just
takes a matter of time to make that determination.
The questions I have really revolve around a document that
I just got Sunday at 10:30 at night that I guess some of you--I
assume all of you have seen it as of Friday, or most of you
have seen it--something called the Community Development
Strategic Business Plan from the Bank of America.
As the Chairman said earlier, I mean, some of the numbers
here are pretty good. We've seen most of these numbers before,
and it's great that affordable housing is going to get four
billion one hundred eighty-five million dollars over the next
several years. That's a wonderful number. Without having looked
at the statistics as to whether that really is a wonderful
number, I will accept it as such, because it's a huge number,
and that's great.
Can any of you tell me where that money is going?
Ms. Flynn. Any of us panelists?
Mr. Capuano. Yes.
Ms. Flynn. No. We asked the question, what was included in
that; and there was a little confusion around what was included
within that category. So it seems to be affordable lending,
some mortgage products, and some investment in rental and real
estate projects; but we're not sure what----
Mr. Capuano. Have we defined the terms ``low'' and
``moderate income''? Have they accepted them as certain
definitions, or are they generic definitions?
Ms. Flynn. No, we don't know what the term ``affordable''
means under this.
Mr. Capuano. So we don't know what towns they're going to?
Ms. Flynn. No.
Mr. Capuano. We don't know what category of people?
Ms. Flynn. No.
Mr. Capuano. Do we know whether these are homeownership or
rental?
Ms. Flynn. No.
Mr. Capuano. So we just know a number.
Ms. Flynn. Right.
Mr. Capuano. What about small business? One billion three
hundred fifty million.
Ms. Flynn. The same. We don't know any information; we
don't know how many small businesses, how many loans, if it's
going to cover the entire state, whether outside of Boston will
be the beneficiary of any small business loans, whether smaller
small business loans will be able to access this kind of
credit.
Mr. Capuano. So we know a number, and that's about it?
Ms. Flynn. Right.
Mr. Capuano. I assume no one here is holding back
information on this.
Ms. Hagins. Well, we have a commitment for ten years for
3,000 mortgages, but it doesn't have a dollar figure.
Mr. Capuano. Mortgages to whom?
Ms. Hagins. To the SoftSecond mortgage program.
Mr. Capuano. To the program that already exists?
Ms. Hagins. Right.
Mr. Capuano. That's good. So that's a program we know is
going to qualify, and we know how it's going to work. Good.
Again, I read the document; I've read it several times now,
and it's a pretty good document. I like the numbers, I like the
generic, broad-bush thing; but I'm kind of left a little empty.
I mean, promote affordable housing production through a
continuation of partnerships with the Mass. Housing Investment
Corp. Great organization; they do wonderful work. Mass. Housing
Partnership; again, great. Mass. Development, Mass. Housing,
CDAC--do we know how much each of those organizations are going
to get?
Ms. Flynn. We know just how much Mass. Housing Partnership
has received, but that's a requirement under state law, for
them to receive a certain amount of loan obligation. Bank of
America did convert some of that loan obligation to grant, so
we know how much that is.
Mr. Capuano. The thing I like is, the bank will convene a
national advisory council made up of prominent public and
private sector leaders throughout the Bank of America
franchise. Could you tell me who the national advisory council
would include? Any of you?
Ms. Flynn. We don't know.
Mr. Capuano. Any of your organizations?
Ms. Flynn. We don't know.
Mr. Capuano. I guess for me, it's a great document; there's
really nothing I can criticize in this document; but, okay, now
what? Have you had any idea of when we're going to get a little
bit more meat on these bones?
Ms. Flynn. No.
Mr. Cofield. No.
Mr. Capuano. Just out of curiosity, when you did Citizens
and Sovereign, which obviously I was involved in, did you get
this level of detail or this lack of detail?
Ms. Flynn. We had an agreement with both of those banks,
and they were probably six or ten pages each. I have copies of
them here. They outline each of the areas that they are going
to be lending in; the number of loans going to LMI areas, et
cetera; the amounts of commitments to MHIC; the amounts of tax
credits they're going to purchase.
Mr. Capuano. My final question, because my time is running
out: Have you had any indication of when there might be meat
added to these bones? I mean, are you meeting tomorrow to put
some meat on this, or next week, or next month, or next year,
or in my lifetime?
Ms. Flynn. We understand that this is the plan they
promised us from Massachusetts.
Mr. Capuano. Thank you, Mr. Chairman.
Chairman Bachus. Thank you, Mr. Capuano. You probably
should have been a lawyer.
Mr. Capuano. Would have made more money.
[Laughter.]
Chairman Bachus. At this time, Mr. Meeks?
Mr. Meeks. Thank you, Mr. Chairman.
And I, too, want to first thank all of you for your
testimony today; but furthermore, I want to thank you for what
you do every day, because what you do every day is looking out
for those who may be less fortunate than most, and what you do
every day is try to make sure people indeed have an opportunity
to share in what folks call the American dream: that is home
ownership, that is to have a job, a roof over their head, and
that is to have a better life, to afford them the opportunity
to give their children a better life than they had themselves
when they were growing up.
So you should be commended for what you do every day. Most
of your jobs I'm sure don't make you rich. You don't get the
huge bonuses that others may get for what they do, but your
commitment is what makes this country great, and I want to
thank you for it.
Financial institutions and financial services, of course,
coming from New York, it's the backbone of New York. I've heard
my colleague Mel Watt talk about Charlotte. I know we're here
in Boston, et cetera; but without financial services in New
York, this city, and indeed this nation, could be greatly
affected.
I can recall, about twenty years ago in New York we had six
major national banks. Today, they're down to three. I mean,
it's like we had, I think it was Citibank, Chase Manhattan,
Chemical Bank, Manufacturers Hanover Trust, NatWest, and
eventually Fleet Bank, and of course JPMorgan was there doing
all of the high-end privileged services.
Then we had Citibank; Citibank is still Citibank. Manny
Hanny was swallowed by Chemical. Chemical then melded with
Chase. Chase then merged with JPMorgan, which now has merged
with Bank One.
The thing that concerns me at some times is that maybe ten
years from now we'll have one bank, one insurance company, one
securities company, and all will be affiliated through Gramm-
Leach-Bliley, which can have an effect on competition, and
therefore on services that may be in the community.
Now, I understand that financial institutions have to make
some money, and I'm not opposed to them doing that. In fact, I
want to encourage and help them to do that.
But I have some concerns with reference to making sure that
we continue in the climate of the negotiations that go on once
we have these mergers. What I'm hearing from the panelists here
is, it seemed to have been a different climate when you had the
negotiations with Sovereign as opposed to negotiations that are
currently going on.
So I guess, before I make that assumption, is that correct?
Is there a different climate in the negotiating rooms that
you've had with both?
Mr. Cofield. Certainly, on the two aspects that I spoke
about, a very different climate. That's what I was making
reference to when I referred to an attitude of openness. It's
just quite different.
Ms. Flynn. I agree. The negotiations weren't pretty with
Sovereign or Citizens. The bank pushed us; we pushed the bank.
But in the end, what we got out of it was an agreement, a
partnership, about how to meet low- and moderate-income credit
needs in the Commonwealth.
So in the end, there was an agreement, a partnership.
Mr. Meeks. Now, let me jump to--and I know Mr. Cofield
mentioned this, but I'll open it up.
In regards to either with Sovereign and now dealing with
Bank of America, is there any specificity with reference to any
goals in regards to procurement, in regards to employment of
African-Americans and minorities and women?
Mr. Cofield. Yes, there is. And Maureen is absolutely
right; that took some time and negotiation.
People of color represent roughly 20 percent of the
population of Massachusetts--it's a hair under 20 percent--and
people of color meaning blacks, Latinos, Pacific, Asian-Pacific
and Native Americans. That represents roughly 20 percent, close
to 20 percent, a hair less than 20 percent of the population of
Massachusetts.
Our approach was, that diversity in Massachusetts ought to
be reflected in the employment levels of the bank and in the
way the bank does business; and we think that's reasonable,
that the bank's business reflect the population.
We did achieve that aim with those two banks. With
Sovereign, we first had a five-year agreement right after their
merger; and because Sovereign was new here and we didn't know
how they were going to work out, and they probably weren't so
sure, the agreement called for a renegotiation of the five-year
deal three years into the deal. So we had an agreement
initially. That agreement was renegotiated over the past few
months and signed a few days ago.
And let me say, to Sovereign's credit, what they've agreed
to do is to sign a totally new five-year deal; so they have
added on three more years beyond what was initially required in
the five-year agreement.
Mr. Meeks. Are you anywhere currently with Bank of America
in regards to goals?
Mr. Cofield. No, we are not; and that's what I referred to
as disappointing.
I had at least a refreshing conversation with the two bank
officials on Thursday morning, and it was an extended
conversation. But there has not been a definitive discussion
about the two issues that I've raised at all, and what they
have referred to is their national plan.
That's why I refer to the CRA being a community-based plan
and not a country-wide-based plan. I hope we would get there;
there was no indication that we would get to the community-
specific level in the discussion on Thursday. I did see a
change of attitude in that discussion, and I'm hoping that it
would get to the level of specificity that we have with
Sovereign and Citizens.
They are well aware that their two largest competitors in
Massachusetts have provided the specificity, and that's what
we're looking for, and we think it's most reasonable. To have
any other plan would suggest that you're going to continue to
have an employment level that shows disparity, and a
procurement level that shows disparity.
Mr. Meeks. My last question--I see my time is up--this is
to anybody, because I haven't heard anyone speak of it, but I
know particularly in communities where there are poor people,
as far as education is concerned, one of the biggest
disparities is the lack of understanding, in public schools in
particular, where there's no financial literacy being taught.
So my question to anyone is, is there a discussion ongoing,
whether it was with Sovereign or with Bank of America or with
anyone, about a part of CRA being investments within
particularly public schools in regard to teaching young people
about financial--or making them become financially literate, so
therefore they can take care of their money and understand
better how to operate and deal on a personal level when they're
banking with whatever the financial institution may be?
Mr. Cofield. Certainly some of the organizations that are a
part of the Community Advisory Committee provide programs
dealing with financial literacy. And I agree; I too think that
that's very important.
To the extent that these institutions are supporting, by
grant and in other manners, those organizations that are
providing that program, I would answer yes.
Chairman Bachus. Thank you, Mr. Meeks.
Mr. Tierney?
Mr. Tierney. Thank you.
Thank you, Mr. Chairman. I want to thank you for working
with Congressman Frank to bring this hearing to Boston and the
Massachusetts area, and I want to thank you also for allowing
me to join the Committee, and all of the other Members for
their courtesies in terms of letting me be here, as well as the
order of speaking; and I appreciate that a great deal. I thank
all the witnesses for their testimony and for what you
contribute to our life around here.
I seem to hear over and over again that this is a situation
where we need a good negotiation to be conducted on the
important matters, and that where you've had that negotiation,
everybody has benefitted. It's been good for the banks, good
for the groups for which you advocate, and good for the
community.
Somebody described--I don't know if it was Ms. Baldwin or
who it was that said it--there was a push and shove, push with
Sovereign, Sovereign pushed back, and the same with Citizens.
It appears to me here that in the past, Bank of America
doesn't like being pushed, either because they think they're
too big for it or because they haven't yet focused on the local
idea in how allowing this to go on is really going to be
important for this region and for the local aspect of this. So
hopefully we can ask some questions about what the attitude
situation is at the bank when we have those witnesses here.
I would like to ask just two questions.
One, Mr. Cofield, when you talked about race, which I think
is important, how would you propose that the current law be
changed in order for us to address the continuing concerns
regarding that issue?
Mr. Cofield. It is my firm belief that we should be working
towards a goal in which race is no longer an important issue in
our nation and in our communities.
I would like to, at some day, see that there's no more of a
need for an NAACP, that we as a nation have gotten beyond the
issue of race.
I truly believe that if we're going to get anywhere near
there, we need to work towards a solution that ends disparity
and not supports disparity; and that's what I'm trying to
convey and is the thrust of my presentation. We need a program
that doesn't continue to support disparity.
That's the distinction that I've seen today between our
dealings with Sovereign and Citizens. I think both of them get
it, and I do give a lot of credit to the leadership of both. We
just haven't seen it today.
Mr. Tierney. Can I interrupt you? Only because I'm limited
in time, and I want to do this as respectfully as I can; but
how specifically are we to change the law? I think your goal is
exactly on point. But is it the law that we need to change, or
is it the enforcement aspect?
Mr. Cofield. It's probably both; but certainly as it
relates to the law, in my opinion, there ought to be specific
language in the CRA that requires an institution, when it goes
or is already in a community, that it set up programs to
reflect the racial and gender disparity in both of those areas,
in employment and in procurement.
And I think that's rather easy. There is available census
data that shows the diversity of a community, and in my opinion
there ought to be specific language in the CRA regulations, in
the CRA statute, that requires that a bank, in operating in a
community, reflect the diversity in that community.
Mr. Tierney. Thank you. And then I suspect that that
wouldn't do much good unless we had some enforcement mechanism
on that after the merger on that.
Mr. Cofield. Absolutely.
Mr. Tierney. Ms. Flynn, let me ask you the same question,
but this time with regard to the small business lending. What
changes in the statute do you think are necessary to allow us
to address the concerns that some institutions may not be
focusing on how they're going to distribute small business
lending?
Ms. Flynn. I think the statute, as written, is pretty
broad. It says that banks should affirmatively try to meet the
credit needs of the communities in which they serve.
So even issues around race and how they are going to serve
communities of color could be met under the current law. It's
how the law is interpreted under regulation.
Right now, there is an emphasis in the regulation on
serving the needs of low- and moderate-income communities, and
that's great; but it doesn't exclude the need to look at how
communities of color have been served.
So if the regulations were tweaked to be more specific
about the communities and individuals within the community that
should be served by the banks, that would be an improvement.
Secondly, on the small business aspect, again, the banks
must report under CRA how they've done on those three
categories of small business lending. So it's there, but
perhaps a greater emphasis on that part of the test in awarding
grades on CRA would be beneficial.
Mr. Tierney. Thank you very much.
Mr. Chairman, thank you again.
Chairman Bachus. Thank you.
Mr. Lynch?
Mr. Lynch. Thank you, Mr. Chairman.
I have a statement I'll enter into the record, in the
interest of time; but I do want to say, if I could go back to
Mr. Frank's opening statement, he talked about the rhetorical
question about what Congress's rightful role here is in
requiring a private entity or private entities to make such
sizable contributions to the public good and in some cases of a
charitable nature.
I just want to emphasize or re-emphasize his conclusion
that government has played a significant role in creating banks
of this size. We have enhanced and protected the position of
Bank of America. We have seen them acquire a number of banks,
and now they have become so large and so overpowering and so
overwhelming to the average citizen, and now even the average
community, that I think it is entirely reasonable for citizens
and their representatives to come to Congress to ask Congress,
that created these conditions of powerlessness in many
communities, to be their champion and to speak on their behalf.
I just want to thank the panel for measuring the unmet need
in their communities and coming forward and articulating so
well on behalf of all of our communities, of color and of need,
and helping us to close the loop, if you will, with the Bank of
America and Sovereign as well in terms of addressing that
inequity in power between our local communities and this bank;
and also somehow keeping that close connection between our
banks and those local communities so that that community
connection is not lost when these banks, as Bank of America has
become a bank with over a trillion dollars in assets, and a
far-flung empire from California to Boston and everywhere in
between. It's very difficult for local communities to get
response and to remain a viable priority in the eyes of such a
huge organization.
So I want to thank the Chairman, and I want to thank my
colleagues in the Congress for honoring us, really, and giving
this wonderful courtesy to come to Boston, to my district.
I also want in particular to thank Ms. Hagins for her work.
I grew up in the Old Colony housing projects not too far from
here, and I know how important that SoftSecond mortgage program
is for a lot of my constituents who are still struggling to buy
their first home.
That first homebuyer program is a great program, and we
need to see more of that continue; and if it were not for the
work that is being done by Ms. Hagins and others who are here
today representing our CDCs and affordable housing advocates,
this need would be lost. It would be lost in the shuffle, and
the problem would grow worse, not only in the city of Boston
that I represent, but also in the city of Brockton that I
represent that is about 40 minutes from here, and all the towns
in between.
So I appreciate the good work being done by this panel and
the spirit of cooperation we've seen from Bank of America and
Sovereign thus far.
Thank you.
Chairman Bachus. Thank you.
Ms. Lee?
Ms. Lee. Let me first thank our Chairman and also
Representative Frank for calling this hearing and for our
panelists, for your very succinct testimony.
Of course, I have much history with Bank of America, going
way back to before its leaving San Francisco and Oakland.
During the late '80s, mid to late '80s, in low-income/moderate-
income communities in my area, B of A unfortunately began to
leave; it wasn't profitable enough. We saw then the rise of
predatory and payday lenders, and there was a big void in the
Bay Area as a result of that.
Then of course, unfortunately, with the move to Mr. Watt's
district, we still haven't recovered from the negative economic
impacts in terms of employment and really a turnaround in terms
of what we had hoped to take place with regard to economic
investment and compliance with CRA.
