Testimony before the Federal Reserve in San Francisco,~ July 9th, 1998 

My name is Brenda LaBlanc. I am here representing Citizens for Community Improvement of 

Des Moines. CC1 is an organization that helps citizens work on any community improvement 

issues. CC1 has been in Des Moines since 1977. Their Reinvestment Task Force was also 

initiated in 1977 to work on the problem of getting home loans in areas that had been red-lined, 

It’s been a long, hard road to travel but it has been worthwhile. 

ARer twenty years we have developed working agreements for special CRA programs with ten 

financial institutions. We work with each bank to help them improve their lending record, and we 

also provide services such as a Home Buyers Club which helps prepare people, not yet ready to 

buy. We also produce Credit & Home Buying seminars that provide a day long session of 

information about the process of home buying and introduce the various bank programs More 

than 300 people attended our last seminar. 

But we have had some problems in the last several years with bank mergers. 

Hawkeye Bank, a State-wide holding company was bought out by Mercantile, Hawkeye had a 

branch in a low-mod neighborhood but when Mercantile took over they attempted to close it. 

We fought this move and succeeded in keeping the branch open. But while we had had a good 

relationship with Hawkeye, we find we do not now have the same kind of relationship with 

Mercantile. 

First Interstate Bank was another we had an agreement with since 1988. They were bought out 

after five years by Boatmen’s Bank. A new president come to Des Moines from St.Louis and he 

told our Task Force that we didn’t need an agreement with them because Boatmen’s had a great 

record of CRA lending. They had done great things in St.Louis, he told us, therefore they knew 

all about what needed to be done. We pointed out that Des Moines is not St.Louis, and what 

works there may not necessarily work here. We pointed out that we had developed expertize in 

our situation and our needs, and therefore they needed to work with us for a CRA program in Des 

Moines to be successftd They eventually agreed, and after that we had a signed agreement with 

Boatmen’s, Then Boatmen’s was bought out by Nation’sBank a year ago. And we started 

through the whole familiar process again. Since last December we have been debating back and 

forth about an agreement with no success, 

In dealing with the local banks after they are bought out, we are, for the most part, dealing with 

the same people locally we have dealt with all along. The problem is that they are now getting 

directives from above, from people far away that we cannot talk to, and people who seem not to 

care about whether CRA programs work or not, 

When we learned at our national NPA conference that other cities were having the same kind of 

problems with bank mergers, we agreed that the time had come to develop a national agreement 

that would give official sanction to our locally developed programs. 
NATIONS BANK OF DES MOINES DIFFERENCES WITH CC1 (CITIZENS FOR 

COMMUNITY IMPROVEMENT ) OVER LOCAL PROGRAM July 1998 

Nation’s Bank has been ignoring our specific program and continually pushes their “standard 

generic” program that they use nation wide for a CRA program. 

Their national program is pretty much the same in most respects as our program except for one 

very iml>orfnirf factor. This is that they target low/mod people (below 80% median income) and 

not low/mod census tracts. This is the same bank (then First Interstate) that, when they first 

signed an agreement with us in 1988, wanted to target by income rather than census tracts. We 

agreed to their suggestion, thinking that many of these loans if not all of them, would be made in 

the low/mod census tracts. But after a couple of years we found this was not so. They made 

many loans under their program but very few of them went in our neighborhoods. 

Now, in the beginning; the problem was REDLINING!. We did not begin this project to help 

low-income people. The law does not speak to lower income people. The CRA speaks to 

“underserved neighborhoods”. And this project was to help bring reinvestment back into our 

neighborhoods. So, after pointing this out, we asked First Interstate to target the low/mod 

neighborhoods rather than low/mod people and they agreed to do so, as do all the banks now that 

we have agreements with, 

When the expanded HMDA came out, we discovered that there appears to be no problem lending 

to people below 80% of median income. In general, about 30% of all loans in the Des Moines 

MSA go to people below 80% of median income. But only 4 or 5 % go to low/mod 

neighborhoods. And yet, the low-mod census tracts contain 25% of the owner-occupied housing 

in the Des Moines MSA. The banks with CRA programs targetted put more than 5% in our 

neighborhoods, some of them 11 to 12%, but our aim is to get equal representation, a goal of 

25%, 

The local bank people understand this situation, and understand the purpose of our program. 

