July 7,1999 

FLEET/BANK BOSTON MERGER TESTIMONY 

CAROL ARANJO, CEO D.E. WELLS FCU 

AFRICAN AMERICAN EXECUTIVES LEADERSHIP COUNCIL 

THE AFRICAN AMERICAN COMMUNITY OF WESTERN MASSACHUSETTS 

HAS NOT BENEFITTED FROM THE MANY BANK MERGERS OR THE NEW BAN-K 

ENTRIES INTO THE STATE THAT HAVE OCCURED OVER THE LAST TEN YEARS. 

MANY PROMISES AND GREAT SOUNDING PROGRAMS HAVE BEEN ANNOUNCED 

WITH POMP AND FANFARE BUT VERY LITTLE FOLLOW THROUGH. 

WE HAVE NOT SEEN THE PRESS RELEASES ON WHEN,WHERE OR TO WHOM 

THE PROMISED FUNDS WERE LENT. WE ARE STILL TRYING TO FIND OUT THE 

STATUS OF THE LOAN DOLLARS THAT WERE PROMISED WHEN FLEET BANK, 

BANK BOSTON AND OTHER BANKS WERE APPROVED TO MERGE.. WE HAVE NOT 

SEEN ANY NEW OR IMPROVED EFFORT REGARDING SMALL BUSINESS LENDING 

IN THE AFRICAN AMERICAN BUSINESS COMMUNITY OF WESTERN 

MASSACHUSETTS, SPECIFICALLY SPRINGFIELD. THE AFRICAN AMERICAN 

ENTREPRENEUR HAS FOUND IT VERY DIFFICULT TO OBTAIN LOANS THROUGH 

THE CONVENTIONAL LOAN PROCESS. ADDITIONALLY MANY OF THE NONPROFITS IN OUR COMMUNITY FIND IT DIFFICULT TO OBTAIN ADEQUATE LINES 

OF CREDIT THAT ARE NEEDED FOR THEM TO OBTAIN NEW CONTRACTS 

NECESSARY FOR THEIR GROWTH.. 

THE BANKS SEEM TO PRACTICE A PLANATATION TYPE PROCESS WHEN IT 

COMES TO THE AFRICAN AMERICAN COMMUNITY. THEY CHOOSE AN OVERSEER 

FOR THE COMMUNITY AND THAT OVERSEER IS THE ONLY ONE ABLE TO RECEIVE 

LOANS. THEY THEN PUBLICIZE THAT LOAN AS THERE CRA EFFORT IN THE 

AFRICAN AMERICAN COMMUNITY. BUT VERY LITTLE IS SAID ABOUT THE MANY 

AFRICAN AMERICAN ENTREPRENEURS WHO ARE TURNED AWAY OR MADE TO 

JUMP THROUGH HOOPS FOR AYEAR OR MORE AND THEN TURNED DOWNFOR A 

LOAN. 

THE BANKS MAKE WONDERFUL ANNOUNCEMENTS OF FUNDS THAT WILL 

BE AVAILABLE FOR LOANS TO THE LOW AND MODERATE COMMUNITIES, THEY 

THEN FAIL TO ANNOUNCE THE METHOD OF DELIVERY. AS A CONSEQUENCE, 

THESE FUNDS NEVER LEAVE THE BANK BECAUSE THEY SAY THE DEMAND DOES 

NOT MEET THE COMMITTMENT NOR THEY COULD NOT FIND SUITIBLE 

APPLICANTS. THIS CIRCULAR PROCESS IS THE BAN-KS DESIGN. 