A couple of things I'd like to just ask panelists.
First of all, in any financial transaction between a
consumer and a financial institution or a credit card lender or
any organization, the consumer is required to live up to their
commitments as they engage in these negotiations and these
agreements. There's a penalty if they don't live up to their
commitments.
With regard to CRA--and I've heard this over and over and
over again--commitments are made during the merger process;
they may or may not be specific; but after the merger takes
place, it's like you would never believe there were any
commitments made.
We heard during this last election the notion of values,
that ethics was very important; and I'm just wondering--and a
consumer would be considered--you know, that behavior is
considered unethical.
I'd like to just ask the panelists how you viewed not
living up to a commitment in order to get a deal done, and
then--and I'll ask the banks this, also--then say either we
didn't make the commitment, we did make it, it wasn't what you
thought it was, we need to go back to the drawing board.
What are the ethical kinds of dimensions of that that we
really need to look at, aside from the legal aspects? Which I
think there should be penalties, quite frankly; if in fact
organizations and financial institutions say they're going to
do something, then they should do it. But beyond that, how do
we look at the correctness of that just in terms of American
values?
Ms. Hagins. I know we have written agreements with all of
the banks that do the SoftSecond mortgage multi-year
commitments. No, we can't go to court and use them, but we hope
that they would live up to those commitments. We meet with the
banks every year to make sure that they are on tune to do the
number that they've agreed to do.
We will hold a community meeting, as we did--the last one
was two years ago with 1,500 people in the room--and they have
to be accountable to those people. So we try to make them
accountable in that way, because we don't have any legal
recourse other than that.
Mr. Frank. That does include the Bank of America in this
case, correct? They have a written agreement.
Ms. Hagins. Right, they have a written agreement for ten
years for 3,000 loans for the State of Massachusetts.
Mr. Cofield. Congressman Lee, I do see it as a moral
commitment. And the role of the Community Advisory Committee
and the organizations that compose that loose-knit coalition is
to stay in place; one, first to negotiate what we believe is a
reasonable agreement with the institutions, and then to work
with the institutions to help them achieve the goal.
And generally that's the way it has been working here;
sometimes better than others, but that's the way it has worked
here, as we have reached these agreements, and the CAC stays in
place and sees it as its role; and the banks that we have dealt
with generally have seen that as a positive thing, so it has
worked well.
But clearly, we believe that it's certainly a moral
commitment, if not a legal commitment.
Ms. Lee. Ms. Baldwin, can you comment?
Ms. Baldwin. Yes. I personally have had a lot of
frustration with our experiences with JPMorgan Chase. I'm not
naive, but I was sort of shocked that a reputable institution
just wouldn't do what it said it would do.
Usually the discussion is around, well, gee, maybe we
misinterpreted our various commitments, where the bank is
saying they would do A and they thought they were honoring it,
and we had a different idea in mind.
Most often we do get letters in writing, saying they'll do
certain things. I have no idea if those are legally enforceable
or not. And banks generally--where I run into difficulty is
monitoring. I've had some banks tell me, yes, we're doing what
we said we would do; but we won't give you the line-item detail
on what these community development loans were. You just need
to trust us that we're doing it.
The other issue I have is that although these commitments
aren't required to get the merger approved, they announced them
in the course of the merger. So I do think, since that was the
context they played out, the regulators really should look at
it and hold them accountable to honor what they were doing.
Ms. Lee. Should past compliance with any type of CRA
progress be part of the criteria for a merger, or is it only
prospective? Or should it be just prospective?
Ms. Baldwin. Well, it's actually overweighted on past
performance; and my sense, from when I read the approval
orders, they rely very heavily on CRA performance evaluations.
Those CRA performance evaluations I don't think look
specifically at how banks have honored existing CRA
commitments. I'm not sure.
But there's no requirement that going forward, that any of
these banks do a specific CRA plan.
Ms. Flynn. I think one way to deal with this issue is, on
the next exam after a bank, two banks have merged, on their
next CRA exam, to bring this up as an exam question, if you
will, that the banks should be graded on immediately after they
merge so that they are held accountable to the promises and the
commitments that they made before they merged.
Ms. Lee. Thank you very much.
Chairman Bachus. Thank you very much; and Mr. Frank, as he
said, your testimony was very helpful. We appreciate your
attendance here today.
At this time we'll call our second panel.
Our second panel is Ms. Anne Finucane--is that correct?
Ms. Finucane. That's right.
Chairman Bachus. You were formerly with Fleet Boston, and
are now the president of Northeast Bank of America.
Ms. Finucane. That's right.
Chairman Bachus. And Mr. Joseph P. Campanelli.
Mr. Campanelli. Yes, sir.
Chairman Bachus. Chief operating officer of Sovereign Bank,
New England Division, and Vice Chairman of Sovereign BankCorp.
Mr. Campanelli. Yes.
Chairman Bachus. So we welcome both of you.
As you probably heard the first panel, and I think they
both referred to some of their discussions with you all, and I
think were very favorable of some of your activities. So you're
welcome to this hearing.
Ms. Finucane, we'll start with you.
STATEMENT OF ANNE FINUCANE, PRESIDENT, NORTHEAST BANK OF
AMERICA CORPORATION
Ms. Finucane. Good morning, and thank you. Thank you,
Chairman Bachus, Ranking Member Frank and the Members of the
Committee.
Can you hear me?
Chairman Bachus. Bring it a little closer. It won't sound
natural, but it is.
He keeps saying I don't sound natural.
[Laughter.]
Chairman Bachus. It doesn't do anything about accents.
Ms. Finucane. Good morning, Chairman Bachus, Ranking Member
Frank, and Members of the Committee on Financial Services. My
name is Anne Finucane, and I serve as the president of the
Northeast region for the Bank of America. Ken Lewis, our
president and CEO, has asked me to convey his regrets. Since he
is attending our company's previously scheduled board meeting,
he was unable to be with us here today. He has asked me to
testify on his and our company's behalf.
As a brief preamble, I'd like to state that as a result of
the merger between Bank of America and Fleet Boston Financial,
Massachusetts and the rest of the Northeast now serve as a key
operational base for one of the country's premier financial
services companies by almost any measure: number of customers,
number of people employed, distribution, products and services,
earnings and philanthropy.
Going into this transaction, we understood the important
role that Fleet had played in fueling the local economy and
enhancing the vibrancy of our communities as an employer, a
lender, an investor, a philanthropic donor, a sponsor, and a
community partner. As Bank of America, we are committed to
continuing this important leadership position.
In negotiating this merger, both Chad Gifford and Ken Lewis
agreed upon unprecedented initiatives in the area of employment
and community development as well as philanthropy for this
region's benefit. Each of these initiatives far exceeds what
Fleet could have delivered if it had continued on its own
separate path.
Now I would like to address the three primary questions
posed to the Bank of America by the Committee.
On the question regarding jobs and employment levels, we
take very seriously our commitment to maintain the premerger
employment level of 17,900 full-time employees in New England.
We believe that this, too, is an unprecedented commitment.
As of October 31 of this year, there were 15,000 full-time
equivalent employees in New England, representing a loss or
reduction of 2,900 associates, which essentially covers the
merger-related lay-offs.
We recently announced plans to add 400 employees in our
wealth and investment management headquarters in Boston, and
another 700 more in Rhode Island, for a total of 1,100
additional full-time equivalent positions in New England, all
announced in a four-month period. That puts our New England
employee total at 16,100 to date, or a net reduction of 1,800
since the time of the merger.
We will meet our commitments to the 17,900 employment
number by 2006 relying on the same approach we have used to
bring the 1,100 positions I just mentioned back to this region,
which we announced in the last four months.
As for our Bank of America associates in the Northeast, we
offer job opportunities, a comprehensive work life benefits
program and new employment benefits previously unavailable to
our Fleet associates. We are on our way to returning to
premerger levels of employment.
On Question No. 2 regarding our commitments: Bank of
America may be new to the Northeast, but like Fleet, the bank
has a long tradition of growth through mergers. And at the
heart of our experience is this philosophy: A strong business
depends on a strong local community and a strong local business
climate. We believe that we have an outstanding track record of
putting this belief into action; and just by way of example, we
are demonstrating our commitment to the Northeast by targeting
$100 billion of the new $750 billion community development goal
to this region.
During the course of developing these goals, we met with
more than 100 community groups; and much of their input is
reflected in the development of these goals. A great deal of
progress has been made; and just to use Massachusetts as an
example, we have committed to $406 million in loan financing,
$18 million in grants for the Mass. Housing Partnership, $200
million in community development loans to the city of Boston.
We agreed to continue membership in the Federal Home Loan
Bank of Boston to originate 3,000 mortgages over the next ten
years with MAHA and to maintain a $20 million plus loan pool
with the Massachusetts Housing Investment Corporation. And we
have outlined our community development Massachusetts goals by
category with an overall 24 percent lift over what we did at
Fleet in the same time period.
In addition to our commitments to employment levels and to
community development, we have committed not just to maintain
but to increase our charitable giving in support of building
healthy and vibrant neighborhoods. In 2004, Bank of America
will have invested more than $9 million in philanthropy and
community sponsorship funding for Massachusetts alone, which is
more than we had done in 2003 as Fleet alone, focusing both on
giving to large and small organizations, including a $1 million
gift to Children's Hospital, a $1 million gift to City Year,
$60,000 to the mayor's Main Streets program, and $200,000 each
to Stride and the Lawrence Community Works program through our
Signature Neighborhood Excellence Initiative.
And if there are still concerns, consider this: that each
bank on its own, Fleet and Bank of America, earned outstanding
CRA ratings and exceeded our community commitment goals as
individual banks. Bank of America is the number-one SBA lender
in the country and the number-one SBA lender to minorities. We
are the number-one mortgage lender to minorities as well.
In 2003, Bank of America spent more than $620 million with
diverse suppliers, and we expect to exceed that goal in 2004.
Just last week we were named the top corporation for
multicultural business opportunities of 2004 by more than
350,000 diverse business owners.
Finally, on Question No. 3, the adequacy of current laws,
let me turn to the merger approval process in connection with
the Fleet/Bank of America merger.
We filed applications or notices with four federal
agencies, more than 30 state agencies, several self-regulatory
organizations, and more than two dozen foreign countries. We
participated in four public hearings in three different states
involving more than 200 witnesses, and we responded to nearly
400 comment letters.
The approval process spanned more than five months, with
the last approval received the day before our scheduled merger
date. Certainly an exhaustive process, but one we can
appreciate.
In our opinion, there are adequate measures in place to
ensure that a bank honors its public pledges. Further, we
recognize that the more favorably customers view their bank,
including its role in the community, the more likely we are to
retain and grow their business. This is a premise underlying
the way Bank of America has operated across the country.
In conclusion, I'd like to emphasize one key fact: that the
new combined bank, the new combined company, enables us to do
more for the New England region, more for Massachusetts, than
Fleet Boston Financial could have done as a stand-alone
company.
Thank you.
Chairman Bachus. Thank you.
[The prepared statement of Anne Finucane can be found on
page 277 in the appendix.]
Chairman Bachus. Mr. Campanelli.
STATEMENT OF JOSEPH P. CAMPANELLI, PRESIDENT AND CHIEF
OPERATING OFFICER, SOVEREIGN BANK, NEW ENGLAND DIVISION, AND
VICE CHAIRMAN OF SOVEREIGN BANKCORP, INC.
Mr. Campanelli. Chairman Bachus, Ranking Member Frank,
Congressmen Capuano, Tierney, Lynch, and Members of the
Committee, on behalf of Sovereign Bank New England and
Sovereign Bancorp, I'd like to thank you for this opportunity
to speak before you this morning. Along with my written
remarks, I have provided written testimony for the record.
During the next few minutes, I'd like to address the
questions you have posed concerning the acquisition of Seacoast
Financial Services Corp. with regards to jobs, benefits of the
acquisition, and commitment to our community.
Since Sovereign entered the New England marketplace almost
five years ago, due to the merger of Fleet and BankBoston, we
have grown organically and through two acquisitions in the
region: Seacoast Financial and First Essex Corp. Our
acquisition strategy has been to gain a presence in key markets
and to better serve our existing customers and prospects.
Sovereign recognizes the critical importance of job
creation to the continued development of our communities.
Putting aside the impact of our acquisitions, Sovereign
employment levels have grown in Massachusetts by approximately
4 percent per year. We are proud of the fact that we continue
to grow our core job base here and anticipate continuing to do
that in the future.
Prior to the Seacoast acquisition, we projected that
approximately 74 percent of the employees would be retained.
All branch staff and other personnel working with customers
would be included in those retained.
We realize the potential hardship the loss of a job can
have on an individual and their family. Sovereign promised that
we would consider former Seacoast employees first in filling
any open positions throughout our company. Following the
acquisition, we retained 74 percent of Seacoast's positions.
Those not offered positions received a severance package,
which includes severance payments, continued health, dental and
life insurance benefits for up to one year, job training, and
outplacement services.
To date, we have placed 20 impacted employees in jobs at
Sovereign, and we will continue to give former Seacoast
employees priority in all future hiring.
There are benefits as a result of the acquisition for the
former customers and communities. Our customers receive a wide
array of products and services previously not available to
them. They have access to additional branches and ATMs; they
have customer-friendly products, including totally free
checking for both retail and small business customers; and they
have additional conveniences of enhanced online banking
products.
Businesses also benefit by having access to our extensive
cash management products, trade finance, payroll and merchant
services, saving them time and money.
I'd like to now address the community commitments that
Sovereign has made.
Sovereign is proud of our track record of meeting or
exceeding our commitments. I will also note that Sovereign
received an outstanding ranking in our most recent CRA
examination. In all of our acquisitions, we have not exited any
communities, and we have experienced growth in every market we
serve.
Recently we reorganized our management team to get closer
to communities we serve, with local decision-making and local
accountability. Every decision that relates to communities in
Massachusetts is made in Massachusetts.
Here is a situation where one and one equals more than two.
Prior to the acquisition, Sovereign and Compass Bank had made
local commitments totaling $450,000 in charitable giving. After
the acquisition, Sovereign has committed a total of $600,000
per year over the next five years, well over the previous
commitments of the combined banks.
In addition, Sovereign has made an equity investment of $1
million in the Southeastern Economic Development Corporation in
Taunton, exceeding previous bank commitments by 30 percent.
We had made commitments to Mass. Affordable Housing
Alliance to originate SoftSecond mortgages to first-time home
buyers. We have improved our ability to serve those customers
by locating mortgage originators and agents in offices in
Roxbury, Massachusetts.
In an effort to serve more low-income homeowners, we are
committed to work with the Federal Home Loan Bank and Members
of Congress to get direct access to affordable housing programs
through the Boston Federal Home Loan Bank.
Sovereign has established community advisory boards in all
the regions we serve. Through them we work collaboratively with
our communities. We are planning on expanding our boards from
two to five over the next year. We truly believe that a bank
needs to listen to the concerns of the community, and must have
a mechanism in place, such as advisory boards, to address those
concerns.
Sovereign is proud of its record of being in and of the
communities where we live and work. We look forward to
continuing to provide exemplary products, programs and services
which will strengthen our customers, our community, in turn
strengthen Sovereign Bank.
Once again, thank you for inviting me to speak before you.
I'm happy to answer any questions you may have.
Chairman Bachus. Thank you.
[The prepared statement of Joseph P. Campanelli can be
found on page 110 in the appendix.]
Chairman Bachus. Ms. Finucane, what new benefits have come
to consumers of Fleet Boston? What have they gained as a result
of the merger with Bank of America? And what has the consumer
response been to the new bank? I know Mr. Campanelli said that
deposits in the accounts have increased.
Ms. Finucane. Well, through research, we have discovered
that more than 20 percent of our customers, the former Fleet
customers, see the new bank more favorably.
Chairman Bachus. And pull that mike up, if you would.
Ms. Finucane. I'm sorry.
So our customers see our bank more favorably since we
announced the merger and since they've started to interact with
us as Bank of America.
We have increased net new checkings by more than 100,000,
new checking accounts; same on savings accounts. So I think
both the economics and the syndicated research would indicate
that that was favorable.
Specifically, why do they see it more favorably? I think
because there is a national network of ATMs and branches that
they can go to across the country at no surcharge. We have free
checking, free online bill pay, a better suite of products in
terms of mortgages, and frankly we can put more money into the
communities in which we work and live.
Chairman Bachus. Those are new benefits. And you did
mention putting money into the community, the $1 million to
Children's Hospital and others, philanthropic. Has that
increased, your philanthropic giving?
Ms. Finucane. Yes. We will increase our philanthropic
giving. We just made a commitment for the next ten years that
we will put $1.5 billion into charitable giving.
So on a combined basis, what we're talking about is, the
charitable giving Bank of America did, the charitable giving
that Fleet did, combined, will over time be 40 percent improved
on that combined basis; and immediately we just saw about a 10
percent improvement in the last year.
Chairman Bachus. I see.
