Yanel |
Malcolm Corlen,

NORWEST BANK SPEECH

Thank you for this opportunity to testify before the Federal Reserve. I bring
greetings from a Nation within a Nation —The Navajo Nation.

My presentation will cover a few of the experiences the Navajos have had with
Norwest Bank Arizona, N.A., But before I move into these experiences, let me
express the fact that the Navajo Nation is pleased and honored to have four
Norwest Banks located within the boundaries of our reservation. Furthermore, we
are proud to have gainfully employed qualified Navajos at these banks.

NAVAJO NATION COMMITMENT:

In late 1993, Norwest Bank Arizona made a ten-year, good-faith commitment to
the Navajo Nation to do the following:

1. Open two full service banking facilities on the Navajo Nation and improve
the two existing banking locations.

2. Originate $60 million in loans over a 10-year period.

3. Annual contribution of $5,000 to the Navajo Nation college scholarship
program.

4. Establish a community advisory board comprised of seven member
representatives from the Navajo Nation.

Norwest’s record against the commitment so far had demonstrated the bank’s
sincerity and good faith in serving the people of the Navajo Nation. Norwest’s
performance on each of the above commitments through June 1998 is as follows:

1. Norwest Bank Arizona, N.A., had invested $4 million to build its four full
service branches within the boundaries of the Navajo Nation. These offices
make up Norwest’s Northeast Bank. These branches are located in
Window Rock, Tuba City, Kayenta, and Chinle. All four branch managers
are of Navajo descent, and of the remaining 35 employees, all but two are
of Navajo descent.

ae.
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Volume IX, Number 13 / Inside Mortgage Compliance / September 7, 1998

NationsBank Strategy Repudiated
—_—

California community groups, which had a hand
in crafting Wells Fargo’s CRA program, praised the
new pledge, calling it a “repudiation of Nations-
Bank’s strategy of making no commitments to mi-
norities.”

NationsBank, whose application to acquire
Bank of America was approved recently by the Fed,
has been at odds with community groups for its
continued refusal to sign any CRA agreement with
any group.

With such a policy, many community groups on
the East and West Coasts doubt that they could
achieve a successful, lasting partnership with the
bank as they had with Bank of America.

While NationsBank has pledged $350 billion to
community development lending over 10 years,
community groups say the pledge is lacking in spe-
cifics and not enforceable.

Although much smaller than NationsBank’s
pledge, Wells Fargo’s three-year CRA lending goal
outlines the following:

e $8 billion in small business and small farm
loans, including loans of $50,000 or less to small
community entrepreneurs;

© $2.5 billion towards affordable home mortgage
lending to low-income borrowers, including FHA
and VA loans in California;

© $3.5 towards community development lending;
and

© $1 billion for low-income consumer loans.

Wells Fargo also plans to commit at least $100
million in CRA investments and corporate contri-
butions in California over the next three years.

Wells Fargo’s clear cut commitment has gar-
nered the support of California groups such as the
Greenlining Institute and the California Reinvest-
ment Committee. Both groups have agreed to re-
view the results of the three-year program on an
ongoing basis.

“The new Wells [Fargo]pledge is a strong indi-
cation that {it] intends to aggresively compete
against NationsBank for California’s 17 million mi-
norities,” institute officials wrote in a letter to
Greentining’s member organizations. “We believe
that Well’s new commitment, since it is based on
past successes, should be the floor for any negotia-
tions with NationsBank.”

Greenlining officials said that in the long run,
competing market forces, rather than the Fed’s ap-
proval of the NationsBank acquisition, will deter-
mine if the acquisition of Bank Of America by an

“absentee landlord” is a success.

The Greenlining Institute and other community
groups have been urging NationsBank to lay out in
detail the $350-billion community development
lending program, just as Wells Fargo and three
other major California financial institutions have
done with their CRA programs.

No To CRA Pacts

But NationsBank has stubbornly resisted calls to
sign CRA agreements with community groups.

“We generally have a policy of not signing
agreements that say we are going to spend ‘x’
amount of dollars in this neighborhood or in this
state because it simply takes away from the demand
that’s out there,” explained NationsBank spokesman
Scott Screidon. “In other words, the $350 billion is
a target goal, a floor not a ceiling. If there is a de-
mand for more than $350 billion we will be glad to
make those loans.”

NationsBank’s philosophy is to meet the de-
mand in the community, fostering long-term rela-
tionships with local and national partners around the
country. These partners include the Enterprise
Foundation, National Council of La Raza, and per-
haps eight to ten more groups, said Screidon.

“To my knowledge those groups never asked us
for any specific agreement because they know how
we work and they know how much money we lend
in the communities. Each of us meets our goal to do
community lending,” Screidon noted. “What we
don’t think generally works is to make a specific
agreement to a specific group when we don’t really
know what the market is demanding out there.”

