. sep-16-98 21:zo 

I 

P-01 

TO: JoAuue Lewellen and staff (see note below, thanks) 

RE: TF,STIMONY OF INNER CITY PRESS/COMMUNITY ON THE 

MOVE AND INNER CITY PUBLIC INTEREST LAW CENTER IN 

OPPOSlTlON TO THE APPLICATIONS OF NORWEST 

CORP TO ACQUIRE WELLS FARGO & ITS SUBSIDIARIES 

Inner City Press/Community on the Move 

Inner City Public Interest Law Center 

Headquarters Office 

1919 Washington Avenue Broux, NY 10457 

TEL: (7718) 716-3540 -FAX: (718) 716-3161 E-Mail: inuercityI@.aot.com 

FACSIMILE TRANSMITTAL FORM 

FOR SEPTEMBER 17,1998 

FROM: Matthew Lee, Esq., Execxltive Director DATE: September 16-17, 1998 

# of Pages: ‘Illis tmnmilial &eel; S-page mtimony = 6 

_._- ..__ ---._____--__-____-______II__----~ .I___-._c_ ---.l___-_____-.--- 

NOTE: 

I have been unable to travel to Minneapolis on 9/l 7. Marv Kamp of the 

Wisconsin Rural Development Center has agreed to read the attached 

testimony into the record. 1 have e-mailed it to Marv in Wisconsin, but in 

case it did not reach him in time, could you please give a copy of this to Mr. 

Kamp (he will appear on your agenda) before 130 pm. on 9/17? 

Thank you very much. 

--Matthew Lee 
sep-16-96 21:21 

Inner City Press 

Community on the Move 

6% 

her City Public Interest Law Center 

TESTIMONY OF MATTHEW LEE, INNER CITY PRESS/COMMUNITY 

ON THE MOVE AND INNER CITY PUBLIC LNTEREST LAW CENTER 

IN OPPOSITION TO THE APPLICATIONS OF NORWEST 

CORPORATION TO ACQUIRE WELLS FARGO & ITS SUBSIDIARIES 

FEDERAL RESERVE BANK OF MINNEAPOLIS 

SEPTEMBER 17,1998 

Good atlernoon, Ms. Smith and other members of the panel. This is 

the testitnony of Matthew Lee, Executive Director of Inner City 

Press/Community on the Move and of the Inner City Public Interest Law 

Center (together, “RX”‘), which Marv Kamp of the Wisconsin Rural 

Development Center has been kind enough to present. ICP on August 21 

tiled a protest to this application, based on Not-west’s disparate lending 

record, particularly of its high interest, rate, so-called “subprime” subsidiaries, 

and based on the Federal Reserve Board’s withholding of all information 

about Norwest’s divestiture proposal. The commitments that Wells Fargo has 

made in California does nothing to address these issues. 

Norwest, the applicant here, is one of the largest mortgage lenders in 

the country. The disparities in its mortgage lending record are troubling, 

particularly but not only in the overlap markets. Some examples: 
sep-16-98 21:21 

I( 

P.03 ? 

-In 1996. Norwest Bank Texas South, NA denied 46% of applications from 

Hispanics, and only 7% of applications Tom whites, for a denial rate disparity 

of 6.57-to-‘I. 

-Norwest Bank Texas Midland, NA denied 61% of applications from 

Hispanics, and only 13% of applications Tom whites, for a denial rate 

disparity of 4.69 -to- I 

-Norwest Bank TX Kelly Field denied 49% of applications Tom Hispanics, 

and only 14% of applications from whites, for a denial rate disparity of 3 Sto-l. 

-Norwest Bank TX San Antonio denied 50% of applications from Afiican 

Americans, 43% of applications from Hispanics, and only 18% of 

applications from whites. 

--Norwest Bank Texas, NA denied 46% of application from African 

Americans, 40% ofapplications from Hispanics, and only 19% of 

applications from whites. 