What new benefits have former Fleet Boston employees been
provided as a result of joining Bank of America, those that
have retained their jobs?
Ms. Finucane. First of all, they have greater job
opportunities, stronger training programs.
But just to give you two ideas of two specifics, we have a
home ownership program for our associates that allows--it's
basically a forgiven-loan program. We give $5,000 to an
employee toward the purchase of their home, and if they stay
with the company for five years, we forgive that loan entirely.
During the course of that five years, they're just paying on
the interest, anyway. We also have some fee waivers that go
with that. Tree hundred and nineteen of our former Fleet
employees have taken advantage of that just since May of this
year.
In 2005, we will introduce to the Bank of America program,
to our Fleet associates, now Bank of America associates, a
child-care program for lower-paid employees. Individuals that
make $34,000 or less or have a household income of $60,000 or
less will get $175 per child per month credit toward child
care.
Chairman Bachus. Okay. You know, you're talking about a
large financial services corporation like Bank of America. How
are you working to uphold the CRA requirements to deliver
products and services to the LMI communities on the local
level?
Ms. Finucane. Well, thank you for asking the question,
Chairman Bachus, because I know this is sort of the gist of
many of the comments made by the community groups.
First of all, I think we appreciate the fact that Bank of
America is new to the region; and to Congressman Frank's point
earlier, sometimes, if it's unfamiliar, organizations can cause
some trepidation.
I'd point again to the fact that both banks previous to
this merger had outstanding CRA ratings. I would point out that
both banks previous to this merger made commitments and then
exceeded them in terms of the total goals.
I would say that--and the community groups are aware of
this--we have taken $750 billion. We've broken that out in
terms of the Northeast. For instance, Massachusetts knows that
the number is $8.4 billion for the next three years. We've
broken it by category. We've talked to many community groups.
I really think the gist of the problem that they see is
they would like a lot of--we will report out on every item that
they would like to know at the conclusion of a year. First of
all, we will report out, not only by the state, but by
metropolitan statistical analysis by each of the categories. It
will include the LMI information, minority information to the
degree it's disclosable.
You also have HUMDA data, you have our CRA filings each
year, and you have our filings with the SBA. That in total is
very specific, but it isn't--so we set the goals, and the
reporting happens at the conclusion of the year. At the
conclusion of the year, if there are any problems, we get
together with our community groups and work to solve them.
Chairman Bachus. Thank you.
And I think you've targeted $100 billion for the Northeast?
Ms. Finucane. $100 billion for the Northeast over a ten-
year period, but that's such a large number. We're trying to
deal with it now in three-year increments, because I think it's
much more tangible; and for the State of Massachusetts, it will
be $8.4 billion, which is a 24 percent lift over what Fleet
did.
Chairman Bachus. What is that about the market president
network working with--what was that? I had read that.
Ms. Finucane. We have market presidents in each of our
states, and in fact, using Massachusetts again as an example,
we have a Massachusetts state president, and then we have
regional presidents in Springfield, Worcester, Boston and Cape
Cod. Each of those works with our people in CRA and in
community development to look over the goals and to make sure
they're met on a business level.
It's more than just commitment. You have to make these
goals with the businesses. You have to reach out to the retail
group and the middle market group and the real estate loans to
make sure each of these happen, and they oversee that process
on a local basis.
Chairman Bachus. Are you making strong local community
alliances?
Ms. Finucane. Yes. As I've said, we've met with more than
100 community groups.
Chairman Bachus. Thank you.
Mr. Lynch?
Mr. Lynch. Thank you, Mr. Chairman. Anne and Joe, I want to
thank you both for participating in this hearing. I just have
one brief question for each of you.
Anne, I know you've gone over generally some of the
employment numbers, but could you take me through that again?
Just where are we now with employment? It seems to be, you take
one step forward, one back, but I know that's going to
fluctuate for a little bit.
And more importantly, what are our projections for, say,
the next two years going forward with employment?
Ms. Finucane. Thank you, Congressman Lynch.
We, premerger, announced--by the way, I use this word
``FTE,'' full-time equivalent. That sort of eliminates the
issue of part-time/full-time. About 80 percent of our employees
are full-time, 20 percent part-time. Full-time equivalent
means, if there were two part-time employees, they are one
full-time equivalent.
So we had 17,900 full-time equivalents, premerger.
The impact of the layoff in New England was 2,900 full-time
equivalents. We have already hired back or have announced the
hiring back of 1,100 of those, so that gets us down to, we
still have a gap of 1,800. But we've done 1,100 in four months;
I think it's reasonable to think we can do the next 1,800 in
two years.
The way we've done it is, we will look at many things, but
two primary ways we've gotten back just the 1,100 is by moving
the wealth and investment management group to Boston. That is
one of the four major divisions of the company. It has six
business units that report up to it, but it's one of the big
divisions of the company. There are four big divisions.
We've headquartered that in Boston, so we can expect that
we will continue to grow the population of an employee base
there, which are very well-paying jobs. We put 700 people,
actually 700 full-time equivalents, 900 people that we will
hire in Rhode Island and southeastern Massachusetts in a center
that we've put down there, a processing call center in Rhode
Island. So I think it's the combination of those kinds of
initiatives: growing business and then bringing business here.
Mr. Lynch. Just one follow-up.
I know that Maureen Flynn had mentioned in her testimony
that we had one CRA specialist from Bank of America to handle
both Massachusetts and Rhode Island.
Ms. Finucane. Right.
Mr. Lynch. Is there any chance that we might be able to get
another person hired to take care of Massachusetts, one person
handling Rhode Island?
Ms. Finucane. Well, she's talking about a relationship
manager. We actually have about ten people that handle the
territory in the areas of tax credit or lending or mortgage
origination. So she was talking about a relationship manager.
I think what's reasonable is that we look at those ten
people and see if there's a better distribution in terms of
relationships.
There was also an issue, I know, that Florence raised with
lenders in Boston for the SoftSecond program. We agree with
that, and we're in the midst of hiring.
Mr. Lynch. Terrific. Thank you very much.
Joseph, if I could ask you, could you elaborate a little
bit on the plans of Sovereign Bank post-merger to meet or
expand its CRA commitments in struggling communities? I've got
a few of those. And also if there are any job-enhancement
possibilities specifically for people living in those
communities.
Mr. Campanelli. Yes; thank you, Congressman.
Many of the discussions we had in our community advisory
group is how we can do a better job. One of the things that
came out of those discussions is a need for us to better
deliver our bank products to all of our communities.
The catalyst behind our reorganization was to put senior
executives in those communities that can make decisions and are
held accountable for the entire bank product distribution,
whether it's CRA, consumer, small business, or general
corporate banking.
That has really allowed us to find opportunities, such as
Roxbury Technology, where they had a struggling company; had a
great opportunity to provide products to Staples. We partnered
with Staples, provided a working-capital line. Ten new jobs are
added in Roxbury, and we believe that's only the beginning.
It's a model that we're looking to expand throughout all our
footprint.
We're so supportive of it, we've actually moved our entire
purchasing relationship from a current provider to Staples,
because we feel Staples gets it. They want to look at ways you
can do a better job of creating jobs in the city tied to
affordable housing.
It really is an integrated approach on how we work with the
community groups that are out there, the development agencies,
some of the state and local programs, and with our own team
members in those markets, making a difference.
Mr. Lynch. Thank you, Joe; thank you, Anne.
Mr. Chairman, I thank the Committee for your courtesy to
me. I do know that Senator Nuciforo and also Representative
Quinn are going to testify on the next panel. Unfortunately I
have to be somewhere else, but I will follow up on both of
those legislators after the hearing, after their testimony; so
we'll touch base then. Again, thank you, Mr. Chairman.
Chairman Bachus. Thank you.
At this time, I recognize the Ranking Member.
Mr. Frank?
Mr. Frank. Thank you, Mr. Chairman.
I want to say, as I said before, there has been unusually
good testimony from all of the witnesses, and I appreciate it.
I want to comment particularly on the choice of one
witness. There was one report that somehow the fact that Ms.
Finucane was testifying instead of Mr. Lewis was a problem for
the Committee. Quite the opposite is the case. It would be very
odd if we were simultaneously to complain that there was not
enough local input, and an objection when we got it.
[Laughter.]
Mr. Frank. The fact is that Ms. Finucane has been, I think,
a very important player in understanding. And she's in the
middle; she's conveying messages both ways. There was no
problem at all, it seems to me; in fact, I think it is
preferable.
We've had a chance to talk to Mr.Lewis; people seem to have
forgotten, those who commented on that, that Mr.Lewis made a
special trip up here in September when we were particularly
distressed about employment. He visited Representative Quinn,
Senator Nuciforo, Representative Capuano, myself and
representatives from the offices of my colleagues; so we regard
this as an entirely legitimate and useful approach.
Let me say, here is the situation with Bank of America. We
have a major national economic entity entering this region.
They come in, and they buy up what had been a major regional
entity.
That's a fact that inevitably gets people nervous. It
doesn't mean anybody's a bad guy or a bad woman; it's just
that's the kind of thing that happens.
It also, though, is very important. Clearly, we're going to
have to learn to live with each other. I think we ought to be
ready to do that. People have said, well, you know, if it was
up to us, Bank of America wouldn't be coming in here.
Well, if it was up to some people at the Bank of America,
maybe I wouldn't be in office.
[Laughter.]
Mr. Frank. I mean, we didn't pick each other. But in the
interest of the people we serve, some of us in the electoral
process, and others through the economic process, we're going
to work together. There will be some bumps and grinds, but I
think we are moving forward, let me say; and I think it's
important to both give credit where it's due, but then complain
where you haven't been satisfied.
With regard to housing, Bank of America has been extremely
responsive. We've already noted that with the Massachusetts
Housing Partnership cashing out, there was a state obligation
that they find some money, but they turned that into a cash
grant at our request, and that was helpful.
Same thing with the affordable housing program, they took
strides to do that; working with the Mass.Affordable Housing
Alliance. Ms. Finucane just acknowledged that they need to do
better in Boston, and we look forward to that.
On the other hand, there have been some unsatisfactory
conversations elsewhere, and I must say--maybe it's a cultural
difference--why there is resistance to appointing a state
advisory board, I do not understand.
I must tell you, give you a little free political
consulting advice. If I could make some people who were unhappy
happy by appointing an advisory board, you'd have that board
appointed in about a minute and a half. I never heard of
anybody that ever died from having an advisory board.
And the fact is that I would hope people would understand,
you're talking about constructive people. These are not barn
burners; these are people who are thoughtful, who understand
economics, and I think it is important to note that in all the
differences, neither side has accused the other, it seems to
me, of being economically unrealistic. So I would hope we could
work within that framework.
I then want to turn to the jobs question. Now, that's been
important for both banks, and that was one of the issues that
we talked about.
Housing, I think everything is good. In some of the other
areas, we still have some concerns and some further work to be
done; and I think the request for specificity, I would say to
the Bank of America, is a perfectly reasonable one.
But let me just touch on race. This is one of the
advantages of Ms. Finucane. Anybody who has lived in Boston for
the last twenty years or more knows we've had this terrible
situation with regard to race. That is significantly improving,
and a lot of us have worked to improve it.
But there's a residual tension, and anybody who approaches
the race situation in Boston shouldn't be surprised when there
is a show-me attitude, a demand for specificity, because it's
part of the heritage that we're all working to overcome.
Then the other area is employment. I was disappointed, and
said so in September, when I thought that job losses were
coming that had not been anticipated. I agree that since
September, with the three announcements, first moving wealth
management here, then opening the call center in Rhode Island,
which is near my district, in southeastern Massachusetts, as is
my colleague Representative Quinn from there. The city of Fall
River, for example, is in the Providence SMSA. So when you put
good jobs like that in East Providence right next to
Massachusetts, you're doing a good thing for southeastern Mass.
as well. I appreciate that.
I think we also ought to be clear, there was no legal
requirement that Bank of America pledge to keep its employment
commitment. That was something that they did and we were
pleased to see. Some of us would have been more critical. I
cannot say that the landlords here in this institution, the
Federal Reserve, would have paid a lot of attention to us. I
mean, if we had been disappointed in the job thing, I must tell
you that it is not my approach to say, well, these guys don't
like it; that's the end of that merger. But we do have that. It
is important.
So I appreciate the steps that have been taken to begin to
move jobs back, and I guess I want to say, at this point I am
confident that Bank of America means what it says. Obviously--
and I think it's a year from now we're talking about, January
of 2006, is that the date that we said by which there would be
the equivalency?
Ms. Finucane. Well, 2006 in----
Mr. Frank. Not necessarily January? Sometime in 2006?
Ms. Finucane. It's reasonable to expect that we would,
before the middle of 2006----
Mr. Frank. Obviously, that's going to be critical to the
relationship. I must say, if we can get back then, then there
will be some--I think that will be, as I said, very helpful to
the relationship.
We did have, with regard to Sovereign, an inevitable job
loss because of Seacoast. With Sovereign, there was much more
overlap. I guess one of the reasons we were concerned, we were
surprised to some extent, there was no Bank of America/Fleet
overlap; Sovereign and Seacoast had a considerable overlap. But
I do appreciate Sovereign's reaching out on the Community
Investment Act; and as I said, they have been working with us
in housing.
Let me just close with one other kind of general comment,
that I hope my friends in the banking community will listen to.
I'm not going to talk about your bonuses this time; I did that
last week in New York.
But the question we have is this: Clearly, the merger,
Sovereign buying up Seacoast, Bank of America buying up Fleet,
those are in the interests of the overall economic efficiency
of the country; and I believe that they are.
Productivity goes up. Technology and globalization, all
those things, argue for these kinds of mergers. But we have
this problem in this country. Alan Greenspan said in April of
2004 that the good news was that productivity was going up, but
he noted--this is to the Joint Economic Committee--that all of
the gains from the increased productivity were inuring to the
owners of capital, and none were going to compensation paid in
the form of wages. I don't think that is sustainable in terms
of equity, and I don't think it's sustainable economically.
We're now looking at retail job figures for this holiday
season, and what do we see? The luxury goods are going off the
charts in the upper direction, and the bottom is falling out of
some of the low-end.
Now, I must say, I tell my colleagues, the fact that Wal-
Mart isn't doing well doesn't cause me any great heartburn, for
reasons of their antisocial approach in so many ways. But
economically, here's the problem: The inequality in America is,
I think, beginning to have not just negative social effects,
but negative macroeconomic effects, because you cannot sustain
an economy where a large number of people don't have that kind
of money to do things.
So that's the context in which corporate responsibility has
to be explained.
Yes, I understand that this merger, that this purchase by
Bank of America of Fleet, the purchase of Seacoast by
Sovereign, these are in the overall macroeconomic interests of
the country; but we cannot continue to ignore the distributive
effects, because that's neither socially acceptable nor, I
think, economically useful.
So that's why we say to Bank of America, please try to
maintain this economic situation, the job situation, because
it's not simply what it does to the bottom line or to the gross
domestic product that counts; we need to have some concern
about equity.
As I said, I just hope that it will be understood in this
context. Nobody up here disagrees with the important role that
banks play in our free market system, but we hope that we would
get a significant understanding that increasing productivity
and enhancing the profitability of stockholders by itself is
not enough; and if that's all that happens, you're going to see
a movement in the country towards a kind of economic disparity
that, as I said, I disagree with in terms of values, but I
think has some economic negatives.
Mr. Chairman, I've overused my time. I appreciate the
indulgence.
Chairman Bachus. Thank you. I would like to confirm that
when you're disappointed, you do say so. I think that's partly
a Massachusetts thing.
[Laughter.]
Chairman Bachus. Mr. Capuano?
Mr. Capuano. Thank you, Mr. Chairman. I wasn't disappointed
in the baseball scores this year, so that's about it.
Mr. Chairman, I have a few questions. Before I do, I want
to echo what Barney said about Ms. Finucane. She has a great
reputation. We're looking forward to her running this bank.
And I'm hoping that things smooth out because of your
knowledge of the region and the different culture that we may
or may not have. I have no proof whether we do, but I know our
culture, you know our culture; if it is different, I'm hoping
that they listen to you.
I'd also like to thank Mr. Campanelli. Again, as I said
earlier, I think Sovereign is one of the banks that has
understood that. They're not a local bank, and I think that his
predecessor, Mr. Hamill, and Mr. Campanelli both have brought a
knowledge of the region that their bank has heard. As I said
earlier, I think with the Bank of America, the test is still
out.
I just want to say for myself, the things I've been most
concerned with this merger are the lack of details that people
can look at and say, okay, this is what we can expect. If we
don't like it, fine; I can see a reason people will disagree,
and some people will never be satisfied. I may even be one of
them. But without detail, there is nothing but questions and
distrust; and for me, that's been the biggest issue.
Part of that lack of detail has also been the suspect
timing of some of the announcements that may or may not have
happened otherwise. The fact that it just so happens you
announced 300 jobs here in Massachusetts last week when we're
having a hearing, it's nice, but it does raise questions. And I
wonder, do we need to have a hearing every week to get good
news?
