Massachusetts 

Donald Stewatf, President 

Leo V. Sarkissian, Executive Director 

Formerly Massachusetts Association for Retarded Citizens 

217 South Street, Waltham, MA 02453-2769 Phone (781) 891-6270 

Fax (781) 991-6271 

Email arcmass 0 gis.w: 

To: Robert M. Brady, Vice President 

Federal Reserve Bank of Boston 

Fr: Leo Sarkissian, Executive Director 

Re: Fleet Financial and Bar&Boston 

Date: July 8,1999 

I appreciate the opportunity to testify on behalf of Arc Massachusetts. Our organization’s mission is 

to enhance the quality of life for individuals with specific developmental disabilities. Arc 

Massachusetts accomplishes this mission by promoting quality community services and advocating 

for enlightened public policy. 

There are a number of systems issues to resolve when a merger such as this is proposed. I’m sure 

there are professionals who have testified to the level of community investment on the part of 

community banks versus larger institutions. I would think any review of this merger should include 

an analysis of community investment that has been made by both institutions. 

I am here to help represent the voice of people with disabilities who have been shut out of the 

housing market over the past several years. “Priced Out in 1998”, is a report published by the 

Technical Assistance Collaborative, Inc (TAC) and the Consortium for Citizens with Disabilities (CCD) 

It documents the severity and nature of the housing crisis for people with disabilities. The report cites 

that the crisis is most evident in the affordability of “efficiency” or studio and one-bedroom 

apartments. On a national average, the cost of a one-bedroom apartment is 60% of SSI (supplemental 

security income) monthly income and more than a person’s total monthly income in 125 housing 

markets of the United States. For many people with disabilities, especially cognitive disabilities such as 

mental retardation, SSI is the primary source of personal income. In Massachusetts this income is 

under 17% of the l-Person Median Income (Opening Doors, May 1999). People with disabilities often 

end up in the category of ‘extremely low income’. HUD studies estimate that 70% of households with 

incomes below 30% of median income who are not receiving HUD assistance have priority housing 

problems. 

In M,lssachusetts, the percentage of SSI income to rent an efficiency unit is 94.89% while to rent a onebedroom, the percentage are over 100% (116.79%), higher th an most states including New York. But 

it is not easy for families either. Families are forced to accept housing units sometimes on upper floors 

where they must carry their children up the stairs. Once upstairs, they go down again to carry up the 

wheelchair or other equipment. 

There are many cities and towns in the Boston metropolitan area where less than 10% of housing 

stock is considered “affordable housing.” (1995, CHAS, Executive Office of Communities and 

Development-blassachusetts) Over half the state’s population lives in this metropolitan area. 

Cities/Towns, n&h are below the 10% threshold, include Newton (3.S%), Arlington (4.4%), 

Walth‘un (5”/,), hlalden (S.9%), Framingham (9%), and Medford (6.9%). 

Local ARC Affiliates Berkshire l Br:ck!cn A-ea l Cape Cod l Central Middlesex l Charles Rver l East Middlesex l FrankIln *Greater Athol *Greater Boston 

Greater Fall Rver * Crzater NW Bec%,d l GreaTor Plymouth l Hampshire County l Lawrence l Minute Man AHS l Ncr%ern Bristol l North Central l North Shoia 

Northern Essex l Sc~th hltdd:esax l Sosr: ~,orfclk l South Shore l South Worcester l W/orcester Area l h4ember of The Arc of the United States 
FEDERAL RESERVE BANK OF BOSTON 

Public Hearing July 7, 1999 

Merger Proposal by Fleet Financial Group Inc. and BankBoston Corporation 

TESTIMONY OF ANDREW R. GRAINGER 

President, New England Legal Foundation 

1. My name is Andrew Grainger. I appear today as President of New England Legal 

Foundation, a not-for-profit public interest law firm which has as its mission the defense 

of traditional economic liberties, support of our system of free enterprise and balanced 

economic growth throughout our six state region. 