The point of the $350 billion program, which is
expected to go into effect when the acquisition of
BofA is completed, is not for NationsBank to meet
the CRA loan requirements but to be the number
one community development lender in the country,
according to Screidon.

“NationsBank already has been rated ‘out-
standing’ and so has Bank of America in meeting
CRA requirements. What we want is for people in
communities across the country to see NationsBank
and Bank of America as somebody they can turn to,
that we are the people who get things done in the
community,” Screidon said. “Nobody could come
close to pledging $350 billion to community devel-
opment lending.”

Targeted to borrowers with incomes at or below
80 percent of the median, the massive $350 billion
program is divided into four categories. It includes

Page 8


Sep 17 98 12:18p Karen Clark 612-721-3052

consumers and senior citizens. Many of my constituents have complained about exorbitant
bounced check fees and how hard that is on a fixed income. We heard testimony iv particular

from many of our military veterans and pensioners. Now Norwest just raised their bounced check

free from $21 to $25.

Norwest is one of the biggest depositories of state funds. In the 1998 Minnesota Legislature, |
authored legislation which required that in order for a bank to have the privilege of being a state
depository they would have to offer a lifeline checking account. Norwest fought this legislation.
I authored legislation that would limit how much banks can charge for bounced checks and that
would prohibit banks from using the practice of clearing a customer’s largest check first to gain

more bounced check fees. Norwest fought this legislation.

Tam concemed that the Norwest/Wells Fargo merger will make banking even less affordable to
low-income people. 1 understand that just this summer, Wells Fargo stopped honoring the free
checking accounts for senior citizens who had been customers of First Interstate, the last bank
that merged with Wells Fargo. Now, instead of having free checking, senior citizens have their
choice between the Basic ATM Checking Account, which has a $5.50 monthly fee and requires
customers to do all their banking at ATM’s or they must choose the Stagecoach Checking

Account which has a $9 monthly fee.

What assurances do we have that this won't happen in Minnesota? My constituents need to know
and I urge that you help us get these answers before you allow the proposed merger to go

forward. Again, thanks for the opportunity to testify. 1 would appreciate a response.


2. Over the first four and a half years of the 10-year lending commitment,
Norwest had lent approximately $35 million dollars to the Navajo people.
The commercial relationship with Norwest and the Navajo Nation
Government is as follows:

Navajo Agricultural Products
e¢ $7,000,000 Term Loan
e 3,000,000 Line of Credit

Navajo Arts and Crafts
* = 129,998.77 Term Loan

Navajo Nation
e 1,640,000 Term Loan
¢ 7,500,000 Term Loan

Navajo Housing Authority
* 1,395,000

Part of the $60 million commitment was a commitment for approximately
$28 million in mortgage loans on the reservation. In order to help ensure
that the mortgage lending goal is achieved, Norwest has obtained approval
to offer the HUD 184 loan program on the Navajo Nation and has already
closed seven (7) mortgage loans under the program.

3. Norwest has contributed to the Navajo Nation college scholarship program
each year, in addition to various other charitable contributions to Navajo
Nation events and non-profit organizations.

4. Norwest has had an active community advisory board in place on the
Navajo Nation since 1994. The members of which are Navajo business and
community leads. The community advisory board works with the local
bank to provide input and to ensure that the bank stays in touch with local
needs and is able to be responsive to those needs.

Conclusion

Norwest Bank has taken a bold step in banking with the Navajo Nation in that it is
a pioneer from the financial community which has truly invested in our nation and
has respected our sovereignty along this journey of developing our economic base.


Sep 17 98 12:17p Karen Clark 612-721-9052 p.2
Paral \
Karen Clarke
Karen Clark Minnesota
State Representative House of
District 61A .
Minneapolis Representatives

HOUSING AND HOUSING FINANCE DIVISION, CHAIR
COMMITTEES: CAPITAL INVESTMENT: ECONOMIC DEVELOPMENT FINANCE DIVISION: ECONOMIC DEVELOPMENT AND
INTERNATIONAL TNADE; FINANCIAL INSTITUTIONS AND INSURANCE

Statement of State Representative Karen Clark to the Federal Reserve Board of Governors
September 17,1998

Good morning. Thanks for this opportunity to provide public testimony. My name is Karen
Clark. 1am the State Representative for five inner-city neighborhoods in South Minneapolis. 1
am also the Chair of the Housing and Housing Finance Committee of the Minnesota House of
Representatives and a member of the House Financial Institutions and Insurance Committee. | am
worried that the proposed merger between Norwest and Wells Fargo will negatively affect my
constituents in their access to banking and credit. The Phillips Neighborhood in particular which 1
both live in an represent bas suffered from a history of neglect by banks. With 17,000 residents,
we are the largest neighborhood in Minneapolis (more populous than 35 of Minnesota’s cuuntics)
and yet we do not have a major banking facility located there. What does that tel] you about the

banking industry’s relationships to lowest income district in the state?