And the fact that we just get a three-page strategic
business plan this week, again, it's a nice plan, it's a good
beginning; but do I have to have a hearing next week to get the
details?
So for me, it's not so much that I'm capable--I think
anyone here is capable of questioning the substance or the
motivation, as much as we're not sure; and it just seems to
have taken a long time to make progress on that issue.
And I guess most notably, and I know that you've heard my
questions in the past, when it comes to the employees, I
understand that when mergers happen--I think we all do--in the
real world, that people lose their jobs. We know that. We
understand that. We understand the result of it.
But what I'd like to ask now, as I've asked in the past,
without getting down to every single individual job, can you
tell us right now, are the bulk, the major, the 99 percent of
the merger-related layoffs, are they done, or do we have more
to come?
Ms. Finucane. They're done.
Mr. Capuano. Thank you. I think that's important for the
employees to know, especially in this season, for them now to
go to Christmas. Understanding that individuals can continue to
be laid off, and that five people, ten people are not the bulk,
I really appreciate that statement; and I think had it been
made earlier by others, that it would be done when we had X
number, I think that would have made a lot of employees in the
region a lot more comfortable.
Relative to the plan that was released last week, I saw
last Sunday, again, it is a fine first step. The numbers I'm
not questioning; the intent I'm not questioning. But are there
plans by the bank to work out more detail, or is that it?
Ms. Finucane. There are more--should I answer that now?
Mr. Capuano. Please.
Ms. Finucane. Yes.
First of all, in order to meet the goals that we've set,
you've got to meet with community groups, and you've got to
work through with them. The production itself, often what
happens--in the case of MAHA, they helped us with true
production on the SoftSecond program. In some other community
development groups, they can help us with true production.
In many cases, we have to deliver it through our banking
centers, our real estate, ourselves; and we're looking for
partnership in terms of identifying those opportunities. That
goes on, not just when there's a hearing; it goes on every day,
in every part of our country, including throughout
Massachusetts.
I think the real issue is--and we will report on that in as
thorough a manner as I think anyone could want at the
conclusion of a year, and that's been the Bank of America
practice for the last few years. It's worked very well in terms
of they exceeded their goals; they got an outstanding CRA
rating. We will do the same here, so that I think the
specificity will all be there. It isn't prospective; it is
reported on an annualized basis.
But that doesn't mean that we're not meeting with every
community group that we need to meet with in order to create
that production.
Mr. Capuano. But does that mean that the three-page
document that we have, will I see a ten-page document or a 20-
page document in the next month, six months, some period or do
I have to wait until we're now working backwards to see whether
you met those numbers?
For instance, the questions I asked the last panel, who's
going to get the money? Where is it going to go? What's your
definition of affordable housing? How much is going to be
leased? How much is going to owned?
All those questions that are really too detailed to deal
with now, do we expect to see that, or are we going to have to
wait for various reports?
And I understand all the reports that banks have to do, and
that's why they're there. Do we have to wait for all those
reports to come in, and look retrospectively to say, oh, you
met them? Or can all the organizations, and more importantly,
the constituents I represent, who are looking for these things,
will they be able to say, okay, we know what the bank plans on
doing this. Are we going to work with the bank to help them
reach their goals?
Ms. Finucane. I think it will be clear how to work with us.
I think that what you're hearing from--and let me use MACDC as
an example--the specificity in which they would like us to lay
out by category, by microcategory, prospectively we will not be
doing.
What we will be doing, though, is, remember that--and I
don't mean to sound like a broken record here. Both companies
had outstanding CRA ratings. Both companies report out by
category, by LMI, by minority, by region, by MSA, on an
annualized basis; and then we of course report with HUMDA and
SBA, which we're the number one SBA lender.
We're also at 27 percent, I think it is, of LMI mortgage
lending in Massachusetts. This stuff is going on constantly,
and we will be working with the community groups to make sure
that we can meet those goals.
Our job is to maintain stronger relationships with even the
people that were here on this panel on a go-forward basis in
order to create production.
Mr. Capuano. I appreciate that.
Mr. Campanelli, my last question. I presume you sat in on
some of the negotiations relative to Sovereign, both the
original ones and the renegotiations?
Mr. Campanelli. The vast majority.
Mr. Capuano. Did those negotiations hurt you either
financially or socially or competitiveness?
Mr. Campanelli. No; and it depends on how you characterize
negotiations. We viewed them more as conversations, looking at
where we can do better, what was available within the
community, and how best to accomplish the objective and the
goal.
Mr. Capuano. Thank you very much.
Chairman Bachus. Mr. Watt?
Mr. Watt. Thank you, Mr. Chairman.
I was tempted to pick up on Mr. Capuano's statement and
suggest that we might have a hearing in Charlotte if we can get
three or four hundred jobs created there; but I won't go there.
[Laughter.]
And Barbara says she wants one in California.
Mr. Meeks. You can't bypass New York.
Mr. Watt. Well, you already said New York is the center of
the universe for banking, so it's not a big thing.
Mr. Campanelli, I'm going to ignore you for a little bit,
but it's not because I don't like you.
Mr. Campanelli. That's quite all right.
[Laughter.]
Mr. Watt. It's because you don't have any operations in my
area, so I'm going to Ms. Finucane here.
Process: The testimony of the witnesses on the first panel,
you've made some written commitments. There are some areas
where you have not made written commitments.
First of all, where there is no history of an apparent
transformative effect, as I have the benefit of having in my
community, do you view it as something that's important to have
written commitments on other things, and will there be ongoing
efforts to get to written agreements, commitments, or is it
just inconsistent with your philosophy, you'll wait until the
end of the year, you'll report, you'll exceed maybe, probably,
all of what you might have agreed to do in a written commitment
if you had agreed to do it in a written commitment; but is
there a philosophical objection to getting to written
agreements of some kind?
Ms. Finucane. First, let me address the issue of the panel.
We're familiar with the panel and have worked with each of
the members of the panel in the past, and we will continue to
work with the members of the panel. We respect their point of
view. We respect their issues. We think that we can meet the
need and continue a relationship without a written agreement.
In the past Fleet has had written agreements. I will tell
you honestly, in some cases, while we exceeded our overall goal
of, in our case it was $14.6 billion, in some cases there was a
written agreement of certain production in a certain geography
in a certain category that probably over a two-year period we
should have adjusted, but one gets locked into these written
agreements, and there's very little flexibility.
Secondly, Bank of America has had a very good track record,
without the written agreements, of delivering on everything
they had laid out. This isn't just rhetoric; it's a matter of
the record. And it isn't just our record; it's record by
regulatory bodies and by law.
So I think that for all of those reasons, we feel pretty
comfortable.
I appreciate the fact that Bank of America is new to the
region, but many of us in this room and that are working with
the community groups are not new. I think if we were good for
our word before, we are good for our word now. Also, our record
shows it.
Mr. Watt. I'm probably the last person on this panel that
ought to be trying to pin you down on this, but I'd have to say
you did a good dance for me there.
[Laughter.]
Mr. Watt. Do I take that to mean that there will not be
additional written commitments? I mean, it sounds like you've
made a commitment on the second mortgage fund. You've made
public pronouncements on the lending front.
Ms. Finucane. Right.
Mr. Watt. For CRA purposes, where apparently there has not
been a written commitment of any kind, small business lending,
employment composition, racial composition, procurement, a
critically important area; do I understand the bottom line to
be, there's not going to be a commitment? It's a ``Trust me''?
Ms. Finucane. No, it's not a ``Trust me.''
First of all, we have made some commitments. The Bank of
America has made a commitment to, over the next few years--and
I'll give you a report card on this year--of reaching a 15
percent goal of minority procurement.
This year we were--or 2003, which was the last full year we
could report on, it's 9 percent. That's 620----
Mr. Watt. That's a global commitment?
Ms. Finucane. Nationally. But I'll get to----
Mr. Watt. That's a national commitment, and what I'm
hearing from the local folks here is, we can't do this
globally; we've got to do it community by community. Is there a
problem with that?
Ms. Finucane. Well, no; but if I could, in the Northeast
alone, just by way of example, Fleet had, in 2003, spent $50
million on procurement with minority vendors. In the Northeast,
Bank of America did $100 million.
So I think it's reasonable to expect that we will do better
as a combined bank than we did as Fleet alone, and that is in
the Northeast itself.
In terms of statistical numbers, which I hesitate to refer
to--and I do have them on a national basis; I don't have them
for Massachusetts, although we have had conversations with Juan
at the local NAACP on numerous occasions--our numbers, and this
is the September filing, our total work force was 68 percent
women, 42 percent people of color. And to use that, sort of
another outlook at that, for the vice-president level and
above, 46 percent were women, and 22 percent were minority.
So from a global perspective, those numbers are very good.
I don't have them for Massachusetts in any kind of recent form.
I need to state that we deeply appreciate the need for
opportunity for all our employees, and we seek to have a
diverse work force that reflects the communities in which we
work and live. That's good for business.
We have a diversity council; we have a hiring practice that
seeks a diverse candidate base for almost any job that we have.
Fifty percent of our people that we've hired in our branches in
the last two years, 50 percent of them are bilingual. I cannot
tell you what an effort we try to make in terms of diversity,
not only in terms of our employment base, but reaching out to
the community.
Mr. Watt. I think the concern is, you're talking about
performance, and other people are asking you about commitments;
and those people are people who don't have the history,
necessarily of--I mean, I hope that you will consider, at least
in the procurement area, and you said there's somewhere written
down, a 15 percent commitment.
Ms. Finucane. There is a commitment to 15 percent.
Mr. Watt. In this area, or globally?
Ms. Finucane. Globally. But I want to give by example, just
to use the Northeast, which was in the last few weeks the most
narrow we could break it down, Bank of America spent
$100million on the diverse supplier list, where Fleet had done
$50 million.
So frankly, it's clearly an improvement and one that I
think will bode well for the future. We're going to do it for
Mass. Will we do it for each state? I don't think so. Will we
do it by region? We will try to do that, to give some
specificity.
In terms of agreement, just a final thing. Sometimes this
is an issue of language. Each of the people that we deal with
in terms of community groups, in essence, there's a form of an
agreement with many of these groups because the community
groups help us deliver on our promises. But it's a focus on
production rather than a prospective ideology.
Mr. Watt. Thank you.
Chairman Bachus. Mr. Meeks?
Mr. Meeks. Thank you, Mr. Chairman. I'll be brief, and I
think I'm learning from some of the Massachusetts people here.
All politics is local, and I don't know whether you're equipped
to answer these questions. Just a couple questions real quick
now, but they're going to pertain to New York.
Ms. Finucane. Okay.
Mr. Meeks. I understand that Bank of America is in the
process of building a large tower in Manhattan very shortly.
Ms. Finucane. Yes.
Mr. Meeks. So my question is, do you know whether or not
Bank of America has, or will have, a minority business
component to go along with the construction of that building,
where there will be minorities that will be involved on the
construction phase of the building?
Chairman Bachus. I thought he was going to ask for two more
stories on the building.
[Laughter.]
Ms. Finucane. Well, we are not responsible for the actual
construction of the building. That is--I forget the name of the
firm. I'm sorry; I don't recall the national developer's name,
but we are not handling the construction of the building.
Mr. Meeks. But they're contracted by you? It's been my
experience in New York, any time we've had a major corporation,
for example, with American Express, after 9/11 they were
redoing their building, and there was another contractor, but
they told their contractor they wanted to make sure that there
was a minority business component of the construction of the
building. Because again, it reflects upon them.
Ms. Finucane. Right.
Mr. Meeks. So I'm wondering if there's a similar type of at
least a direction in which the Bank of America is moving with
reference to this construction of this large tower.
Ms. Finucane. Well, we certainly support opportunity, and
given that we're neither doing the construction nor are we the
developer of it, we're a few sort of businesses removed; but I
will look into that. I'm sorry; I just can't----
Mr. Meeks. I understand. Please look into it, because I can
tell you that a number of us, we'll be reaching out to you, but
we'll also be reaching out to the contractor.
Secondly, the local concern that I have, Fleet had a large
presence in my district, and was doing a number of things
there, had a number of individuals that were employed there. I
think totally, though, Bank of America at the time only had
about 40 to 43 people that were employed in the district.
I was wondering whether or not, with the merger, whether or
not Fleet will be looking to do additional business in a
district like mine--I'm in southeastern Queens, which is
basically really kind of a middle-class community. So I was
wondering whether or not there's any plans to expand in
communities like mine since this merger, but particularly since
Fleet had such a large presence within the district.
Ms. Finucane. Well, Bank of America has not only the
capacity but the desire to build out in New York City in a more
aggressive way than Fleet would have been able to do. So we
have already opened six new banking centers in the Manhattan
area; we're looking at other opportunities throughout New York
City.
I can't speak with specificity about your district, because
I don't know whether we have a banking center planned; but I
can tell you that we are looking to expand our presence in New
York. Unlike New England, we do not have a number-one presence
in terms of market share in New York, and we're eager to get
there.
So I think that we would be most anxious to continue a
dialogue with you.
I know that you can expect that in terms of employment
levels, philanthropy and community development, those will all
improve in the next months and years to come.
Mr. Meeks. Very good. I definitely would like to have that
discussion, because unfortunately what has happened--and Fleet
was the one that was really kind of taking up some of the
slack--there was not the kind of presence given the economic
impact that the community had, particularly on a commercial
level with commercial development in the community. So I would
love to be able to follow up with you to have a conversation
with regards particularly to southeastern Massachusetts and
Queens.
Ms. Finucane. Thank you.
And Congressman, I would like to address a comment you made
earlier in your questioning of the community groups about
financial literacy. Just as an example, we've put more than $6
million into the issue of financial literacy. I think that most
financial institutions, I'm sure Sovereign agrees, all of us
feel that we need to do more in the area of financial literacy.
Mr. Meeks. Thank you for that, and I'll be looking for you
to come and help out some of our schools in southeastern
Queens. Thank you very much.
Chairman Bachus. Ms. Lee?
Ms. Lee. Thank you very much. Thank you, Ms. Finucane, for
your testimony.
I'm glad to hear of the $100 billion commitment here as it
relates to CRA. I'm trying to reconcile what I heard from Mr.
Cofield in terms of, it seems like there's some disconnect
here. He indicated that he only heard and had some refreshing
discussion very recently, last week, with regard to what is
taking place and what the plans and commitments are.
So again, going back to associating itself to Mr. Capuano's
remarks, what is it going to take? The NAACP is a very
important organization, and if they have only had recent
discussions, what can we do to make sure that those discussions
are real and continue? That's the first part of my question.
The second is, you mentioned that Bank of America is the
number-one mortgage lending institution to minorities. Could
you verify that for California for me, please? Because from
what I remember, the last report that I saw was very dismal in
terms of B of A and its lending to minorities; but I may be
wrong. I'd like to verify that.
And thirdly, with regard to minority and women-owned
businesses--I was a former small business owner; I was in
business eleven years prior to coming to Congress--and just
listening to Mel Watt and talking about written agreements, I
had to have written agreements for everything I did;
everything. There was no way I could function without a written
agreement. Not just contractual, but every move I made had to
have a written agreement. But I guess the rules are a little
different for the small businesses.
But I'm looking at the breakdown that you provided
subsequent to Congressman Frank's request with regard to
minority and women owned businesses, and I want to ask you, is
this a national chart that you provided? You had 511 African-
American suppliers, 59 Asian-Indian----
Ms. Finucane. Yes.
Ms. Lee. That's national.
Ms. Finucane. Yes.
Ms. Lee. And 519 Hispanic. Last year is 9 percent?
Ms. Finucane. 2003.
Ms. Lee. 2003 is 9 percent, and you're hoping to get to 15
percent next year?
Ms. Finucane. Actually, no; I think it's in 2009.
Actually, in 2004, my guess is that our number, our
percentage, will look lower, because the denominator will be
higher, because we'll have the combination of Fleet and Bank of
America. So the actual dollars spent with minority suppliers
will go up; but because the denominator is bigger, the
percentage will look slightly lower.
Ms. Lee. It just looks like a very small number of
suppliers that you have nationwide, so I'll be very interested
to see the dollar amount. Maybe the dollar amount doesn't
support an additional pool of minorities.
Ms. Finucane. It is 625 for 2003.
Ms. Lee. 625----
Ms. Finucane. Million.
Ms. Lee.----million? Out of what, in terms of total
suppliers.
Ms. Finucane. Out of the base, I'm sorry; I don't know. We
could provide that to you.
Ms. Lee. Could you provide that for us, please?
Ms. Finucane. I can provide to you in terms of where we
stood in terms of mortgage lending in California. In
California, we're number three.
Ms. Lee. You're number three in California?
Ms. Finucane. Yes.
Ms. Lee. Do you have the breakdown in terms of the
percentages.
Ms. Finucane. I don't here today.
Ms. Lee. Would you get that?
Ms. Finucane. Sure.
Ms. Lee. Because I just want to verify this, because the
general--and again, it's based on the report we saw several,
about a year or two ago, the numbers had seemed to be, for
African-Americans 2 to 3 percent.