--Norwest Hank Texas Waco, NA denied 60% of applicat,ions from 

Hispanics, and only 20% of applications from whites. 

When ICP raised these Nor-west issues in 1996, when Norwest was 

acquiring Prudential Home Mortgage, Norwest responded with a letter, dated 

April 30, 1996, to Mr. James Lyon of-this Federal Reserve Bank of 

Minneapolis, in which Norwest acknowledged that, quote, “‘Norwest 

Mortgage’s (NMI) record of minority lending is.. below market averages in 

some market,s., . To address the needs of markets with high concentrations of 

minority popul,ations, Not-west Mortgage has committed to hiring of 

Community Development loan officers to focus on the underserved 

communities... our plan for each of the markets is... New York: 74,” unquote. 

2 
Sep-16-98 21:21 

Here, however, was Norwest Mortgage’s full year 1996 lending record 

in the New York City MSA: 

Whites 

Originations Market Denials Denial Disparily 

Share Rate 

1218 2.69% 291 17% -- 

Blacks 120 1.03% 90 37% 2.18 

Hisp. 95 1.65% 40 25% 1.47 

In MSA for full-year 1996, Norwest Mortgage had more than twice the 

market share of loans to whites than to African Americans, as well as a denial 

rate disparity for African Americans significantly above the industry average 

in this MSA. It cannot be said that NMl’s denial rate disparity is explained 

or justified by greater than average outreach to minorities, given the market 

share numbers. Question: did NM1 ever take the steps it said it would in its 

April 30, 1996 letter to the Federal Reserve? Was this ever followed up on? 

Neither Norwest’s Application, nor the Federal Reserve’s questions to date, 

address this in any detail. Similarly, were Nor-west’s representations about 

improving Prudential Home Mortgage’s lending disparities every followed up 

on’? Our experience is: No. 

Norwest Funding, Inc. nationwide in 1996 made 6,52 I loans to whites, 

and only 228 loans to At&an Americans, and only 252 loans to Hispanics. 

In the NYC MSA in 1996, Norwest Funding made 101 loans to whites, only 

10 loans to African Americans, and only 8 loans to Hispanics. 

Meanwhile, in the predominantly minority South Bronx of New York 

City, Norwest has opened an office of its high interest rat~e Island Finance 

subsidiary. ICP members here have been intormed that Norwest’s Island 

3 
sep-16-98 21:21 

Finance office charges virtually all borrowers for personal loans 25% interest, 

the absolme maximum under New York usury prohibitions. BolTowers 

(virtually all of them protected classes) are charged 25% regardless of their 

credit histories. 

Norwest is engaged in “subprime” lending nationwide. See, ,fiw 

exumpk, Ifeather Tinnnons’ article, Notwest Unit a Plaver in Subprime 

Lendinr~ Webs at Home in Prime, in the American Bauker of June 17,1998: 

“Norwest Financial, with more than $9 billion of assets... is one of the largest 

bank-owned finance units, rivaled only by NationsCredit. .,“. All of these 

issues should be inquired into, and acted on, by the Board in this proceeding. 

The Board increasingly refuses to consider, much less examine, finance 

company subsidiaries of BHCs, (mis-) using as a yardstick the reported assets 

of the finance company compared with the bank subs&ties. That will no 

do, here: “Norwest Financial... pulled in $269 million of net earnings in 

1996, almost 20% of the Darent companies earnine for the year.” Same 

source, emphasis added. TCCP isexplicitly asking the FRB to view Norwest 

Financial .in EARNINGS context, rather than simply by assets. 

The public has also been denied access to information crucial to 

assessing and commenting’ on this proposal: Norwest has sought confidential 

treatment for all information specifying its divestiture proposal. The public 

has a right to review and comment on Not-west’s actual proposal, including its 

divesmure proposal. ICP tiled a Freedom of Information Act appeal on 

August 2 I ) 1998; the information has yet to be released. 
sep-16-98 21:22 

The choice of Minneapolis as the venue of this public meeting is 

diffkult for ICP to understand, and appears inconsistent with several prior 

Board precedents. It would appears that the rationale for the selection of 

Minneapolis as the site of the public meeting is based on the fact that 

Norwest has to date been supervised by the FRB of Minneapolis. But Bane 

One has been supervised by the FRR of Cleveland, and the FR_B held its Bane 

One-First Chicago public meeting in Chicago. 

