- (fLOoLto i Va
Sengdkor. Borbarnr BoKer,
pen eel Pash 2

On April 13, 1998, BankAmerica Corporation and NationsBank Corporation
announced they would merge to create what Promises to be the first truly national
bank in the United States. The combined institution will have assets worth an
estimated $570 billion. The Chairman and CEO of BankAmerica, David Coulter, as
well as the Chairman and CEO of NationsBank, Hugh McColl, have said the merged
institutions will be good for their customers and for the communities these now
Separate institutions serve-- ] hope so. Nevertheless, I would be remiss if T did not
admit to having some concems,

My concerns are threefold.

First, BankAmerica has been a leader in the area of community reinvestment.
Not only are its community reinvestment activities unmatched, it has also been the
leading voice, among its fellow bankers, espousing the virtues and benefits of
community reinvestment. BankAmerica has made the point that its community
reinvestment activities are not just good for the communities the bank serves, those
activities have also been profitable for the bank.

While other banks, have often complained bitterly that the Community
Reinvestment Act is unnecessary and burdensome. Mr, Coulter, quoting former
BankAmerica CEO Dick Rosenberg, has said, “community reinvestment isn't just the
night thing to do, its the smart thing to do in a dynamic and diverse marketplace that
is being reshaped by powerful economic forces.” Mr. Coulter went on to say that
BankAmcrica is firmly committed to providing capital to enhance the economic and

social wealth of the communities they serve. BankAmerica has fulfilled this
commitment.

NationsBank has pledged $350 billion, over 10 years, towards community
Teinvestment and has committed to retaining BankAmerica’s Community
Development Bank. Community groups worry, however, this commitment may be
somewhat hollow inasmuch as NationsBank has failed to provide any specifics as to
how it intends to reach its community reinvestment pledge. Community groups note
that the pledge’s vagueness could enable NationsBank to make a varicty of loans that,
while technically considered community reinvestment, are not targeted to those truly
small business customers who need them.

The $350 billion pledge by NationsBank is extremely sizeable. I hope, in
making this sizeable commitment, the bank will consider more fully addressing the


concerms expressed by community groups as relates to the specifics of their
community reinvestment pledge. For example, how much of that $350 billion will
be specifically committed to California verses the commitment for North Carolina
and other states in which the combined institution will operate? In addition, I would
hope that NationsBank would publicly and firmly commit, like BankAmerica, to
providing the necessary capital to enhance the economic and social wealth of ai/
segments of the communitics the combined institution will serve.

Second, I want to ensure that Californians are well-served by this combined
institution. Will the combined institution distort any markets for customers? For
instance, with such a huge market share, will the combined institution offer their
customers competitive rates? Will the newly merged institution be as responsive and
as flexible in meeting the needs of their customers? .

I believe the merged institution should provide the community with more
services, greater innovation, more choice and more competitive pricing. Similarly
it is important to ensure the less affluent segments of the community are fully
serviced. It is easy, no doubt, to forget small businesses and underserved
communities when large one-stop-shopping financial institutions are created, | hope
this is not the case in California.

Third, I am concerned that the headquarters of the combined institution will be
in Charlotte, North Carolina. Unlike North Carolina, California is a very large state--
the largest in the nation-- with many diverse communities, NationsBank must be
prepared to meet the needs of this growing and diverse population. How will the new
institution succeed in understanding and meeting these needs with its headquarters
in Charlotte, North Carolina? The answer, | hope, is that the combined institution
will commit to keeping a significant and sizable number of BankAmerica’s top
executives in California-- particularly those executives who are engaged in
community banking activities.

T want to note that I recently met with Mr. McColl and found him to be very
sincere, forthcoming and personable. Mr. McColl, has promised to meet with me in
California to discuss, in detail, the concerns 1 have raised. I look forward to our
meeting and hope Mr. Coulter will be available to join us.

As a member of the Senate Committee on Banking, Housing and Urban
Affairs, | am all too aware of the proliferation of mergers in the banking industry.


Indeed, prior to the announcement of the BankAmerica/ NationsBank merger, a
number of California based financial institutions, including Wells Fargo and Home
Savings, had announced and/or completed mergers, Notwithstanding the importance
of each of those institutions to California, I believe BankAmerica’s pending merger
is different.

Here’s why, BankAmerica is not only California’s largest bank, but it is also
the largest bank-- and probably the most powerful-- in the West. BankAmerica’s
headquarters, San F: rancisco, is the financial capital of the West. Moreover, and more
important to Californians, BankAmerica has been an extremely rcsponsible and
Tesponsive corporate citizen for all of California’s communities. I want to make sure
that we do not lose this responsiveness. It’s too much to lose,