Ms. Finucane. Okay; we'll look into that.
Ms. Lee. It was very low.
Ms. Finucane. I do want to speak to Mr. Cofield's remarks
insomuch as I'm sorry you only found them productive in the
last week or so, but we have had conversations for the past
year through the local NAACP and then an association, a
coalition that's associated with it. So the dialogue continues.
Ms. Lee. I think his point was, though, it was not a
definitive dialogue; it was finally beginning to become a
dialogue.
Ms. Finucane. Right. Well, I appreciate that.
Ms. Lee. Thank you very much.
Chairman Bachus. Thank you.
Mr. Tierney, it's your time to wrap up and summarize.
Mr. Tierney. Thank you. I feel a little bad for Mr.
Campanelli here, but I don't think he feels too bad about it.
[Laughter.]
Chairman Bachus. I haven't heard him complain.
Mr. Tierney. I haven't heard him complain, either; and I'm
not going to break the pattern here.
It's safe to say that the folks that Sovereign has working
up in the northeastern part of the state certainly are doing a
great job, and we appreciate that, both with the local and
small business community and the community at large; so thank
you on that.
Ms. Finucane, I just want to nail down some aspects. It
looks to me, or sounds to me, as if the concern that Bank of
America has about specificity is that there will be some
resulting litigation, or if not litigation, confrontation about
not having met specific exact details down there; that you feel
you can meet general firm things, but geographically there
might be a little difference in the way things result or things
like that. Is that part of the hesitation?
Ms. Finucane. No. Really, the hesitation is that I would
say we would like some flexibility, because what happens--I
don't think it will be litigation, by the way. It's a matter
of, you seek some flexibility so that as you see opportunity,
you can take it. And I don't mean just----
Mr. Tierney. I hear you, but can't you--how is it that
Citizens can do it and Sovereign can do it, and the Bank of
America can't come up with some sort of a written agreement
setting forth specific goals with some flexibility in it? I
think you've got smart lawyers and negotiators.
Ms. Finucane. I think we have it. Our written agreement is
that we will do $750 billion; $100 billion a year and $8.4
billion in the next three years in Massachusetts----
Mr. Tierney. I think you know what I'm saying. It's not
specific in terms of what the advocacy groups are looking for,
nor even reasonably in that direction. Apparently Mr. Cofield
felt that you didn't get to the national global figures until
last week; so while you may have had a lot of conversations
over the period of time, you're just getting to the global
figures. There's some frustration that I sense on that, that
you couldn't have gotten there sooner and down to a more
specific level locally here at a quicker pace.
Ms. Finucane. I appreciate what you're saying, Congressman.
We did provide these global numbers before. I think he was
speaking about more specificity in terms of a relationship
going forward, and an advisory role that he feels that the
local NAACP could play. So I think he was speaking more
specifically. The numbers have not been unclear.
Just to repeat, I'm not being--this isn't rhetoric. We have
broken it by state, by category within the state, and the
difference between what our previous commitment was and our
current commitment, and what improvement that would be. I think
we have a game plan for how we will get there.
What we haven't done is given, by category, a prospective
by category, by geography, some of the categories that some of
the community groups would like; and they're not all in
agreement on what they would like.
Mr. Tierney. I understand. Is there any other aspect of
your business that you don't look prospectively forward and set
out some written goals with a certain degree of specificity?
Ms. Finucane. We have written out prospective goals with
specificity. I think the disconnect is the kinds of commitments
and the kinds of reporting they would like us to do. We want to
report it at the end of the year----
Mr. Tierney. Well, that wouldn't be very prospective.
Ms. Finucane. But the prospective is that we've laid out
the categories, the increase in the categories, and the
fundamental ways that we will get there.
Mr. Tierney. And they want?
Ms. Finucane. They want greater specificity. They basically
want--I think to be fair, using retrospectively what we've seen
other banks do or that we've done ourselves, it's very
cumbersome. If you're doing it--the amount of money we will
spend in these categories far outweighs what any other bank in
the region will spend in these categories.
Mr. Tierney. Have you seen the models that the witnesses
have talked about in terms of what Sovereign has done in
reaching an agreement with them?
Ms. Finucane. No.
Mr. Tierney. Maybe it would be instructive to take a look
at that and see if there's some objection that Bank of America
has that you couldn't get close to that model. It seems to me,
if other banks can do it, then--and not having looked at it for
Sovereign Bank, Bank of America objecting to something they're
not even clear on what it is that they might accomplish and
might get to some point of agreement with.
Ms. Finucane. I think we'd be happy to look at those. We
certainly have in the past with Fleet, and so has Bank of
America.
I just would repeat, it isn't as if we're talking about two
banks that haven't done well at this.
Mr. Tierney. No; and please, I don't mean to interrupt.
You've said that over and over again, and I think everyone in
the room gets the point.
Ms. Finucane. I hope so.
Mr. Tierney. I hope so, too. But I don't know if Bank of
America is getting the point----
Ms. Finucane. I think we are getting the point.
Mr. Tierney.----that it is quite possible to do a
prospective agreement with more specificity than it has.
And now, to get back to the original point, is it attitude,
or what is it that makes the bank so stubborn in saying it
doesn't want to get to that point?
Ms. Finucane. It's not attitude. It's a matter of, in terms
of good business--I think the thing is, in terms of the
agreements, there are many organizations we will do very
specific agreements with in order to produce the results that
we need.
These are coalitions of community groups that want various
steps to be taken, various iterations on the reporting. You
spend a lot of time doing that and maybe less time doing the
production, and when you produce much more than any other
company can do, I think there's a value to that, too.
Mr. Tierney. Did you have those kinds of agreements with
Fleet and these organizations?
Ms. Finucane. Yes.
Mr. Tierney. So it's not impossible to do it; you've done
it before?
Ms. Finucane. Right.
Mr. Tierney. Can you explain for me the reasons, what went
wrong with those agreements that would encourage you not to
want to enter into them as Bank of America?
Ms. Finucane. I don't think it's a matter of what went
wrong. This is a different business model.
Mr. Tierney. In what way?
Ms. Finucane. The different business model is that we will
lay out our goals, we will----
Mr. Tierney. Without specificity?
Ms. Finucane. No, I think there is specificity. I think
that we do have more specificity than you're appreciating here
in this room.
Mr. Tierney. Do you have more specificity, in Bank of
America's view, than you did when you had Fleet?
Ms. Finucane. No.
Mr. Tierney. And you say that your new business model
prohibits you from getting the kind of specificity you had in
the Fleet agreements.
Ms. Finucane. No, I don't think it's a matter of
prohibiting. I think it's a matter of, we feel we can deliver
on this. We think that in working with the community groups, we
will meet and exceed our goals; and we will have a track record
from both companies to have done that.
Mr. Tierney. Thank you.
Chairman Bachus. Thank you. I appreciate it, folks, your
testimony.
Mr. Campanelli, is there anything you'd like to add?
Mr. Campanelli. No; I appreciate the opportunity to speak
before the Committee, and it's really the results of all our
team members that allows us to accomplish what we've done. We
look forward to continue being a responsible corporate citizen.
Thank you.
Chairman Bachus. Thank you. I appreciate both your
testimonies. Very instructive.
Ms. Finucane. Thank you.
[Pause.]
Chairman Bachus. At this time we will reconvene with our
third panel, which is made up of elected and state officials.
This time, Mr. Frank is going to introduce the third panel.
Mr. Frank. Thank you, Mr. Chairman. I'll do it in the order
that they're seated.
First is Representative John Quinn, who is someone I work
very closely with, both on banking issues, and also he is in my
district and is a great expert on fishing law. So John Quinn
has been a great representative of the fishing industry, and
I'm glad to have him here.
Next to him is Senator Andrea Nuciforo. People should know,
in Massachusetts, the legislative committees are joint
committees; and they are co-chairs of the Committee on Banks
and Banking, is it still called, in Massachusetts. Senator
Nuciforo represents western Massachusetts, and between them
they have a very distinguished record, including the passage in
Massachusetts of, I think, a very good predatory lending law
that I hope we will take a look at. It's close to the law of
South Carolina, and I think serves as a good national model.
Finally, Commissioner Steven Antonakes, who is a bank
commissioner. We have a very strong commission in Massachusetts
of bank commissioners who have been both fully appreciative of
the importance of the banking industry and respectful of the
rights of consumers. I understand how they go together, and
Commissioner Antonakes has continued in that tradition, so I
very much appreciate them.
We have, of course, Massachusetts laws that are applicable.
One, in fact, that has been alluded to--and people should be
clear it's a Massachusetts law--when there have been various
references to the $18 million that Bank of America put into
this entity known as the Massachusetts Housing Partnership,
that's pursuant to a Massachusetts law which says that if you
are going to have this change of ownership, a certain
percentage of the assets have to be made available for
affordable housing. It's been a very useful law and has
produced a good deal of money. Sovereign obviously complied as
well.
So I am very grateful to these three gentlemen for joining
us.
Chairman Bachus. Thank you.
Having been a Member of the State Senate of Alabama, I am
aware that being a State Legislator is a demanding and
difficult job. In many respects, it's more difficult than being
a Member of Congress, so I commend you with the job you're
doing.
At this time, we will start with Mr. Quinn.
STATEMENT OF JOHN F. QUINN, REPRESENTATIVE, MASSACHUSETTS STATE
HOUSE
Mr. Quinn. Thank you very much, Mr. Chairman and the other
Members.
I first want to thank you as well as my Congressman,
Congressman Frank, for being at this hearing here and the fine
work you do. Particularly, as Congressman Frank said about my
fishing connections, not only does Congressman Frank do a lot
of work on the banking and financial services; he does a
tremendous job on behalf of our area of the state.
Obviously, it's been a long and busy day, and a long and
busy year in Massachusetts and the country regarding mergers
and acquisitions; and unfortunately, I think there's really no
end in sight. In Massachusetts there's over 300, or 200 banks
here and certainly the bigger-is-better strategy of banks. I
think the issues we're discussing today are not just
appropriate for today, but for five years and ten years and
twenty years from now. It's great and very important that we're
here.
I think it's important to distinguish between really two
types of mergers. We're fortunate, or unfortunate, to have had
both those types in Massachusetts.
One, the mega-merger, where I would put the B of A/ Fleet,
in which it's got statewide implications. They've got branches
all across the state; and if there's going to be some negative
impacts, they're balanced and spread out across the entire
State.
The second is one such as the Sovereign/Seacoast, which
occurred in my district and Congressman Frank's district, which
is a high concentration of impacts. And I must say that in the
Sovereign issue, over 300 jobs were taken out of the center of
our major city of New Bedford, as well as the closing of 12
branches.
Through that process and through participation in those two
hearings in Massachusetts, I think I've learned, I think, that
there's two or three holes in the approval process in the
state, which is actually quite similar to the federal approval
process. So the remarks I'm going to make are going to be
applicable to both the state and federal approval process.
Number one--and we've heard it time and time again--not
enough information provided at the approval hearing with not
enough specifics. And I want to compare and contrast the
Sovereign versus Bank of America mergers.
The Sovereign merger, I'm amazed I'm actually going to
compliment them for laying off 300 people in my district; but
the issue of process, days before the merger, hearings
occurred. They had a plan to lay off 300 people, they had a
plan to close twelve branches; but they also had a plan to
retrain people and put them into other jobs in the system. They
came actually to downtown New Bedford in the shadow of the
headquarters that they were going to close down, and said to
the people of southeastern Mass., this is what we're going to
do.
Did we like it? No. But they were up front, told us what
was going to happen, and we could plan for that impact.
Compare that, I think, with the Bank of America hearings,
in which we've gone around and around and what was said and by
whom and whatever else.
I appreciate the statements today, and I appreciate what's
happened over the course of the last couple of weeks of three
major announcements of bringing new jobs here, but there was no
suggestion that there was going to be a several-thousand-
dollars dip in employment levels in New England that would rise
again in the first quarter of 2006. I think we all understood
that that may occur, but I wish it was up front that we were
told, and we could have planned for it.
The definitions of what a headquarters means, and what
customer facing positions mean, those were all talked about
after the hearing. Sovereign told us about it before; Bank of
America after.
And like I say, I want to commend the steps that Bank of
America has taken over the course of the last couple weeks; but
I think two things caused that to happen: one, this hearing,
and the second was the meeting which Congressman Frank and
Congressman Capuano called for on a summer day in September, in
the Newton Town Hall, in a hot stuffy room in which the entire
Congressional delegation was there, and the two of you guys
said, this is not what you said you were going to do. And lo
and behold, a couple weeks later, they moved the wealth and
investment management division to Boston.
It's unfortunate that had to occur. We're here where we
are, and hopefully prospectively things can occur and we can
have a positive relationship.
But comparing those two approaches, I think it's so
important up front to get the specificity and the commitments.
And the second, the two combination issues that I want to
talk about in closing, there's no mandatory mitigation plan
required at the state or federal level, and there's really no
enforcement mechanism for third-party agreements.
I've written down all the statements that have been made
here today by Members and by people in the audience: binding
obligation, non-binding obligation, unenforceable contract,
local pledges, moral commitment, oral commitment, public
commitment, written contract, and my favorite one, it's a
floor, not a ceiling, when they talk about employment levels.
What's so wrong with writing something down and sticking to
it, at all levels of this? Is it that bad to write something
down? You're going to go over to an advocacy group and say, if
you testify favorably, this is what we're going to do? Is it so
wrong to write something down instead of using nuances and
semantics of what a word means? I think not.
We've heard a lot today about this wonderful program, the
Mass. Housing Partnership program. As Congressman Frank said,
it's a state statute in Massachusetts, which I would strongly
urge you look at the federal level.
I know the industry says, oh, it's a taking or it's a tax.
This passed in 1990 in Massachusetts. There have been 33 bank
mergers in Massachusetts since 1990 with almost a billion
dollars--one billion dollars--of loans made available through
this program. It certainly didn't hinder or deter any mergers.
What I proposed, and Senator Nuciforo and I have filed some
state legislation, and I would hope you would consider it at
the federal level, is, have what's good for housing or good for
economic development, and backfill in the jobs that are lost.
So there also should be a commitment, not a grant, but act as
loan money, small business money. So we proposed an entity
called the Mass. Development Financing Agency, having a similar
commitment made to them.
So it's in statute. It's not a nuance or semantic words;
it's in statute that that money will be available.
So again, I want to thank you for having this hearing here;
and in closing, I think it's important that these mergers have
unique impacts on our communities.
The distinctive character of banking requires that a
potential loss due to mergers be given careful consideration as
to those aspects I talked about. I hope we'll work hard on the
state level to try and impact those, and I urge you to consider
in particular that Mass. Housing Partnership, 1 percent or
whatever it is. $1 billion in Massachusetts ought to be good
for economic development as well.
Thank you.
Chairman Bachus. Thank you, Representative.
[The prepared statement of Hon. John F. Quinn can be found
on page 321 in the appendix.]
Chairman Bachus. And Senator Nuciforo.
Mr. Nuciforo. Nuciforo. That's how they say it in Rome.
Mr. Frank. Tell me how they say it in Rome, Georgia.
[Laughter.]
Mr. Nuciforo. I don't think I could master the accent, Mr.
Chairman.
Chairman Bachus. I'll tell you what: I won't try to master
yours if you don't try to master mine.
STATEMENT OF ANDREA F. NUCIFORO, JR., SENATOR, MASSACHUSETTS
STATE HOUSE
Mr. Nuciforo. Thank you.
For the record, my name is Andrea Francesco Nuciforo, Jr.,
and I hail from the western part of Massachusetts. I serve in
the state Senate here in Massachusetts, and have served in the
Senate since 1997.
For the last five years or so, I have also served as the
co-chair on the Committee of Banks and Banking. I serve along
with John Quinn, who just testified. We both serve, and have
for a number of years now served, as Chairmen of that
Committee.
I'd like to thank you personally for being here, and
certainly to Congressman Frank, who's the Ranking Member, and
other Members of the Committee. It's wonderful to have the
hearing here. It gives Members access and the public access to
this kind of proceeding that we wouldn't normally have.
I have already submitted written testimony, so I'm not
going to read that. What I will do is summarize some of that
briefly and address some of the points that have been raised by
members of the panel previously and by some of the Congressmen
that are here.
We have a pretty good idea about what is concerning
communities, and the issue is employment. There are other
issues that we've heard about, housing and CRA and the like,
but the issue we're here really to talk about is the issue of
employment.
We've had now a perspective of going through the '90s and
now the last four or five years; and we know that when you have
big bank mergers, you see some pretty big losses in employment.
We can have lots of discussions about what brings that about,
but there is some pretty strong evidence that these losses in
employment are direct results of these mergers.
I have here in my hand a report. It's an excellent report
that was done by the Center for Policy Analysis down at UMass
Dartmouth in southeastern Massachusetts, and it was prepared by
a professor there named Clyde Barrow. I have a number of copies
of this available if Members of the Committee would like to see
it. But this is excellent, and I would like to just quote some
of the things from the executive summary here.