And this bank knows - because they tried it - that targetting by income does not do the job of 

getting home-ownership in our under-served neighbrhoods. How do we get this across to the 

people at the top at Nations who have designed this “cookie-cutter” program. We have logic on 

our side, and the intent of the CRA on our side, but we cannot deal with decision makers who are 

miles away, 
. . . : / 

Citizens for Community improvement 

1989 

1989 - 

1991 

1992 

1992 

1992 - 

1996 

CC1 and First Interstate Bank sign fist community reinvestment agreement. 

First Interstate Bank works with the CC1 Reinvestment Task Force responsively, improving lending 

RC0l-d. 

First Interstate Bank and Boatmen’s Bank merge. 

After severA months of initial distmst, Boatmen’s signs agreement with CCL 

Boatmen’s Bank and CC1 Reinvestment Task Force develop good working relationship. Len&g 

record continues to improve. Boatmen’s Bank becomes one of the original participants in CCI’s 

Homebuyers Club, offeling educxion in home ownership and related isslles to low income home 

buyers. 

1996 Boatmen’s Bank proposes merger with NationsBank. 

c 

c 

t 

Boa: men’s Bank officers assure CC1 that local management will continue to make 

decisions ‘Ibout bank products. 

Officers also assure CC1 that with more resources, NationsBank will be able to serve 

community needs better. 

Natio,nsB.mk tells us its slogan is, “We treat every community we’re in like it’s the 

community we’re from, because it is.” 

1996 

1996 

1997 

1997 

1998 

1998 

1998 

1998 

Community groups file challenge agA.st merger. CC1 writes letter supporting Boatmen’s Bank, 

outlining our positive relationship with the bank. Letter based on above a_ssur~~~es. 

Before the agreement with Boatmen’s expird NationsBank sent a packet announdng the new 

programs, which did not fit our agreement. 

NationGnk opens a new branch in the heut of the inner city. CC1 views this as a good reinvestment 

choice, a~ td helps public& and market the opening, including participating in the press conference. 

New bra& is robbed. NationsBank affirms commitment to staying. CC1 orgxniz~s a press 

conference of community leaders to support the bank in its decision. 

Local staff expresses theirwillingness to sign an agreement, based on negotiations with Reinvestmenr 

Task Force. After they send the agreement to their superiors, they say they Cannot sign one. 

The merF,er between NationsBx& and Bank of America is announced. 

Member of CC1 Reinvestment Task Force goes to St. Louis with other community leaders from 

around tl :e country to meet with representatives from NationsBank and Bank of America about a 

national ;lgreement. Community leaden are treated disrespectfully by Bank of America and 

NationsB.mk staff, and told they are wasting their time. 

NationsKuA representatives in Des Moines seem eager to work with CCI, but their hands are tied by 

superior;. It becomes clear that any further merger will only distance the bank from its accounrability 

to the co~rununiry. 

? 

: 

of Des Moines: 

History of Relationship Between 

CC1 of Des Moines and NationsBank 
PCRG Testimony before the San Francisco Federal Reserve Board: 

NationsBank Corporation’s Proposal to acquire BankAmerica 

Corporation 

Greetings to the distinguished members of the Federal Reserve Board and 

thank you for the opportunity to testify about the home mortgage lending 

patterns and practices of NationsBank and BankAmerica in the City of 

Pittsburgh, PA. I came to San Francisco to testify on behalf of the 

Pittsburgh Community Reinvestment Group (PCRG) as the second 

representative and thirteen community based organizations -all of which 

have filed protests against the proposed acquisition because of the 

abysmal records of lending to African Americans, African American 

neighborhoods, low income neighborhoods, and low income families in 

the City of Pittsburgh by both institutions. 

