fort #24
lue Sart

CALIFORNIA COMMUNITY ECONOMIC DEVELOPMENT ASSOCIATION

TESTIMONY TO THE FEDERAL RESERVE ON THE APPLICATION FOR
NATIONSBANK TO MERGE WITH THE BANKAMERICA CORPORATION
JULY 10, 1998

Good Afternoon. My name is LueVenia Scott and I am a program manager in
the Oakland office of the California Community Economic Development
Association. My testimony today is on behalf of CCEDA and its Executive
Director, Ralph Lippman.

CCEDA is a statewide membership association of community based organizations
that are actively engaged in the revitalization of California's low income
neighborhoods. In their respective communities CCEDA members produce
results in many areas of community building including, but not limited to, the
production of housing, industrial and commercial space, employment training,
job creation, business start up and expansion, and the provision or facilitation of
human services.

State associations provide clearinghouses for information and action. To build
the capacity and expand the resources for community based organizations, thirty
state associations advocate on behalf of the nation's 2,200 CDCs. Critical
partners are banks like NationsBank and the Bank of America. Forty-eight
percent of the nation's community development corporations reported the receipt
of more than fifty thousand dollars in grants, investments, or loans in a National
Congress of Community Economic Development study published in 1993.
“Against all Odds". The amount has substantially increased over the last five
years as deal structure changed, subsidies shrunk, and our members grew more
financially sophisticated.

State associations and CDCs are very concerned that mergers may result in the
attenuation of partnerships with banks for community economic development
projects. In this time of devolution and consolidation of resources at the state
level any. decline is a serious concem. We have found that local groups and
state associations have a much more difficult time negotiating support from their
banks following a merger.

1611 TELEGRAPH AVENUE, SUITE 402 OAKLAND, CALIFORNIA 94612
{510) 251-8065 (510) 251-8068 FAX

Lg


Page two of two

This is particularly underscored today. The Bank of America, its foundation and
the Community Development Bank have been unflagging partners of the work of
CCEDA and its members. Jim Wagele, Susan Howard, Don Mullane and Mike
Mantle have been responsive and supportive. The rural initiative and the
economic initiative are national models. To be at this juncture in the merger and

still have uncertainty in the absence of written commitment about the
organizational fate of the CD Bank, the Initiatives, and the Foundation's targeting
is, in our view, unacceptable. California deserves better.

We believe the CD Bank has acquired considerable knowledge and expertise
regarding development in California. We would like to see it stay here.

We note the integral role the Foundation has played in the operation of
California's community based groups. A percentage of the Bank's earnings
would ideally be earmarked for California's communities, with a decision making
group that is close to the ground in the west, not the southeast.

We would like to see an established target goal that would help us to back into
conclusions regarding how far the new Initiatives will go.

Finally, the nation's state CDC associations want a firm commitment from banks
that are merging to work with their state associations. We want every financial
institution to recognize that policy advocacy and training are important to the
viability of community economic development. We suggest that merging
institutions invest a portion of their resources to support the work of state CDC
associations. An alternative approach beyond a direct multiyear commitment to
CCEDA and groups like us, such as Housing California, could be for the banks to
utilize the National Congress for Community Economic Development as an
intermediary which would serve as the granting entity and then distribute funding
to affiliated state groups in which the newly merged entity would do business.

We believe that Banks understand that a rich and vibrant environment is good for
the community and for business. We believe that they understand that public
policy is moving to the States. We urge a written commitment to support
California and state associations.