This report has to do with the southeastern part of
Massachusetts, where John Quinn hails from, and this is the New
Bedford and Fall River area that Congressman Frank represents.
Between 1993 and 2003, total southeastern Massachusetts
employment in the banking industry dropped by 31 percent. 31
percent; those are numbers like what has happened in fishing
over 20 or 30 years.
Most job losses in the banking sector are directly
attributable to mergers and acquisitions over the last ten
years, and we know what these numbers are in that particular
area.
In 1995, when Fleet came together with Shawmut, there were
179 employees who lost their jobs.
In 1997, two years later, when Bank of Boston got together
with BayBank, there were 100 employees who lost their jobs
then.
Then two years after that, in 1999, Fleet and BankBoston
got together, and that year Citizens and U.S. Trust got
together; and those two mergers combined to cost 500 employees
their jobs.
So in four years alone, in that distinct part of
Massachusetts, some 800 people lost their job; and that's going
up to 2003.
2004 came along, and in 2004, Sovereign and Seacoast
Financial, 350 employees. Fleet Boston with Bank of America,
we're thinking 500 or so employees. Now, those numbers have
changed, and I'll talk about that in a minute. And we also know
that Webster Financial got together with First Fed America down
in Swansea, and there was a 20 percent job loss there.
So we know the facts, and the facts are that when these big
mergers take place in our communities, there are big job losses
that result.
Now, while that has been a constant, there's another very
substantial constant that we know about bank mergers; and this
is something Congressman Frank talked about not long ago. We
know there are spectacular executive compensation packages that
come along with these deals.
Now, the eye-popping numbers back in '95, when the Shawmut
deal happened, were $2 million. Those numbers have gone up
substantially. They're $12 million or $15 million or $17
million or $20 million executive payouts. Those are good
numbers; they're big numbers.
And this, I think, touches on the point that Congressman
Frank made a moment ago. We know that there are incredible
efficiencies that are created by these mergers. We know that by
using automation and using technology, there are big
efficiencies and the shareholders are rewarded. But we have not
seen those rewards go to people that are down below, and that
is my concern.
It's not surprising, or we shouldn't be surprised to know,
that when the Federal Reserve Board allowed the approvable of
this most recent deal between Bank of America and Fleet, there
was only one passing reference, in a 58-page opinion, to
employment.
We shouldn't be surprised, because the Bank Holding
Companies Act doesn't require that you look at employment. It
should. Because we've seen these kinds of substantial impacts
on employment in our communities, I do believe that this
Committee should act and that Congress should act and that we
should have an amendment to the Bank Holding Company Act; and
that amendment should require that, as part of the approval
process, we should add another factor for the Federal Reserve
Board to consider, and that factor would be the employment
impact, short-term and long-term impact on employment in the
affected communities.
I'm not going to go on at any greater length, other than to
say that I'm really pleased that you're here, and that you're
here to hear from us on the state side, because we have
watched, as a matter of state law, some smaller mergers; but
these mega-mergers have had dramatic impacts on our
communities, and I hope you take into consideration some of the
comments we've made.
Thank you.
[The prepared statement of Hon. Andrea F. Nuciforo, Jr. can
be found on page 311 in the appendix.]
Mr. Frank. Mr. Chairman, before we proceed, could I ask the
others to consent to put that very good report from Clyde
Barrow into the record.
Chairman Bachus. Yes, hearing no objection.
Commissioner?
STATEMENT OF STEVEN L. ANTONAKES, COMMISSIONER OF BANKS,
COMMONWEALTH OF MASSACHUSETTS
Mr. Antonakes. Thank you.
Good afternoon, Chairman Bachus, Congressman Frank, Members
of the Committee and staff. My name is Steven Antonakes, and I
serve as the Commissioner of Banks for the Commonwealth of
Massachusetts. Thank you for the invitation to testify today. I
have submitted written testimony which I'll be summarizing this
afternoon.
Massachusetts has a longer history than most in
experiencing interstate transactions, having passed the first
regional interstate banking act in 1982, and a nationwide
interstate holding company law in 1990.
Four years later, Congress passed Riegle-Neal, providing
for nationwide banking. Massachusetts adjusted its law
accordingly in 1996. Accordingly, the rules for nationwide
holding company acquisitions have essentially been well-settled
since 1990.
The Massachusetts state bank holding company act requires
bank holding company transactions to be approved by the
Commonwealth's Board of Bank Incorporation. I chair this three-
member board, which also includes the Commissioner of Revenue
and the State Treasurer.
The law applies to all acquisitions of Massachusetts
holding companies as well as banks, regardless of whether the
bank is state or nationally chartered. This provides a
significant benefit of local review of certain transactions
that would otherwise only require federal approval.
Massachusetts statutory approval requires the Board to
determine that competition is not adversely affected and
whether or not public convenience and advantage will be
promoted. This includes a determination of net new benefits,
such as initial capital investments, job-creation plans,
consumer and business services, and commitments to maintain and
open branch offices.
Other factors considered by the Board include the CRA
rating of each bank or its subsidiary. In addition, as has been
referenced several times today, the law requires the bank
holding company pledge .9 percent of the assets located in the
Commonwealth to be made available for low-cost loans through
the Massachusetts Housing Partnership Fund.
Not unlike the rest of the country, Massachusetts has seen
substantial consolidation within the banking market during the
past 20 years. Nevertheless, the number of jobs tied to the
Massachusetts banking industry has increased during this
period.
Consolidation has allowed banks to grow stronger, thereby
allowing banks to be more competitive, add branch offices, and
add additional lines of business. This, in turn, has allowed
banks to increase their employment bases over time despite
cases of initial layoffs following mergers.
As a result of nearly 20 years of consolidation, however, a
bifurcated system has emerged, both locally and nationally,
which generally includes a small number of very large banks
operating on a nationwide basis, and a large number of small
community banks. The existence of very large banks has been
authorized by federal and state law as legislators and
regulators recognize that there could be benefits if, like
other financial service entities, the banking system operated
on a nationwide basis.
I appreciate and recognize the Committee's decision to take
time and understand the impact of these laws, regulatory
approvals, and consummated mergers on all interested parties. I
also encourage the Committee to consider what needs to be done
at the federal and state level to foster a banking system that
remains receptive to both large nationwide and smaller
community banks.
Certainly, a significant benefit exists in maintaining the
current level of banking choice. Allow me to briefly share with
you some of my thoughts on how to best position our community
banks to be able to effectively compete against larger
nationwide banks to ensure that consumers continue to enjoy the
advantage of multiple banking options.
First, regulators and state legislators need to ensure a
competitive environment exists for our state-chartered banks.
This can be accomplished by ensuring that the state banking
code is regularly updated and does not place state-chartered
banks at a competitive disadvantage.
In addition, state banking departments need to increase
efficiency and ensure that they complete their supervisory
duties while minimizing examination-related regulatory burden.
Second, regulators, state legislators and Congress need to
recognize the overwhelming and growing compliance burden on the
banking industry and its disproportionate effect on smaller
institutions. For community banks, the costs to comply with the
litany of federal and state laws and regulations threaten not
only their ability to compete with their larger counterparts
and serve customer and community needs, but also threaten their
own viability.
Third, thought should be given to requiring that community
banks receive preference in the process to purchase or lease
branches closed or divested as a result of a bank merger. This
will allow community banks to expand their branch networks,
maximize banking choice, and perhaps provide continuing
employment opportunities to existing branch personnel.
And finally, Congress needs to continue to be vigilant
relative to the efforts of federal bank regulatory agencies to
preempt state consumer protection law. We should question what
public policy goals such actions further. If federal preemption
efforts continue, not only will consumer protection efforts be
weakened, but federally chartered banks will gain an even
greater advantage over smaller state banks, resulting most
likely in the end of the community banking system as well as
the nation's century-old dual banking system.
Thank you very much.
Chairman Bachus. Thank you.
[The prepared statement of Hon. Steven L. Antonakes can be
found on page 82 in the appendix.]
Chairman Bachus. At this time, I'm going to yield to the
Ranking Member. I'm also going to surrender the chair to him,
which is permitted by our rules. You don't often see it, but
you will today.
Mr. Frank. Again, I thank you. The Chairman of the hearing
came from Alabama yesterday, and is going back today, and I
very much appreciate his making this possible. If the majority
had not cooperated, we couldn't have had this hearing. Thank
you.
Chairman Bachus. And it is something that affects all of
us; and from a business standpoint, we do--efficiency of scale
is just something that businesses do, so it's something you
almost expect them to do, to make these combinations when they
create efficiencies.
It is hard on the communities, and it's hard on us, to see
our local institutions in many cases be absorbed by
institutions which are not locally owned. And it is something
that is an issue; it's a growing issue across the country as we
have more bigger banks. We have three that have almost 10
percent of the deposits now. And while we are creating many
smaller banks as a result--and that's what often happens, is
people want a local bank.
But it's something that we'll be dealing with for years
ahead. We appreciate your input and your continued input, and
look forward to working in a bipartisan way to see that the
consumers and the communities benefit from whatever the path
that banking and financial services goes now.
Mr. Frank. Thank you.
I thank the Chairman as he leaves, and you can be sure that
the hearing is not going to go on too much longer because I
have to return this to Tom DeLay by 5:00.
[Laughter.]
Mr. Frank. [Presiding.] I want to begin with a couple of
points of strong agreement with Commissioner Antonakes.
The last point he raised is really the subject for another
set of ears. There is a pending action actually already taken
by the Comptroller of the Currency preempting a wide range of
state laws.
The problem is that the Comptroller of the Currency is not
equipped to do a lot of the consumer enforcement. Indeed, we've
got a very interesting issue of that sort that I'll be
addressing later; but our Attorney General, Tom Reilly, is now
engaged in trying to enforce good consumer protection against
gift cards.
People go into stores and get gift cards, and what we've
found is, people sometimes buy the gift cards, and they've got
an expiration date that people aren't clear about, and there
are other restrictions on them; and Attorney General Reilly
wanted to enforce our Massachusetts consumer laws. The retail
stores that have these cards are saying, oh, no, you can't do
that, because we're banks. We're in effect the agents of banks
here and the Comptroller of the Currency has preempted this.
Now, the Comptroller of the Currency, if that preemption
were to go forward, has no way to make those consumer
protections; and the Controller has stayed out of it for now,
but this is an example of the kind of overreach that the
Commissioner is talking about.
Frankly, I don't think it's an accident that it's at the
state level that consumer protection is really best done.
At the federal level, with all due respect to the
regulators, they're concerned with large systemic issues.
Individual consumer cases aren't going to have as much impact
there as they will have on the state and local levels, so
that's a very important point.
The second point where I very much agreed with the
Commissioner--I want to look at this--has to do with giving
some preference when there has to be the sale of branches to
community banks.
We had an example here. When Fleet and BankBoston merged,
there was of course considerable overlap in branches. I forget
how many branches had to be divested, but it was a very large
number.
The Attorneys General at that time of both the U.S. And the
State of Massachusetts said, well, antitrust being what it is,
we want to take all of those branches that have to be divested
and put them in one big package and sell them to one big
outside bank, so that outside bank can come in and provide
competition to Fleet.
And what many of us in our delegation heard was, no, don't
do that; we don't want to have to choose between two very big
banks. This came from our local Chambers of Commerce, local
retailers, from people who were in the locally oriented
businesses; they said, we would find that very difficult. And
in fact, all of us in the Massachusetts Congressional
delegation signed a letter urging that some of the branches be
sold to the community banks.
We got some criticism from some journalists who said we
were shilling for Fleet in doing that. And it did not come from
banks, but from borrowers.
I think about 10 percent of the branches were then sold to
community banks. We wish it had been more.
A year later, I was struck that the Boston Globe, which had
been somewhat critical of Congress, wrote an article saying,
well, that consumer satisfaction was at a much higher level in
the smaller banks, in the smaller areas. So that notion of
preference to community banks is very important.
Of course, the two come together, because one of the things
we have is, the Comptroller of the Currency sent out a CD in
which he tells you that if you change your charter, if you
leave your state charter and become a national bank, he won't
regulate you very much. It was kind of a recruitment to come be
a national bank to the Comptroller of the Currency.
So I just want to express complete agreement with the
Commissioner on those points.
As far as regulation is concerned, I think it is possible
to kind of help CRA be not a burden, but I do not favor the
cutbacks in CRA reach which we have heard about.
Now, to Senator Nuciforo, I just want to focus
particularly, because he recalled us to one of the purposes of
this hearing, and that is the job impact.
As I read the law, the regulators, if they choose to do it,
have at least some leverage over the community reinvestment
piece; but they have no leverage over the job piece.
And I guess we say to them, yes, well, obviously we expect
there to be some job loss. If in fact it turned out that the
purchase of a particular in-state bank by some out-of-state
bank was going to totally reduce employment in a very
substantial way, that that's something we're going to be able
to take into account and object to.
Mr. Nuciforo. I think it is something that we ought to be
able to consider.
I think we also have to take a look, not just at what has
happened in the recent past, but at what is likely to happen in
the future. Toronto Dominion recently announced its intentions
to acquire Bank North group; and Toronto Dominion is, of
course, based in Toronto, and has indicated on several
occasions in the newspaper that it not only wants to have a
very significant franchise here in the Northeast, which is
currently Bank North, but they intend to acquire three or four
or five other banking properties along the East Coast and
central part of the country: Ohio, New Jersey, Pennsylvania,
these kinds of places.
So we have an opportunity now to amend the law and make
sure that, going forward, when you have other large mergers
that are happening, we can consider employment during that
time.
Mr. Frank. I'd like to be very explicit.
People will say efficiency is the thing. Efficiency is very
important; it ought to be a major goal. But I think it is a
grave error to make efficiency the only criterion.
We are consumers in this country; we are also producers.
And a society in which the ability of people to earn is totally
neglected, again, it's got an economic problem.
As I said, Henry Ford paid the workers at the time five
dollars a day, and people said, what, are you nuts? In fact, in
some areas, he was; he was this crazy conspiratorial anti-
Semite, so he was nuts about some things, but he was a genius
about industrial production.
Eventually he said, look, if I don't pay these guys a
decent amount of money, who's going to buy the cars? And I
think we are in danger in this country of reaching the level of
income inequality which will produce macroeconomic problems,
because you will have a consuming public unable to buy enough
to sustain production. I think that's what we're seeing with
this great disparity now, where the luxury retailers are doing
wonderfully and the lower-end and middle- end retailers are
doing very poorly.
So I do think it is a mistake to say increased efficiency
will be the only guideline of public policy, and that we won't
take into account both regional and even macroeconomic impacts.
I have over gone my time. I do want to express my
appreciation to my legislative colleagues. I think we will be
working together, and I did want to say particularly to John
Quinn, we've been wrestling at the federal level with the
question of how to fund the Housing Trust Fund. Some people
want to take it out of the FHA, and I think that has serious
problems.
I must say the analogy to the affordable housing program
here in our Massachusetts statute here, it's a very good idea;
so I am going to pursue that further, and we'll be in touch on
that. Thank you.
Mr. Watt?
Mr. Watt. Very briefly, Mr. Chairman. I've been looking
forward to calling you ``Mr. Chairman'' for a good while, so I
can't resist calling you ``Mr. Chairman'' while I have that
opportunity.
Mr. Quinn, there were a couple of suggestions that you made
for federal legislation. Any of those things currently in the
state legislative, state laws?
Mr. Quinn. Yes. As the Chairman just said, in 1990 we
passed the state statute that requires nine-tenths of 1 percent
of the assets within the Commonwealth that are being taken over
to be made available for call by the Mass. Housing Partnership.
So it's funded over $900 million of housing programs, and I
know that the Bank of America, on top of the $18 million grant,
I think it's $406 million that they'll be making available over
the next ten years.
Mr. Watt. Does the state have any employment criteria such
as what was being suggested by Mr. Nuciforo?
Mr. Quinn. No, there is not. As part of this bill that we
file for next session, we would require, premerger--and it's
critical that it be premerger--to have job projections of one,
three, and five years out by the petitioner, so that the board
that's making the call of whether to approve it or not has in
front of them the facts or the projections of what's going to
happen over the next five years. So there's no requirement of a
particular rating of employment, but at least a knowledge of
what it may be so that a full disclosure is made premerger.
Mr. Watt. Do you contemplate having some sanction if the
projections are not lived up to? Or do you suggest disapproval
of the merger that might result?
Ms. Flynn. One of my suggestions, it might be scary to the
industry, but why can't you have a conditional approval ora
subject-to approval? If you're going to make these commitments
up front, the approval is subject to, you're committing or
keeping your word on what was said at the hearing.
Mr. Watt. What's your position on that, Mr. Nuciforo?
Mr. Nuciforo. I think we do this with respect to CRA. We
give people scores. We figure out a way to determine what their
commitment should be to CRA, and then each and every year there
is a measurement. So we're able to say, Mr. Antonakes said a
moment ago, that an institution is outstanding or an
institution is not outstanding. There's got to be a way to
similarly measure a bank's compliance with the promises it
makes with respect to employment.