PCRG is a non-profit consortium of twenty-nine community based 

organizations representing sixty-five low/moderate income 

neighborhoods in the City of Pittsburgh, Pennsylvania. PCRG works with 

financial institutions to insure equal lending patterns and practices for all 

Pittsburgh neighborhoods in accordance with Community Reinvestment 

Act (CRA). Since 1988, PCRG has formed partnerships with thirteen 

Pittsburgh lending institutions and developed reinvestment programs 

targeted to Pittsburgh’s low and moderate income neighborhoods. 

Through CRA, PCRG members meet with financial institution executives, 

loan officers, and branch managers on a regular basis to discuss ways 

financial institutions can meet community needs. Within this framework, 

both PCRG members and Pittsburgh financial institutions are dedicated to 

a comprehensive approach to community revitaIization and equal access 

to capital for all neighborhoods. PCRG has successfully negotiated 

lending agreements with Pittsburgh financial institutions for over $2.7 

billion in inner-city reinvestment. 

PCRG analyzed the 1996 and 1997 Pittsburgh MSA Loan Application 

Registers for NationsBank and BankAmerica and discovered lending 

patterns indicating that neither bank is making many loans to the City of 

Pittsburgh’s African American families, African American neighborhoods, 

low income families, and low/moderate income neighborhoods. 

NATIONSBANK 

NationsBank, through its mortgage company subsidiary Nationsbanc 

Mortgage Corporation, has a very small presence in western 

Pennsylvania, and virtually no presence in the City of Pittsburgh. 

Through their office in downtown Pittsburgh, 
l Nationsbanc Mortgage approved two loans out of four applications in 

the City of Pittsburgh in 1996. All four of the applications were from 

upper income neighborhoods. 

. In 1997, Nationsbanc Mortgage took no applications from,the City of 

Pittsburgh, but took twenty-eight from Pittsburgh’s affluent and 

predominantly white suburbs. 

BANKAMERICA 

Bank of America, through its mortgage company subsidiary Bar&America 

Mortgage Company has a much larger presence in the City of Pittsburgh. 

BankAmerica Mortgage Company, originated forty-four loans from fiftyfour applications in 1996 and originated forty-three loans from seventyfive applications in 1997. 

Lending to African Americans and African American Neighborhoods 

l BancAmerica Mortgage made only one loan per year in Pittsburgh’s 

African American neighborhoods in 1996 and 1997 and received only one 

application per year. 

l Only one application from an African American borrower was 

received in 1996 and two were received in 1997, resulting in one loan 

approved in each year. 

Lending to Low/Moderate Income Neighborhoods 

l In 1996, Bank Of America originated five loans in low/moderate 

income neighborhoods and Thirty-nine loans in upper income 

neighborhoods. 

l In 1997, twelve loans were originated in low/moderate income 

neighborhoods. Thirty loans were originated upper income 

neighborhoods. 

l In 1996, the origination rate for upper income neighborhoods was 

thirty-five percent greater than the origination rate for low/mo&rate 

income neighborhoods. 

l In 1997; the origination rate for upper income neighborhoods was 

seventy percent greater than the origination rate for low/moderate 

income neighborhoods. 

Lending by Income 

l Eighty percent of all upper income applications were originated 

compared to thirty-one percent of low income applications. 

Conclusion 

In May, PCRG, along with representatives from ten other communities 

from around the country met with representatives from NationsBank and 

Bank of America to address both local and national concerns about their 
lending records and come to an agreement on a plan of action that would 

address these concerns. Both institutions showed no willingness to listen 

to our communities’ concerns and to work to address them. Their 

unwillingness to work with our community to address our credit needs 

and the indisputable evidence of redlining discovered in the analysis of 

the loan application registers of both institutions places them in direct 

noncompliance with the Community Reinvestment Act. 