As you may know the state of Minnesota is in the throes of a serious crisis in affordable housing.
It is extremely hard to find an affordable unit of housing to rent or even to buy in many areas
throughout the state, particularly in the inner city where the vacancy rate is 1.3 to 1.8%. That’s

critically below the 7% that’s considered a healthy rental market rate.

2633 18th Avenue South, Minneapolis, Minnesota S507 (612) 722-7728
‘Blale Office Building, 100 Constitution Ave., St. Paul, Minnesota 55155-1298 (612) 296-0294
Fax (612) 297-8128 TDD (612) 296-9806

TM S AGB: 9

sunt OOINTER AT GOWFRNMENT EXPENSE

bull


Inside Mortgage Compliance

VOLUME IX, NUMBER 13 SEPTEMBER 7, 1998

Community Reinvestment
Wells Fargo CRA Pledge Puts

NationsBank on the Defensive

Wells Fargo & Co. has pledged to lend an ad-
ditional $15 billion over the next three years to
lower-income and minority homebuyers in Califor-
nia to strengthen its proposal to merge with Nor-
west Corporation..

The new pledge is in addition to Wells Fargo’s
existing 10-year Community Reinvestment Act
commitment of $45 billion made in 1996.

Two-and-a-half years into the commitment,
Wells Fargo already has lent more than $14 billion
or 31 percent of the goal, Wells Fargo President
and Chief Executive Officer Paul Hazen reported
last month in letters to the Federal Reserve Board
and the Office of the Comptroller of the Currency.

The $15-billion program combines Wells
Fargo’s CRA loan and investment programs for
community development lending, small business
lending, and loans to low-income consumers. Also,
it introduces a new category of single-family mort-
gage lending.


Sep 17 98 12:18p Karen Clark

612-721-9052

It’s estimated that we are lacking 38,000 units of affordable housing im the metropolitan area
alone. The problem is both one of not producing enough new affordable housing and of not
preserving what affordable housing we already have. If you would walk with me around my own
neighborhood as I have recently been doing a lot lately, you would count at least 200 units of
boarded or vacant houses in need of repair. Some of these are scheduled for demolition. But
many of these homes could be repaired and purchased by our hard working, low-income families
that often pay twice as much in rent than they would for « mortgage with renovation rolled in for
that same or @ similar house. We need Norwest’s help to develop better home-mortgage products
that would be more responsive to the particular credit needs of many of our hard working, low-

income families in order to allow that to happen.

Last year in the state legislature we had an opportunity to help both rehabilitate and construct
more affordable housing and had an unprecedented alliance with the private sector to do so. We
proposed to that the state invest $40 million in a combination of State Housing Finance Agency
finds and tax credits and the private sector, with strong leadership provided by the Minnesota
Family Housing Funds, proposed to match that with $20 milhoa. Together that would have
leveraged another $180 million in private and federal funding for a total of $240 million in housing
rehabilitation and new construction dollars for both home-ownership and rental housing. The
result would have create 3000 affordable housing units. Unfortunately Govemor Carlson vetoed
all but $5 million for construction and rehabilitation. My understanding is that Wells Fargo
recently pledged that if the merger is approved, they will lend $5 billion s yoar in California to
minority and low-income customers for home mortgages, small businesses, and community

development. Before Norwest moves its headquarters out of Minnesota to California, we need

Ls


Sep 17 98 12:18p Karen Clark 612-721-9052

them to make a similar commitment to the people of the Phillips Neighborhood, to the people of
Minneapolis a dn St. Paul, and to all Minnesotans. With their new savings and combined wealth
they should become a major private sector leader to match the public commitment the legislature
has already shown it would provide. Norwest and Wells Fargo have announced that this merge
will save them $630 million a ycar on top of the already large profits these banks make. We

clearly need them to put more money back into our community.

One other significant approach to increasing home-ownership opportunities that the merged Wells
Fargo-Norwest bank could provide would be to raise the wages of its front line workers. My
information is that the average wages of the workers who work in the banking industry are such
that they can’t afford housing in today's market without public subsidy. Kor example, a bank
teller would need to eam $12.38/hour to be to afford the fair market rent for a two bedroom
home which is $644/month or would necd to earn $18.98/hour to rent a four-bedroom housing
unit. My understanding is that many of Norwest and Wells Fargo bank employees don’t earn that
kind of wage. Raising their wages would be one way to help with the housing crisis and real

community re-investment.

1am concerned that even though Norwest is the largest mortgage company in the country, they
lag behind the other Twin Cities banks in their lending to people of color and in low-income
neighborhoods, according to their 1997 records for conventional and FHA loans. What is

Norwest doing to address this?

On the House Financial Institutions Committee, I have fought for fairer bank fees for low-income