And keep in mind, I don't think this should be the sole
factor; but there are seven or eight factors set forth in the
bank holding company statute. Why not add another one that has
to do with employment, particularly when we're seeing numbers,
employment impacts like the kinds we're seeing right now.
Mr. Watt. I think I'll yield back, Mr. Chairman.
Mr. Frank. Thank you.
Mr. Capuano?
Mr. Capuano. Mr. Chairman, I just want to thank the
representative of the Senate and the Commission for coming
today. I feel as thought we're on the same page, fighting the
same battles with the same people, and I want to thank you. I
wish Representative Bachus were still here, because I would
remind him, as far as I'm concerned, you both speak with
accents. I struggled to follow each and every word you said.
[Laughter.]
Mr. Capuano. I really don't have any questions, because I
agree with everything you said. I really have just a commentary
to remind you of the struggles we face.
I know that you know the numbers in Congress, and I know
you know that the current Administration is less than friendly
to even the concept of regulation. Regulation is a swear word
within the current Administration, and they look the other way
on all kinds of things.
That's why, though a CRA rating of outstanding is okay,
it's fine by me, it's better than not outstanding, it's not
unusual; it's good, it's as good as you can get. But it's
really not a stratified rating all that much. I actually think
it should be rated in a more stratified way so we can really
know who is doing more than that was necessary.
As far as I'm concerned, in the banking world, I've been
doing banking law since, I don't know, 1978 with Kevin Kiley
pretty much the whole time. I was around during the beginning
battles of the whole debate about interstate banking that has
now come to show that mergers aren't necessarily bad or evil in
themselves if it works out; it actually makes room in many ways
for smaller banks.
And this merger is no different. It may or may not; in the
final analysis, it will probably be an okay thing. It's not a
bad thing, having mega-banks around for the people who need
mega-banks.
The question is, what does it mean in the long run, and
what can we do to solve it? I know from the legislative
perspective, I have no doubt that you feel like you have a
tiger by the tail. What real clout do you have?
I won't speak for the rest of my colleagues, but I don't
feel like I have a tiger by the tail as much as we don't have a
tiger. We have an Administration that doesn't want to regulate,
doesn't want to look at it; and we have a Congress right now
that's really not all that interested even in looking at some
of the things that you suggested.
Mr. Frank, obviously, is the leader of this group, and
where he leads, we'll probably follow; and that's all well and
good. But it's important that you know, because we know, that
the likelihood of success in the short term is really not that
great.
No matter how little it might seem, I think there's very
little hope that we'll be able to get anything passed through
Congress that will even approach some of the things
Massachusetts has done or the things you've outlined.
I do think we should work on them, and I'm sure we will;
but I think, like with many things, the leadership really has
to come from the Commonwealth. You've done a great job thus
far, you've done what you can do within the limits of the mega-
merger world, and I encourage you to do more, and as we go
forward, my hope is that little by little, first of all, the
people who are doing the mergers don't see us as the enemy.
Sometimes they will, and that's inevitable. But I don't think
I've heard anything here today that has been extraordinary. All
we're asking for is plans. As you said, Representative, what
are the plans? What are you going to do? How can we deal with
it? How do we move on?
We all know that yesterday's ways of doing business, not
just in the banking world, but everywhere. Manufacturing, we've
been through manufacturing. Even the fishing industry is
changing daily. And our job is to try to figure out, okay, how
do we help the people that are left behind? How do we then
catch them up?
Again, I just want to thank you for coming today. Thank you
for your leadership on these issues and others, and to pledge
to you our support of your efforts and our cooperation as we
move forward.
Mr. Frank. Just a brief comment on what my colleague said.
It's true with regard to any major legislative changes in the
direction we'd like to see, they're highly unlikely.
There is one possible exception. That is, as Commission
Antonakes noted as the Bank Commissioner, on a bipartisan
basis, every state bank commissioner and every state Attorney
General has expressed serious concern about the reach of the
preemption by OCC, and I think there may be a chance for us to
work together on that.
The only thing I would say is this: It is true that we are
unlikely to be able to get passed some of the legislation we
want to get passed. On the other hand, our friends in the
banking industry have some legislation in some cases that they
would like to see passed.
And the important principle to remember legislatively is
that the ankle bone is connected to the shoulder bone, so there
may be some basis for negotiation there.
Ms. Lee?
Ms. Lee. Thank you very much, Mr. Chairman. I too want to
thank our panelists, coming from the state legislature to
Congress. I understand, first of all, the power of state
legislators at this point, and so I appreciate all of your
progressive moves here in the State of Massachusetts, and want
to comment on Commissioner Antonakes' comment with regard to
caution as it relates to federal preemption.
You know, oftentimes many of us find ourselves on the other
side of the states' rights argument when it comes to federal
preemption of laws relating to the government and the financial
services industry.
Case in point: I just want to ask your thoughts on this.
When we passed, of course, the Fair Credit Reporting Act, many
of you know that California has much stronger consumer
protection requirements than many states, and of course we had
a battle around that.
Some of the discussion, and I have an amendment--well,
several amendments, but one was to make the federal standard no
less than the strongest state standard. Of course, that got
shot down.
Another one was to allow California and other states which
had stronger consumer protection requirements, allow those
states to be grandfathered in. Well, that got shot down. But
I'm pleased that our Chairman was able to help us mitigate
against some of the negative preemptive aspects of that as the
bill went through the House.
And then the other option could be that the standard, the
federal standard, should be the floor rather than the ceiling.
But now we're faced with, again, looking at predatory
lending, which will be coming up. We've had many discussions
about this, and I'd like to get your take with regard to what
the options are for us at the federal level to ensure that,
again, states' rights provisions prevail where the consumer is
better protected.
Mr. Antonakes. Thank you very much.
First, I should acknowledge really the leadership role that
Chairman Frank has taken on matters regarding federal
preemption.
I think it's a delicate issue in many respects, in that you
want to recognize that we do have a dual banking system. You
don't want to unnaturally impinge on the ability of national
banks to compete nationally and globally, and do their business
without undue interference from the crazy quilt of state laws
that exists.
But I think specifically in areas relative to consumer
protection, that state laws should be recognized; and if a
decision is made to roll back state laws, the appropriate place
for that to come from is Congress and not from a federal agency
without public debate.
Mr. Nuciforo. If I could say something about that, it was,
I think, 1999 or 2000 when the issue of ATM surcharging came
up, and I know this was debated widely across the country. And
here in Massachusetts, several of us, including me, filed bills
that would limit the ability of banks to surcharge.
That kind of bill was stalled in the state legislature for
a variety of reasons, one of which was that there was a case
proceeding in the federal courts in Connecticut that was
addressing the same issue. The case there was whether the OCC
and its rules could preempt any state consumer protections in
that area, ATM surcharging. The federal opinion went against
us, as I recall.
So we have seen from the federal side preemptions of a
whole host and a whole variety of consumer protections that are
enacted in state law. Predatory lending, I suspect, will be the
next one.
But I do think that to the extent you've got any ability as
a Committee or as a Congress sitting as a whole to specifically
limit the ability of the federal regulators, OTS, OCC, the
others, to preempt us, it would make a difference.
Ms. Lee. How would you suggest that the grandfathering in
states would have stronger consumer protections? I mean, what
would be your specific suggestion?
Mr. Nuciforo. Well, I think states generally get the kinds
of consumer protections that they deserve and that they want.
What's good for consumers in Massachusetts might not be the
kinds of protections that they would choose in Alabama or in
California or elsewhere.
So I do think that there should be some effort to seek the
level of consumer protection required by people on the state
level.
Now, how you do that, how you craft that kind of provision
in Congress, you're the experts on that; I'm not. But that's
the goal I think we should be moving towards.
Mr. Quinn. I'll just add quickly, you ought to have the
federal law be a floor, not a ceiling, and to allow the
grandfathering of existing laws. Predatory lending is a perfect
example, for the 25 states that have passed predatory lending
laws. National banks say, A, we don't do predatory loans; but
B, your laws aren't going to apply to us anyway. So it puts us
in a tough situation.
Then there's always the implicit threat that if it gets too
tough in Massachusetts, we'll just flip to a federal charter,
and we'll see you later. So it's a delicate balance, but I
support the grandfathering and making the federal law no less.
Ms. Lee. Thank you very much. Thank you, Mr. Chairman.
Mr. Frank. I just wanted to say to Commissioner Antonakes,
illustrating part of the principle, which is there are some
things that are core banking functions, and I don't think--we
passed a law about check truncation; I wouldn't let the states
interfere with that. Deposit insurance.
What we need to do is distinguish. On the other hand, you
have a claim that there's a preemption if a state tries to
regulate gift cards which are issued by a retailer, because
ultimately the retailer is financed by a bank. I think that's
one of the things we have to determine, is what is or isn't in
the core banking function.
Now, some traditions ought to be maintained, so the last
word will go to a New Yorker.
Mr. Meeks?
Mr. Meeks. Thank you, Mr. Chairman. And I really don't have
many questions. I'll be real brief, also.
I want to thank all of you for being here and for
participating in this hearing. I want to thank the Chairman,
because I think you were right when you urged us to come here,
that this indeed affects your state in Massachusetts, but it
has some broader ramifications for all of us, whether you come
from California, New York or North Carolina. So I want to thank
you for putting this together and thank everybody that
participated.
I mentioned to the Chairman earlier--and I do like that
word, Chairman Barney Frank is sitting there, so I'll use it as
often as I can, also--I mentioned to the Chairman a few minutes
ago that I was tremendously impressed, particularly when we had
the not-for-profit organizations that were before us and the
way that they seemed organized as well as the way they seemed
empowered to negotiate with the banks, et cetera.
I guess my only question would be, the fact that the way
that Massachusetts law is written, that all the bank mergers
have to go through the Massachusetts bank board, do you think
that has an effect to empower community organizations so that
they are able to negotiate and try to work together to follow
through to make sure that the communities' needs and
requirements are being taken care of?
Mr. Antonakes. Congressman, I think it certainly does. I
think the aspect of local review is very important; the fact
that we have a public hearing here in Massachusetts, often try
to have it in the community that's most impacted by a merger.
We had, as was referenced, and Representative Quinn had
requested, we had our hearing on the Sovereign-Seacoast
application in New Bedford. We had the Fleet/Shawmut hearing
back several years ago in Worcester, where that was the city
that was most impacted by the merger as well. And I think local
review and the approval process does to some degree empower
local community groups and further fosters a good dialogue
between banks and those organizations.
Mr. Nuciforo. I would agree with everything the
Commissioner just said.
We have here in Massachusetts something called the Board of
Bank Incorporators, and the Board of Bank Incorporators is the
Commissioner of Banks and the Commissioner of DOR and the State
Treasurer. Those three sit as a board to decide, upon
application from merging banks, whether there are net new
benefits resulting from this merger. Part of that is actually
the jobs issue, but there are many other factors.
My good friend John Quinn here has filed a bill, and I
think it's a terrific bill, that would beef up the net new
benefits criteria so that we could take a look at specifically
employment and the impacts on the local economic condition as a
result of these things.
Mr. Meeks. Thank you.
Mr. Frank. Thank you.
The representative from California.
Ms. Lee. Thank you.
Before I leave, I just would like to thank the Chairman for
bringing us all together today for this hearing, and I wanted
to say that what I have heard here today really gives me a lot
of hope in terms of the B of A/Fleet Boston merger. I wish,
when B of A departed the Bay Area, that we would have had these
types of constructive discussions ahead of the curve.
I think that the negative impact in terms of employment, in
terms of economic impacts and in terms of all of the issues
that we are still dealing with in the Bay Area as a result, we
may have been able to--we would have been in better shape. So I
want to commend you, Chairman Frank, and commend all of you for
being here today.
Mr. Frank. Thank you, and I hope the Massachusetts groups,
while obviously they're not fully satisfied, will reflect on
that, which is that yes, this process has been helpful; and I
think we have come out of this, or are going to be coming out
of it, better than we might have.
I just, in closing, again want to thank--the gentleman from
North Carolina?
Mr. Watt. Mr. Chairman, I ask unanimous consent that I be
allowed to submit for the record a series of newspaper
articles.
I do this because, on the way here, I was going through,
and there was an identification of so many different local
impacts that mergers are having, not only in connection to
community jobs, but the kinds of contributions that are being
made to non-profits, to charitable institutions. Sometimes the
larger the merged institution and the further away it is, it
changes the quality of the charitable contributions.
Some of those things are reflected in these newspaper
articles, which I also would encourage the banking interests to
take a look at. It's a whole myriad of things that are kind of
set into motion as a result of a merger.
Mr. Frank. Without objection, they'll be put in the record.
I just want to close by thanking people. First of all, the
witnesses really set a good example here. I wish we had
witnesses--let me just say, these kind of field hearings are
sometimes, frankly, road shows, dog-and-pony shows, where we
look good.
This has been one of the more substantive hearings that I
have been in as a Member of the Committee, and I want to thank
my colleagues. I hope everyone in the area appreciates that
getting nine Members of Congress a couple weeks before
Christmas isn't easy. Five of our colleagues are from out of
town. Four of them are from Massachusetts. The witnesses were
all very good in their testimony. They were on point. They
responded to questions.
Finally, when we have hearings in Washington, it's pretty
routine; but to bring nine Members of Congress and all these
witnesses and everything else 400 miles away is a lot harder
than it may look.
So to both the Republican and Democratic staffs, my deepest
appreciation. This has been a very well-run hearing, and we've
had good substance. We haven't lost a Member yet. We have a
couple more to get to the airport, but I think we'll be okay;
but I really am appreciative of the staff.
As I said, it's hard to kind of export this, and I think
this has been done very smoothly from the recordation to the
presentation of the witnesses.
So I just want to thank everybody, and also note that if I
hear no objection, the record will remain open for 30 days; and
I should tell the witnesses, what that means is that Members of
the Committee will have the option, including some who weren't
here, of submitting questions to us, which we will transmit.
If any Member of the Committee has a question that they
would like put to a witness, we will submit that, and the
witness will have a chance to answer. And we will keep the
record open, which means, one, if the Members think about
something, they can do it; and, two, if any witness feels he or
she wasn't asked something he or she wanted to be asked and has
a point they want to make, it's not hard to find a Member to
ask you.
[Laughter.]
Mr. Frank. And the responses will be placed in the record.
Hearing no objection to that, it is so ordered; and the
hearing is adjourned.
[Whereupon, at 2:12 p.m., the committee was adjourned.]