TO BREAK THIS CYCLE WE SUGGEST THAT THE BANKS RELEASE THESE 

FUNDS AS DEPOSITS. GRANTS AND LOANS TO COMMUNITY DEVELOPMENT 

FINANCIAL INSTITUTIONS, COMMUNITY DEVELOPMENT CORPORATIONS AND 

COMMUNITY LOAN FUNDS. THESE ORGANIZATIONS SHOULD HAVE THE ABILITY 

TO MAKE LOANS TO MAKE SURE THAT THE PROMISE BECOMES A REALITY AND 

THE NEW LOAN FUNDS ACTUALLY HELP THE PEOPLE IT REFERS TO IN THE 

PROMISE. 
UNLESS THE NEW BANK THAT WOULD EMERGE FROM THE FLEET/BANK 

BOSTON MERGER IS WILLING TO PROVIDE MONETARY ASSISTANCE TO THOSE 

ENTITIES THAT WILL BE LEFT WITH PROVIDING FOR THE ECONOMIC NEEDS IN 

THE COMMUNITIES THAT WILL BE AFFECTED BY THE MERGER, THEY SHOULD 

NOT BE ALLOWED TO MERGE. 

WE, THE MEMBERS OF THE AFRICAN AMERICAN EXECUTIVE LEADERSHIP 

COUNCIL, DEMAND THAT THE FEDERAL RESERVE BE MORE DILIGENT lN 

MONITORING THESE MERGER AGREEMENTS. TO ENSURE THAT ALL OF THE 

COMMUNITIES AFFECTED ARE INCLUDED IN THE ALLOCATIONS PROMISED IN 

THE AGREEMENTS. THEY NEED TO FOLLOW THE MONEY. 

THE REALITITY IS, THE NEW BANK CANNOT GET OUT THE TYPE AND 

NUMBER OF NEW LOANS IT IS STATING WITHOUT INCLUDING COMMUNITY 

LENDERS. THE SO CALLED NEW LOAN DOLLARS WILL JUST GO FROM THE LEFT 

POCKET TO THE RIGHT POCKET. THE FEDERAL RESERVE MUST INSURE THAT A 

COMMUNITY DELIVERY SYSTEM IS IN PLACE TO PROVIDE THE ECONOMIC 

RESOURCES NEEDED IN TRADITIONALLY UNDERSERVED COMMUNITIES 
. ‘i 

Testimony of Andrew Morehouse 

Executive Director, Greater Holyoke Community Development Corporation 

Chair, Community Reinvestment Committee, Massachusetts Association of CDCs 

On the Proposed Merger of 

Fleet Financial Group, Inc. and BankBoston Corporation 

Wednesday, July 7,1999 

Federal Reserve Bank Public Meeting 

Good afternoon. Thank you for the opportunity to testify at this hearing. My name is 

Andrew Morehouse. I am the Executive Director of the Greater Holyoke Community 

Development Corporation and the Chair of the Community Reinvestment Committee of 

the Massachusetts Association of Community Development Corporations. In these 

capacities, my job is to channel public and private resources to support the unmet 

economic needs of low-income and minority residents who are disenfranchised from the 

economic mainstream. 

In Holyoke, the Greater Holyoke CDC serves over 200 low-income individuals a year, 

offering business development, economic self-sufftciency, and asset building services. 

The vast majority of these individuals are not regular customers either of Fleet Bank, 

BankBoston or any other bank for that matter. 

By helping this constituency to build their incomes, assets and human capital, Greater 

Holyoke CDC and other CDCs in their respective communities enable low-income and 

minority residents to become productive stakeholders in the community. In turn, they 

generate economic demand for goods, services and, yes, even financial services. 

However, community development organizations, the banking community and public 

officials have learned that financial services must be adapted to these underserved 

markets Only by investing in innovative financial products and services can economic 

activity be stimulated, generating profitable opportunities for business lending, home 

mortgages and community development projects. Yet, it takes all three of these 

institutions working together to revitalize our nation’s underserved communities. 

This is the intent behind the Community Reinvestment Act (CRA), which according to 

Federal Reserve Board Governor Gramlich, has helped leverage $117 billion a year in 

home, small business, and community development loans for working class and minority 

communities. CRA has proven to be a unique and critical instrument to enfranchise the 

less fortunate and to stimulate economic growth. 