2. NELF is represented throughout New England by a Board of Directors comprised of 

General Counsel and senior partners from leading businesses and law firms. We also have 

a network of Advisory Councils, one in each New England state, which provide the 

Foundation with an “ear to the ground” on issues affecting business, the economy and 

property rights on a state and local level. 

3. The Foundation’s primary activity consists of filing amicus briefs in lawsuits where a policy 

or constitutional position requires consideration in the resolution of a dispute affecting 

economic rights and obligations. We typically are involved in more or less 30 cases every 

year in state and federal courts, primarily in New England but also throughout the country, 

as well as two or three in the United States Supreme Court. 

4. The Foundation also engages in advocacy outside of the courtroom on behalf of free 

enterprise interests and the business climate in New England. In this context I speak today 

as the Foundation’s President in support of the proposed merger between Fleet and 

BankBoston. 

5. The economic well being of New England and the best interests of individuals and 

companies doing business here are better served if we can preserve a large strong regionally 

based commercial lender, as this merger contemplates. We are all aware that institutions the 

size of Fleet and BankBoston are vulnerable to out-of-region acquirers many times their 

size. 

6. While large national and international businesses based in New England can select on a 

national and international basis to meet their capital requirements, middle market and 

smaller companies are hurt when deposit and credit decisions are removed to other parts of 

the country. In particular the branch system and cash management services that New 

England based lenders can provide are important to New England businesses. If, as it 

should, the proposed merger preserves a local presence, then Boston and the rest of New 

England will benefit. 
a i 

Testimony of John T. O’Connor 

Re: Proposed merger of Fleet Bank and Bar&Boston 

Submitted to The Federal Reserve Bank of Boston 

July 7,1999 

Good afternoon. My name is John O’Connor. I am a longtime community 

organizer with substantial “experience in consumer and urban empowerment 

issues, and the president of a Cambridge .environmental firm, as well as a 

member of State Senator Dianne Wilkerson’s Community Advisory 

Committee. For all these reasons, I have followed with great interest and 

growing concern the planned merger of Fleet Bank and BankBoston. 

I speak today to express my strong opposition to that px-oposal. This merger 

would substantially lessen competition in Massachusetts and around New 

England, nor would there be sufficient (if any) net positive benefits to the 

public interest to justify its approval. 

Put simply, this is a deal that may “greenline” the pockets of Fleet and 

Bar&Boston shareholders, but it redlines the needs and concerns of 

Massachusetts consumers, small businesses and urban communities. 

Let me start by stating the obvious. Although what’s being proposed here is 

usually described as a merger of two, Fleet and BankBoston, it in fact 

represents the consolidation of what had been-just a few short years agofour of the largest banks in Massachusetts, into a single entity. Surely, going 

from four to two, and now two to one, cannot be a recipe for robust, healthy 

compedtion. 

Not surprisingly, even after divestiture, this new Fleet Boston entity would 

utterly dominate regional markets, commanding a roughly one-third share 

across Massachusetts, and possibly even more in greater Boston. In other areas, 

like Worcester, Hartford CT, and Rhode Island, Fleet Boston’s overwhelming 

presence would be even more dramatic. Ironically, many of these markets are 

already over-concentrated in the hands of Fleet alone at its current size. 

Likewise, the new Fleet Boston would be by far the biggest holder of ATMs in 

Massachusetts. Again, even after divestiture, Fleet Boston is likely to control 
upwards of half of all bank-owned ATM machines in our state-many 

the number held by any other institution. 

Some say the solution lies in recruiting some financial behemoth 

times 

from 

Charlotte or San Francisco to come up to New England and compete with 

Fleet-Boston on its own terms, while others favor helping our existing smaller 

banks to do more. Let’s be clear: this is a no-win situation. If history is any 

guide, small banks probably will better serve their customers and our 

communities than mega-giants like the proposed Fleet Boston. But they cannot 

effectively compete in the super-heavyweight division occupied by a FleetBoston. Eventually many of these smaller banks will be acquired, squeezed 

out, or just plain run over. .’ 