A P P E N D I X
December 14, 2004
[GRAPHIC] [TIFF OMITTED] T0952.001
[GRAPHIC] [TIFF OMITTED] T0952.002
[GRAPHIC] [TIFF OMITTED] T0952.003
[GRAPHIC] [TIFF OMITTED] T0952.004
[GRAPHIC] [TIFF OMITTED] T0952.005
[GRAPHIC] [TIFF OMITTED] T0952.006
[GRAPHIC] [TIFF OMITTED] T0952.007
[GRAPHIC] [TIFF OMITTED] T0952.008
[GRAPHIC] [TIFF OMITTED] T0952.009
[GRAPHIC] [TIFF OMITTED] T0952.010
[GRAPHIC] [TIFF OMITTED] T0952.011
[GRAPHIC] [TIFF OMITTED] T0952.012
[GRAPHIC] [TIFF OMITTED] T0952.013
[GRAPHIC] [TIFF OMITTED] T0952.014
[GRAPHIC] [TIFF OMITTED] T0952.015
[GRAPHIC] [TIFF OMITTED] T0952.016
[GRAPHIC] [TIFF OMITTED] T0952.017
[GRAPHIC] [TIFF OMITTED] T0952.018
[GRAPHIC] [TIFF OMITTED] T0952.019
[GRAPHIC] [TIFF OMITTED] T0952.020
[GRAPHIC] [TIFF OMITTED] T0952.021
[GRAPHIC] [TIFF OMITTED] T0952.022
[GRAPHIC] [TIFF OMITTED] T0952.023
[GRAPHIC] [TIFF OMITTED] T0952.024
[GRAPHIC] [TIFF OMITTED] T0952.025
[GRAPHIC] [TIFF OMITTED] T0952.026
[GRAPHIC] [TIFF OMITTED] T0952.027
[GRAPHIC] [TIFF OMITTED] T0952.028
[GRAPHIC] [TIFF OMITTED] T0952.029
[GRAPHIC] [TIFF OMITTED] T0952.030
[GRAPHIC] [TIFF OMITTED] T0952.031
[GRAPHIC] [TIFF OMITTED] T0952.032
[GRAPHIC] [TIFF OMITTED] T0952.033
[GRAPHIC] [TIFF OMITTED] T0952.034
[GRAPHIC] [TIFF OMITTED] T0952.035
[GRAPHIC] [TIFF OMITTED] T0952.036
[GRAPHIC] [TIFF OMITTED] T0952.037
[GRAPHIC] [TIFF OMITTED] T0952.038
[GRAPHIC] [TIFF OMITTED] T0952.039
[GRAPHIC] [TIFF OMITTED] T0952.040
[GRAPHIC] [TIFF OMITTED] T0952.041
[GRAPHIC] [TIFF OMITTED] T0952.042
[GRAPHIC] [TIFF OMITTED] T0952.043
[GRAPHIC] [TIFF OMITTED] T0952.044
[GRAPHIC] [TIFF OMITTED] T0952.045
[GRAPHIC] [TIFF OMITTED] T0952.046
[GRAPHIC] [TIFF OMITTED] T0952.047
[GRAPHIC] [TIFF OMITTED] T0952.048
[GRAPHIC] [TIFF OMITTED] T0952.049
[GRAPHIC] [TIFF OMITTED] T0952.050
[GRAPHIC] [TIFF OMITTED] T0952.051
[GRAPHIC] [TIFF OMITTED] T0952.052
[GRAPHIC] [TIFF OMITTED] T0952.053
[GRAPHIC] [TIFF OMITTED] T0952.054
[GRAPHIC] [TIFF OMITTED] T0952.055
[GRAPHIC] [TIFF OMITTED] T0952.056
[GRAPHIC] [TIFF OMITTED] T0952.057
[GRAPHIC] [TIFF OMITTED] T0952.058
[GRAPHIC] [TIFF OMITTED] T0952.059
[GRAPHIC] [TIFF OMITTED] T0952.060
[GRAPHIC] [TIFF OMITTED] T0952.061
[GRAPHIC] [TIFF OMITTED] T0952.062
[GRAPHIC] [TIFF OMITTED] T0952.063
[GRAPHIC] [TIFF OMITTED] T0952.064
[GRAPHIC] [TIFF OMITTED] T0952.065
[GRAPHIC] [TIFF OMITTED] T0952.066
[GRAPHIC] [TIFF OMITTED] T0952.067
[GRAPHIC] [TIFF OMITTED] T0952.068
[GRAPHIC] [TIFF OMITTED] T0952.069
[GRAPHIC] [TIFF OMITTED] T0952.070
[GRAPHIC] [TIFF OMITTED] T0952.071
[GRAPHIC] [TIFF OMITTED] T0952.072
[GRAPHIC] [TIFF OMITTED] T0952.073
[GRAPHIC] [TIFF OMITTED] T0952.074
[GRAPHIC] [TIFF OMITTED] T0952.075
[GRAPHIC] [TIFF OMITTED] T0952.076
[GRAPHIC] [TIFF OMITTED] T0952.077
[GRAPHIC] [TIFF OMITTED] T0952.078
[GRAPHIC] [TIFF OMITTED] T0952.079
[GRAPHIC] [TIFF OMITTED] T0952.080
[GRAPHIC] [TIFF OMITTED] T0952.081
[GRAPHIC] [TIFF OMITTED] T0952.082
[GRAPHIC] [TIFF OMITTED] T0952.083
[GRAPHIC] [TIFF OMITTED] T0952.084
[GRAPHIC] [TIFF OMITTED] T0952.085
[GRAPHIC] [TIFF OMITTED] T0952.086
[GRAPHIC] [TIFF OMITTED] T0952.087
[GRAPHIC] [TIFF OMITTED] T0952.088
[GRAPHIC] [TIFF OMITTED] T0952.089
[GRAPHIC] [TIFF OMITTED] T0952.090
[GRAPHIC] [TIFF OMITTED] T0952.091
[GRAPHIC] [TIFF OMITTED] T0952.092
[GRAPHIC] [TIFF OMITTED] T0952.093
[GRAPHIC] [TIFF OMITTED] T0952.094
[GRAPHIC] [TIFF OMITTED] T0952.095
[GRAPHIC] [TIFF OMITTED] T0952.096
[GRAPHIC] [TIFF OMITTED] T0952.097
[GRAPHIC] [TIFF OMITTED] T0952.098
[GRAPHIC] [TIFF OMITTED] T0952.099
[GRAPHIC] [TIFF OMITTED] T0952.100
[GRAPHIC] [TIFF OMITTED] T0952.101
[GRAPHIC] [TIFF OMITTED] T0952.102
[GRAPHIC] [TIFF OMITTED] T0952.103
[GRAPHIC] [TIFF OMITTED] T0952.104
[GRAPHIC] [TIFF OMITTED] T0952.105
[GRAPHIC] [TIFF OMITTED] T0952.106
[GRAPHIC] [TIFF OMITTED] T0952.107
[GRAPHIC] [TIFF OMITTED] T0952.108
[GRAPHIC] [TIFF OMITTED] T0952.109
[GRAPHIC] [TIFF OMITTED] T0952.110
[GRAPHIC] [TIFF OMITTED] T0952.111
[GRAPHIC] [TIFF OMITTED] T0952.112
[GRAPHIC] [TIFF OMITTED] T0952.113
[GRAPHIC] [TIFF OMITTED] T0952.114
[GRAPHIC] [TIFF OMITTED] T0952.115
[GRAPHIC] [TIFF OMITTED] T0952.116
[GRAPHIC] [TIFF OMITTED] T0952.117
[GRAPHIC] [TIFF OMITTED] T0952.118
[GRAPHIC] [TIFF OMITTED] T0952.119
[GRAPHIC] [TIFF OMITTED] T0952.120
[GRAPHIC] [TIFF OMITTED] T0952.121
[GRAPHIC] [TIFF OMITTED] T0952.122
[GRAPHIC] [TIFF OMITTED] T0952.123
[GRAPHIC] [TIFF OMITTED] T0952.124
[GRAPHIC] [TIFF OMITTED] T0952.125
[GRAPHIC] [TIFF OMITTED] T0952.126
[GRAPHIC] [TIFF OMITTED] T0952.127
[GRAPHIC] [TIFF OMITTED] T0952.128
[GRAPHIC] [TIFF OMITTED] T0952.129
[GRAPHIC] [TIFF OMITTED] T0952.130
[GRAPHIC] [TIFF OMITTED] T0952.131
[GRAPHIC] [TIFF OMITTED] T0952.132
[GRAPHIC] [TIFF OMITTED] T0952.133
[GRAPHIC] [TIFF OMITTED] T0952.134
[GRAPHIC] [TIFF OMITTED] T0952.135
[GRAPHIC] [TIFF OMITTED] T0952.136
[GRAPHIC] [TIFF OMITTED] T0952.137
[GRAPHIC] [TIFF OMITTED] T0952.138
[GRAPHIC] [TIFF OMITTED] T0952.139
[GRAPHIC] [TIFF OMITTED] T0952.140
[GRAPHIC] [TIFF OMITTED] T0952.141
[GRAPHIC] [TIFF OMITTED] T0952.142
[GRAPHIC] [TIFF OMITTED] T0952.143
[GRAPHIC] [TIFF OMITTED] T0952.144
[GRAPHIC] [TIFF OMITTED] T0952.145
[GRAPHIC] [TIFF OMITTED] T0952.146
[GRAPHIC] [TIFF OMITTED] T0952.147
[GRAPHIC] [TIFF OMITTED] T0952.148
[GRAPHIC] [TIFF OMITTED] T0952.149
[GRAPHIC] [TIFF OMITTED] T0952.150
[GRAPHIC] [TIFF OMITTED] T0952.151
[GRAPHIC] [TIFF OMITTED] T0952.152
[GRAPHIC] [TIFF OMITTED] T0952.153
[GRAPHIC] [TIFF OMITTED] T0952.154
[GRAPHIC] [TIFF OMITTED] T0952.155
[GRAPHIC] [TIFF OMITTED] T0952.156
[GRAPHIC] [TIFF OMITTED] T0952.157
[GRAPHIC] [TIFF OMITTED] T0952.158
[GRAPHIC] [TIFF OMITTED] T0952.159
[GRAPHIC] [TIFF OMITTED] T0952.160
[GRAPHIC] [TIFF OMITTED] T0952.161
[GRAPHIC] [TIFF OMITTED] T0952.162
[GRAPHIC] [TIFF OMITTED] T0952.163
[GRAPHIC] [TIFF OMITTED] T0952.164
[GRAPHIC] [TIFF OMITTED] T0952.165
[GRAPHIC] [TIFF OMITTED] T0952.166
[GRAPHIC] [TIFF OMITTED] T0952.167
[GRAPHIC] [TIFF OMITTED] T0952.168
[GRAPHIC] [TIFF OMITTED] T0952.169
[GRAPHIC] [TIFF OMITTED] T0952.170
[GRAPHIC] [TIFF OMITTED] T0952.171
[GRAPHIC] [TIFF OMITTED] T0952.172
[GRAPHIC] [TIFF OMITTED] T0952.173
[GRAPHIC] [TIFF OMITTED] T0952.174
[GRAPHIC] [TIFF OMITTED] T0952.175
[GRAPHIC] [TIFF OMITTED] T0952.176
[GRAPHIC] [TIFF OMITTED] T0952.177
[GRAPHIC] [TIFF OMITTED] T0952.178
[GRAPHIC] [TIFF OMITTED] T0952.179
[GRAPHIC] [TIFF OMITTED] T0952.180
[GRAPHIC] [TIFF OMITTED] T0952.181
[GRAPHIC] [TIFF OMITTED] T0952.182
[GRAPHIC] [TIFF OMITTED] T0952.183
[GRAPHIC] [TIFF OMITTED] T0952.184
[GRAPHIC] [TIFF OMITTED] T0952.185
[GRAPHIC] [TIFF OMITTED] T0952.186
[GRAPHIC] [TIFF OMITTED] T0952.187
[GRAPHIC] [TIFF OMITTED] T0952.188
[GRAPHIC] [TIFF OMITTED] T0952.189
[GRAPHIC] [TIFF OMITTED] T0952.190
[GRAPHIC] [TIFF OMITTED] T0952.191
[GRAPHIC] [TIFF OMITTED] T0952.192
[GRAPHIC] [TIFF OMITTED] T0952.193
[GRAPHIC] [TIFF OMITTED] T0952.194
[GRAPHIC] [TIFF OMITTED] T0952.195
[GRAPHIC] [TIFF OMITTED] T0952.196
[GRAPHIC] [TIFF OMITTED] T0952.197
[GRAPHIC] [TIFF OMITTED] T0952.198
[GRAPHIC] [TIFF OMITTED] T0952.199
[GRAPHIC] [TIFF OMITTED] T0952.200
[GRAPHIC] [TIFF OMITTED] T0952.201
[GRAPHIC] [TIFF OMITTED] T0952.202
[GRAPHIC] [TIFF OMITTED] T0952.203
[GRAPHIC] [TIFF OMITTED] T0952.204
[GRAPHIC] [TIFF OMITTED] T0952.205
[GRAPHIC] [TIFF OMITTED] T0952.206
[GRAPHIC] [TIFF OMITTED] T0952.207
[GRAPHIC] [TIFF OMITTED] T0952.208
[GRAPHIC] [TIFF OMITTED] T0952.209
[GRAPHIC] [TIFF OMITTED] T0952.210
[GRAPHIC] [TIFF OMITTED] T0952.211
[GRAPHIC] [TIFF OMITTED] T0952.212
[GRAPHIC] [TIFF OMITTED] T0952.213
[GRAPHIC] [TIFF OMITTED] T0952.214
[GRAPHIC] [TIFF OMITTED] T0952.215
[GRAPHIC] [TIFF OMITTED] T0952.216
[GRAPHIC] [TIFF OMITTED] T0952.217
[GRAPHIC] [TIFF OMITTED] T0952.218
[GRAPHIC] [TIFF OMITTED] T0952.219
[GRAPHIC] [TIFF OMITTED] T0952.220
[GRAPHIC] [TIFF OMITTED] T0952.221
[GRAPHIC] [TIFF OMITTED] T0952.222
[GRAPHIC] [TIFF OMITTED] T0952.223
[GRAPHIC] [TIFF OMITTED] T0952.224
[GRAPHIC] [TIFF OMITTED] T0952.225
[GRAPHIC] [TIFF OMITTED] T0952.226
[GRAPHIC] [TIFF OMITTED] T0952.227
[GRAPHIC] [TIFF OMITTED] T0952.228
[GRAPHIC] [TIFF OMITTED] T0952.229
[GRAPHIC] [TIFF OMITTED] T0952.230
[GRAPHIC] [TIFF OMITTED] T0952.231
[GRAPHIC] [TIFF OMITTED] T0952.232
[GRAPHIC] [TIFF OMITTED] T0952.233
[GRAPHIC] [TIFF OMITTED] T0952.234
[GRAPHIC] [TIFF OMITTED] T0952.235
[GRAPHIC] [TIFF OMITTED] T0952.236
[GRAPHIC] [TIFF OMITTED] T0952.237
[GRAPHIC] [TIFF OMITTED] T0952.238
[GRAPHIC] [TIFF OMITTED] T0952.239
[GRAPHIC] [TIFF OMITTED] T0952.240
[GRAPHIC] [TIFF OMITTED] T0952.241
[GRAPHIC] [TIFF OMITTED] T0952.242
[GRAPHIC] [TIFF OMITTED] T0952.243
[GRAPHIC] [TIFF OMITTED] T0952.244
[GRAPHIC] [TIFF OMITTED] T0952.245
[GRAPHIC] [TIFF OMITTED] T0952.246
[GRAPHIC] [TIFF OMITTED] T0952.247
[GRAPHIC] [TIFF OMITTED] T0952.248
[GRAPHIC] [TIFF OMITTED] T0952.249
[GRAPHIC] [TIFF OMITTED] T0952.250
[GRAPHIC] [TIFF OMITTED] T0952.251
[GRAPHIC] [TIFF OMITTED] T0952.252
[GRAPHIC] [TIFF OMITTED] T0952.253
[GRAPHIC] [TIFF OMITTED] T0952.254
[GRAPHIC] [TIFF OMITTED] T0952.255
[GRAPHIC] [TIFF OMITTED] T0952.256
[GRAPHIC] [TIFF OMITTED] T0952.257
[GRAPHIC] [TIFF OMITTED] T0952.258
[GRAPHIC] [TIFF OMITTED] T0952.259
[GRAPHIC] [TIFF OMITTED] T0952.260
[GRAPHIC] [TIFF OMITTED] T0952.261
[GRAPHIC] [TIFF OMITTED] T0952.262
[GRAPHIC] [TIFF OMITTED] T0952.263
[GRAPHIC] [TIFF OMITTED] T0952.264
[GRAPHIC] [TIFF OMITTED] T0952.265
[GRAPHIC] [TIFF OMITTED] T0952.266
[GRAPHIC] [TIFF OMITTED] T0952.267
[GRAPHIC] [TIFF OMITTED] T0952.268
[GRAPHIC] [TIFF OMITTED] T0952.269
[GRAPHIC] [TIFF OMITTED] T0952.270
[GRAPHIC] [TIFF OMITTED] T0952.271
[GRAPHIC] [TIFF OMITTED] T0952.272
[GRAPHIC] [TIFF OMITTED] T0952.273
[GRAPHIC] [TIFF OMITTED] T0952.274
[GRAPHIC] [TIFF OMITTED] T0952.275
[GRAPHIC] [TIFF OMITTED] T0952.276
[GRAPHIC] [TIFF OMITTED] T0952.277
[GRAPHIC] [TIFF OMITTED] T0952.278
[GRAPHIC] [TIFF OMITTED] T0952.279
[GRAPHIC] [TIFF OMITTED] T0952.280
[GRAPHIC] [TIFF OMITTED] T0952.281
[GRAPHIC] [TIFF OMITTED] T0952.282
[GRAPHIC] [TIFF OMITTED] T0952.283
[GRAPHIC] [TIFF OMITTED] T0952.284
[GRAPHIC] [TIFF OMITTED] T0952.285
[GRAPHIC] [TIFF OMITTED] T0952.286
[GRAPHIC] [TIFF OMITTED] T0952.287
[GRAPHIC] [TIFF OMITTED] T0952.288
[GRAPHIC] [TIFF OMITTED] T0952.289
[GRAPHIC] [TIFF OMITTED] T0952.290
[GRAPHIC] [TIFF OMITTED] T0952.291
[GRAPHIC] [TIFF OMITTED] T0952.292
[GRAPHIC] [TIFF OMITTED] T0952.293
[GRAPHIC] [TIFF OMITTED] T0952.294
[GRAPHIC] [TIFF OMITTED] T0952.295
[GRAPHIC] [TIFF OMITTED] T0952.296
[GRAPHIC] [TIFF OMITTED] T0952.297
[GRAPHIC] [TIFF OMITTED] T0952.298
[GRAPHIC] [TIFF OMITTED] T0952.299
[GRAPHIC] [TIFF OMITTED] T0952.300
[GRAPHIC] [TIFF OMITTED] T0952.301
[GRAPHIC] [TIFF OMITTED] T0952.302
[GRAPHIC] [TIFF OMITTED] T0952.303
[GRAPHIC] [TIFF OMITTED] T0952.304
[GRAPHIC] [TIFF OMITTED] T0952.305
[GRAPHIC] [TIFF OMITTED] T0952.306