In Massachusetts, Fleet Bank and Bar&Boston are major partners in innovative financing. 

Past commitments and contributions of Fleet and BankBoston are critical to the success 
of regional intermediaries of community development, to community organizations and 

to state programs like the Massachusetts Housing Investment Corporation and the 

Massachusetts Housing Partnership. You will hear the testimonies of others attesting to 

this. Small community banks generally just do not have the assets and economies of 

scale to be able to afford innovative financial products and the volume of lending that 

Fleet and Bar&Boston have the capacity to offer as a result of their respective mergers 

with smaller banks. 

I would like to share with you, however, a different picture -- one that is quite disturbing. 

As both banks have merged with other banks over the past decade - amassing greater 

financial assets and profits for shareholders -- their lending overall to minorities and lowincome census tracts has fallen precipitously. HMDA data show) that in the Springfield 

MSA, the percentage decline in mort a e lendin is even greater than that of the 

Commonwealth. Focusing on Fl&?bktore and a er its merger;- 

B/&&Z *DZNi+ from 1994 

-1998 loans to low- and moderate-i&come borrowers dropped 83%, to Latin0 borrowers 

90%, and to Black borrowers 96%. Total lending for the same period dropped 71%. 

These figures represent a significant retreat from underserved communities in particular 

and home mortgages in general. It also raises the specter that Bar&Boston’s far better 

track record of home mortgage lending will cease to exist after the merger. Further 

declines of the proposed ban&r combined home mortgage lending - especially to lowincome and minority individuals and census tracts -- will seriously impair the 

revitalization efforts of these communities. 

The proposed divestitures and likely branch closings will certainly be cited as a 

justification for further reductions in home mortgage lending. The public must have 

guarantees that the proposed bank will reverse this trend in home mortgage lending to 

underserved communities. In other words, the public should be assured that the proposed 

FleetBank will uphold its commitment to 1+1>2 in these communities. In fact, this 

should hold true in all of Western Massachusetts where no divestitures are reportedly 

going to take place. 

organizations and elected officials. As publicly insured institutions, these banks have an 

obligation to serve the communities whose savings are being entrusted in them. This is 

nowhere more crucial than in low-income and minority communities that are traditionally 

underserved. Without a negotiated community reinvestment plan, there is every reason to 

believe that their home mortgage lending will continue to spiral downward. Moreover, 

there is no)guarantee that the banks will even sustain, much less increase, their current 

commitments to affordable rental housing, basic banking services, and accessible 

branches and ATM sites. 

Community organizations and public officials from across the Commonwealth have 

painstakingly reached out to each other to debate the impact of the proposed merger on 

community reinvestment in underserved communities. Coalitions representing diverse 
b 

constituencies have come together to formulate a realistic and measurable plan that the 

banks have steadfastly refused to negotiate in good faith. 

I respectfully call upon the Federal Reserve Bank to break the impasse by requiring the 

banks to negotiate a community reinvestment plan. Moreover, I urge the Federal Reserve 

to establish a two-week comment period after a negotiated plan is reached so that all 

affected parties have an opportunity to respond to it. In my humble opinion, Izxpect no 

less from the Federal Reserve. fh;&UrSLWLJd. 

In this period of unprecedented economic growth, we must not ignore the fact that 

millions of Americans are increasingly being left behind. Without Federal Reserve Bank 

action to foster a negotiated agreement, profitable business opportunities and long-term 

investments in underserved communities will suffer. We are faced with a rare yet clear 

opportunity to bring disenfranchised Americans into the economic mainstream. 

Together, we can make this come true. 