Since 1988, PCRG has formed partnerships with thirteen Pittsburgh 

financial institutions to for over $2.7 billion in reinvestment in Pittsburgh 

Neighborhoods. This reinvestment is the product of a working 

partnership between financial institutions and communities. 

Communities identify their credit needs and work with lenders on an 

ongoing basis to develop products and policies to insure that they are met. 

l PCRG members work with lenders and the public sector to develop 

innovative mortgage products to meet community needs. For example, 

the Housing Recovery Program provides public sector deferred second 

mortgages paired with bank loans to help homebuyers purchase and 

renovate blighted properties in city neighborhoods. PCRG members 

worked with member banks and Fannie Mae to develop a mortgage 

product to enable more community mortgages to be sold on the secondary 

market. 

l PCRG and its financial institution partners formed the Community 

Lender Credit Program, a credit restoration and homebuyer education 

organization, to develop home buyers from Pittsburgh neighborhoods. 

l All of ERG’s partner banks have shown improvement in lending to 

underserved communities as a result of our partnership. Lending to 

low/moderate income neighborhoods increased twenty percent per year 

and lending in African American neighborhoods increased twenty-two 

percent per year between 1991 and 1996. 

Based on our ten years of experience in community reinvestment, we 

believe that the only way the new institution formed by BankAmerica and 

NationsBank will improve their deplorable record of lending in Pittsburgh 

and other cities is to form working partnerships with community 

organizations. The $350 billion commitment that NationsBank and 

Bar&America propose comes with no promises for Pittsburgh’s 

neighborhoods and no effort to identify community needs which are not 

being met as indicated by our analysis of the loan application registers. 

PCRG is willing to work with NationsBank and Bar&America to bring 

them into compliance with the Community Reinvestment Act in 

Pittsburgh by forming a partnership to improve their lending to 

Pittsburgh’s African American families, African American neighborhoods, 

low income families, and low/moderate income neighborhoods. 

3 
NationsiBmkAmerica Public Mseting 

Testimony of Rural Development and Finance Corporation 

San Antonio, TX 

Presented by Gordon F. Goodwin 

Rural Development Andy Finance Corporation is a development finance intermediary 

headquartered in San Antonio, TX. We provide technical assistance and loans to 

entrepreneurs and community development corporations that are building 

enterprises, affordable housing and community facilities in our country’s most 

severely poverty impacted rural areas. To date, we have invested over $12 million 

in 2 1 states, created or retained 2,500 jobs and financed the construction of over 

500 units ofatfordable housing. 

Like other financial intermediaries, we rely on partnerships with financial 

institutions such as banks, corporations, religious orders and foundations to make 

below-market rate investments in our loan fund so that we can obtain flexible, 

affordable capital to lend. -Because a large part of our work is providing problem 

solving assistance to rural entrepreneurs and housers, we turn to these same sources 

to undenvrite some portion of our cost to provide this help. 

Bank of America has been an important partner in our work - and the work of the 

development field at large - as a grantor and investor. It is the only large scale 

bank that has institutionalized its community development lending mission by 

capitalizing a separate division to do so - The B of A Community Development 

Bank. Over the last 5 years, it has financed some $2 billion of multifamily housing 

and small business development in low income communities. It has also made 

well over $500 million in equity investments. In 1997; Band of America 

committed to invest $500 million over the next two and a half years to rural 

communities. This investment commitment is backed with a pledge to make $5 

million in grants to support innovative and meaningful partnerships. This is the 

most specific commitment ever made to the credit needs of rural areas by a banking 

institution. 

This level of commitment is critical to our work, and we urge both Bank of 

America and NationsBank to uphold and even to expand this level of commitment 

to match the breadth and scope of the new market area the merger will create.