So I, for one, cannot see how this proposed merger-no matter how it’s 

handled-can do anything other than substantially lessen competition. At best, 

it pushes us farther in the direction of a market oligarchy, which is not an 

acceptable substitute for true competition. 

The question then becomes: will consumers and our communities see sufficient 

new benefits from Fleet Boston in terms of convenience or service to offset the 

bad side-effects of diminished competition? Again, the answer is a clear “no.” 

Bar&Boston and Fleet are both plenty big enough now to be able (in theory 

anyway, if not always in practice) to offer the full range of services and 

products needed by our consumers and our economy. This isn’t a case of two 

little community banks teaming up to be able to do more lending to mid-sized 

businesses, say. 

Nor is there any reason to think that, when it comes to banks, bigger inherently 

means better for consumers. Just the opposite, in fact. Big banks charge more, 

not less, for the basic services most individual and small business customers 

count on. According to one 1997 study, big banks charge 15% higher fees on 

checking accounts; require substantially higher minimum balances; and impose 

more and higher surcharges for ATM usage. 

Significantly, Fleet and Bar&Boston have been very quiet on the subject of 

customer fees and consumer issues. So unless and until they make some public 

commitments to the contrary, I see no evidence to assume the outcome here 

will be any different: more money for less service. Fleet and Bar&Boston may 

consider that perfectly “convenient,” but consumers and small businesses will 

probably think otherwise. 
Finally, there’s the vital issue of how this deal meets (or fails to meet) the 

needs of all our communities, and whether the proposed merger and the 

component banks are truly in compliance with the purposes of the Community 

Reinvestment Act. 

A couple of weeks ago, Fleet and Bar&Boston unveiled what they’re touting as 

a $14 billion-plus CRA commitment that allegedly addresses these concerns. 

Having examined it closely, I concur totally with the many others who have 

criticized it as both woefully insufficient in funding, lacking in forwardlooking innovations that anticipate likely changes in the financial services 

landscape, and, critically, missing an enforcement mechanism. 

Parse the numbers and you find that the Fleet / BankBoston CRA proposal falls 

short of representing what the two institutions have achieved separately. Even 

taking into account shrinkage due to expected divestitures, the CRA plan 

would constitute a 12 percent decline in small business lending and a 

whopping 46 percent drop in lending and investment for community 

development. 

That CRA shortfall is even more striking when you consider that Fleet’s 

present level of effort is already insufficient, and is reflective of the fact that 

the previous generation of takeovers and consolidations involving Fleet have 

generally lessened, rather than increased, the availability of banking products 

and services for many residents, especially in urban areas. 

One recent study finds, for example, that following its acquisitions just a few 

years ago of Shawmut National and NatWest bank, total Fleet mortgage 

lending to African-American, Latin0 and low-income borrowers in the Boston 

area dropped sharply relative to what had been achieved previously by the 

separate institutions. Other data show a similar falloff in New York State. 

Under-the CRA statute, these kind of facts alone should be sufficient grounds 

to deny Fleet the right to expand its franchise still further-whether through 

this merger or some other means-until Fleet proves it has cleaned up its act. 

Let me close by going back to the beginning. 

Fleet and BankBoston kicked off this process some months ago with the nowfamous phrase that “one plus one is greater than two.” Asked to attach some 

specifics to that promise, Fleet officials soon asserted their statement was 

meant to apply only to supposed business “synergies’‘-a synonym, I take it, 

for shareholder profits. 
But I suggest today that Fleet 

this proposed merger must be 

for itself. 

must be held to its word, and that the merits of 

tested against the same benchmark Fleet has set 

Does Fleet plus BankBoston really add up to more than the sum of its parts, for 

all our people and all our communities. 7 In short, does it work for us, all of us? 

Or is it actually the case that Fleet / Bar&Boston’s deal asks us to work for 

them, through higher fees, fewer choices, and less attention to the pressing 

needs of so many of our communities? 

I respectfully submit to you that this proposal does not and will not pass these 

tests, and should therefore be rejected. 

Thank you. 

JOHN T. O’CONNOR 

160 Second Street 

Cambridge, MA 02 142