And so it might seem that the rationale is that Minneapolis would lose 

a BHC headquarters if this proposal were approved. But, if and when Bane 

One and First Chicago consummate their proposed merger, Columbus, Ohio 

will lose a BHC headquarters. Nevertheless, the Board held its Bane OneFirst Chicago public meeting in Chicago. 

One solution would have been -- and still should be -- to hold more 

than one public meeting - as was done on Wells Fargo-interstate, for 

example, and on Fleet - Shawmut (public meetings in Boston, Hartford and 

Albany). The latter two of those three Fleet-Shamwut meeting show that the 

FRS is not constrained to only hold public meetings in cities where it has a 

Reserve Bulk. 

On tbe ctnrent record, this mega-merger proposal, which would expand 

Norwest’s practices, could not legitimately be approved. ‘There are other 

adverse issues, including Norwest’s record in its existing states, ably raised 

by the Wisconsin Rural Development Center and others. For all the reasons 

stated, this proposed merger should be denied. Thank you for your attention; 

we will be submitting further written comments by September 24, 1998. 

Thank you. 


w-- I thought I was home free. Thought I had made it through the wi &with & J 

“(d my space eaters when one night in late February I arrived home and, & dark a4; 

hen I opened the door I stepped in water up to my ankles. I thought I 

had all the pipes upstairs turned off and drained, but the old plumbing had played 

a terrible trick on me. Water was pouring through the ceiling in the lobby. Now I 

bad more to do to the building and no money, no hope of being able to qualify for 

another loan to do any construction and no place to turn to. 

Another winter is coming up and I am going to be in the same predicament 

that I was last year. No money to tire up the boiler, no way to get out of this 

situation that I am in. Eventhougb interest rates have dropped to almost 2% 

below what my mortgage is set at, I can’t qualify to refinance my loan which if I 

could, would drop my payments by quite a bit. 

Many of my Union Brothers and Sisters are going through at least as 

desperate a situation as I am, and some have it much worse. One of our Union 

Brothers took his own life at the beginning of summer. That rocked all of us; 

thinking that we saw this Brother several times a week, and didn’t realize what 

pain he was in, He had lost his wife to cancer 10 months earlier and that is when 

we worried about him. He was in his early middle years, had no children at home 

and his whole life evolved around his wife, but he made it through those months 

and now we lost him. 

(J-@$ ev 

I know personally &s going through a divorce that before this work 

stoppage, seemed to have a very stable marriages Quite a few of our brothers and 

sisters have had to find work in other cities and are now trying to support two 

households on top of being separated from their families at least during the week 

t close enough to come home on weekends. 

y problems brought on by this Company’s refusal to 

bargain in good faith and although the Company has suffered a tremendous loss 

and continues to lose money daily, much to our dismay, Wells Fargo Bank, and 

other smaller banks, continu&o bankroll CF&I. The longer this practice 

continues we feel the longer CF&I will remain in a position to keep us off 64r 

jobs. This is a Union town, the economy of this community was built around 

m &bapsCour local banks,worked with our union brothers and sisters on 

their personal loans or mortgagk ments, allowing them to pay only the interest 

in some instances, and in others giving them deferred payments. As far as I can 

determine, Norwest Bank did not offer any leniency,for any type of payments, A 

bank has an obligation to help the communities they move into. I cannot even 

imagine Wells Fargo being a part of this community after turning their backs on 

the union workers to help finance CF&I in their efforts to break our uniontand 

what is worse is, eventhough they know how it is affecting our people, they 

continue this practice. 