Thank you again for inviting me to testify before you. 
Table 5 

MORTGAGE LOANS FOR HOME PURCHASES IN THE SPRINGFIELD MSA 

Before and After Recent Mergers by BankBoston and Fleet, 1994 - 1998 

Da scurccs: 

Low!hlodmtt: Income ILMI): 

Loan Appliwtion Registrw (L.W data made ~vail~blc in xcordance with the Home .\;lortgogc Disclosure Act 

(MCDX). 19!%1997 data hm CDs distributed by the Federal Firuncial Institutions Council. 1998 data obtained 

directly horn BankBoston and Fleet. Date include 311 loans by identifiable Aliliatates of lender+ named. 

Detined for this table as up to 80% of the median family income in the Sprin@ield ?&A. The maximum income to 

qualify 3s L&II was 5-;2.000 in 1994 md 1995. S3.000 in 1996. and S?6.000 in 1997 & 1998. 

Jii Campen l_Xz.vBoston July 6. 1999 
My name is Susan Worgaftik. I am Chair Massachusetts Micro-Enterprise Coalition and 

Director of This Neighborhood Means Business!, a micro-entrepreneurship education and 

technical assistance program in Dorchester, MA. I would like to thank the Federal Reserve 

Board for providing me with this opportunity to share my views. 

The announcement of the merger of Fleet Bank and Bar&Boston foreshadows a change of great 

concern to micro-enterprise training, technical assistance, and loan programs. The microenterprise programs of the Commonwealth serve entrepreneurs with businesses of 5 employees or 

less and low and moderate individuals who are in the process of creating their own businesses. 

Most of these businesses are located in the Commonwealth’s inner cities and rural areas. The 

development of new micro-businesses has been an important element in the recent economic 

improvements that have occurred in urban neighborhoods and rural communities. 

In the last decade, we have worked closely with both Bar&Boston and Fleet Bank to create loan 

products designed precisely for the smallest of Massachusetts’ entrepreneurs. In the early days of 

micro-entrepreneurship development in Massachusetts, it was very difficult to engage banks in 

loan development for this sector of the economy. The competition between these two banks was 

key in the development of some loan products designed to meet the needs of micro 

-entrepreneurs. 

In addition, the foundation and corporate donations which micro-enterprise programs received 

from BankBoston and Fleet Bank have been essential to the development of the technical 

assistance and entrepreneurship education which are crucial to making micro-enterprises 
successful. 

Clearly, Fleet Bank and Bank Boston believe that the synergy created by their merger will be 

beneficial to the development of their business. We believe that the same should be true for the 

communities, businesses and individuals that the bank serves. If one plus one equals more than 

two for the banks, it should also equal that for the businesses and individuals in our communities. 

It is my hope that this merger will mean an increase in the number of loans made available to 

micro and small community entrepreneurs in urban and rural communities and that there will be a 

significant increase in the technical assistance and education support grants which are essential to 

making these loans successful. Anything less is a direct step backward from the commitments 

these two banks have made to our communities and entrepreneurs in the past. 

As a partner in the efforts of the Massachusetts Association of Community Development 

Corporations, the Massachusetts Affordable Housing Alliance and the Organization for a New 

Equality, I had hoped that we would have a verifiable agreement with the new Fleet Boston by 

now. I had hoped that such an agreement would ensure that the number and availability of funds 

for loans to micro-entrepreneurs would expand in much the same way that the expectations for 

the new Fleet Boston forecast a more robust future. I had hoped that this agreement would 

recognize the importance that entrepreneurship training and technical assistance is to the success 

of micro loans and that there would be funds specifically available for this purpose. At this time, 

no such agreement exists. 

As we move into a new era of banking , it is essential that all aspects of the economy benefit 

from the progress and the projections that are put forward. At this time, the projections that 
. 

have been presented publicly do not mention the needs and concerns of the micro-entrepreneurs 

of the Commonwealth. I hope that the new Fleet Boston will resume discussions with MACDC, 

MAHA and ONE to develop a balanced plan for the future which will make this merger a 

success in everyone’s eyes-a merger which benefits everyone.