On behalf of the memberships of Locals 2102 and 3267 I want to thank you for 

listening to me and God Bless You. 
._.. “_ ,..-__. I._._.___.” 

REMARKS OF MARY ROSENTHAL 

MINNESOTA STATE DIRECTOR, AFL-CIO 

BOARD OF GOVERNORS OF THE FEDERAL RESERVE HEARING ON 

THE WELLS-FARGO/NORWEST MERGER 

Go0 my name is Mary Rosenthal, I am the Minnesota State 

Director for the AFL-CIO. Thank you for this opportunity to testify. The 

AFL-CIO’s member unions represent [ 3 thousand working people here in 

Mhmesota, and hundreds of thousands more within Norwest’s service area 

This is a region of farms and small towns, highly vulnerable to capital 

draining by distant fmancial institutions. 

The Wells-Fargo Norwest merger is the takeover of a regional giant with a 

poor record of serving working people by a giant national bank with a worse 

record. Wells-Fargo’s merger with Norwest will pass control of our region’s 

largest financial institution to a West Coast bank that by its nature and as a 

result of the business strategies it has chosen to pursue cannot be focused on 

the fmancial services needs of our communities. 

Wells-Fargo is 181sL out of the top 200 U.S. fmancial institutions in its 
reinvestment rate in the primary service area communities from which it 

takes deposits. A study by our afftliate,the United Steelworkers of America , 

has shown that Wells Fargo’s defmition of its service areas in the Southwest 

has excluded lower income census tracts. Wells-Fargo’s loan origination and 

management program is database and Internet driven, with a decreasing 

emphasis on loan offtcers who know the communities in which they lend. 

On the consumer side, Wells-Fargo is a leader in charging high fees for basic 

banking services and in closing branches in low income communities. 

Not-west’s service area includes a variety of communities vulnerable to the 

withdrawal of fmancial services- large cities with substantial low and 

moderate income communities like Minneapolis-St. Paul and Denver, where 

Not-west’s record has already been poor, smaller towns and rural areas 

dependent on agriculture that have been repeatedly devastated by commercial 

banks’ withdrawal from the agricultural credit markets, and areas of 

extreme rural poverty like the Pine Ridge Indian Reservation in South 

Dakota. Not-west’s record in these communities has already been the subject 

of prior protests by AFL-CIO afftliates to the Board of Governors 
w-w.3 -“. ,,_- _.-, .-_ ._.. . . 

I 

For all these communities, this merger promises more expensive and less 

accessible flmancial services. In fact, even before the merger has been 

approved, Norwest appears to be raising a variety of fees to match levels at 

Wells-Fargo. This merger also promises to create more towns like Pueblo, 

Colorado, where Wells-Fargo has fmanced a savage campaign to break the 

Steelworkers union at Oregon Steel- a campaign that has illegally denied a 

thousand people the middle class jobs that were a foundation of that 

community’s economic strength. Wells-Fargo claims this is somehow not an 

issue affecting its treatment of its service area. We think it exemplifies WellsFargo’s outright hostility to the needs of working families- as consumers of 

financial services and as contributors to the economic well-being of the bank’s 

service area 

We oppose this merger because it will not benefit the working families of this 

region, and because we believe Wells-Fargo has not complied with the 

Community Reinvestment Act in its current service area 

Finally, we urge the Federal Reserve not to accept empty assurances from 

Wells Fargo. Wells-Fargo has a history of mischaracterizhrg the impact of its 

merger activity on its constituencies. When Wells-Fargo acquired First 
Interstate it announced it would destroy “only” 7,200 jobs, and then after the 

deal was done Wells-Fargo said it would really be 10,000 jobs, and then it 

turned out it was really 14,000 jobs- almost twice what they told regulators 

and the public when they were getting approval for the merger. 

The AFL-CIO would be pleased to work with the Federal Reserve in its 

further consideration of this merger to ensure the Community Investment Act 

is complied with and the interests of the working families in both banks’ 

service areas are protected. Thank you.