The enormous and unprecedented merger of Charlotte, N.C.-based Bank of America with Boston-based Fleet Bank has raised concern among Connecticut officials that the national giant will underserve the state’s scattered low-income areas.
Connecticut State Treasurer Denise L. Nappier and Attorney General Richard Blumenthal said this week that federal regulators should only approve the pending BofA/Fleet merger if it includes requirements that the bank maintain jobs, increase community reinvestment funding in Connecticut and assure accountable corporate governance. They made their comments Tuesday at a public hearing on the merger that included representatives from Fleet, BofA and several community organizations from around the state.
Bank of America announced last October it would acquire Fleet Bank’s parent, FleetBoston Financial Corp., to form an institution with $933 billion in assets. In Connecticut, Fleet has 175 branches, approximately 400 ATMs and 5,500 employees.
‘Critical Issues’
Prior to this week’s proceedings, Blumenthal and Nappier had asked the Federal Reserve Board of Governors, the first federal agency to consider the merger, to hold a formal hearing on Jan. 28 at the State Capitol complex in Hartford. Testimony was to be provided to the Federal Reserve Board and to the Office of Comptroller of the Currency, the agency that must approve the merger of branch networks of the two banks – the final step in the regulatory approval process. That hearing, however, was declined by the Federal Reserve Board, which instead scheduled hearings only in San Francisco and Boston.
Representing his office and the Treasury, Blumenthal traveled to Boston for last month’s hearing to urge the Federal Reserve to approve the mega-merger only if “explicit standards are set to assure that Bank of America will fully address community needs and enact effective, accountable governance structure.”
“I’m encouraged by a high-ranking FleetBoston official’s statement to me [at the Boston hearing] that the goal for community reinvestment for the Northeast is $150 billion, a 50 percent increase over the $100 billion the bank originally proposed as a minimum,” Blumenthal said in a prepared statement this week. “Also, the bank recognizes in principle that the amount of community reinvestment should reflect the proportion of its assets in the region. This newly articulated position seems to be a significant step forward. It should increase the bank’s commitment to Connecticut and other Northeastern states. While this progress seems promising, we’ll continue to press for a specific commitment of funding and community accountability for Connecticut.”
Nappier and Blumenthal took issue with BofA’s assertion to the Federal Reserve Board that a community reinvestment program that allocates specific funds to individual markets would be unwieldy.
“Fleet has heeded the people and organizations in communities with firsthand knowledge of their problems and financial needs. Their community reinvestment funds were more effectively spent because of grassroots involvement,” Blumenthal told the Federal Reserve Board.
He added, “Approval should be conditioned on Bank of America setting specific state community reinvestment goals, establishing a process that assures actual accountability to communities the bank serves and maintaining current employment levels in Connecticut for at least four years after the merger. All the rhetoric still leaves completely and unacceptably unclear some absolutely critical issues – beginning with whether Connecticut will receive its fair share of community reinvestment funds and how those monies will be allocated.”
This is not the first time that the treasurer and attorney general have teamed up to provide Connecticut residents with a forum to express concerns regarding a pending bank merger. In 1999, Blumenthal and Nappier had sought a Federal Reserve Board hearing on the merger between Fleet and BankBoston. When that request was denied, the two Connecticut officials co-hosted a fact-finding hearing at the Connecticut Legislative Office Building attended by 150 citizens, 60 of whom testified. Those comments were shared with the Office of the Comptroller of the Currency and provided the basis for the agreement negotiated between Blumenthal, Nappier and Fleet.
Blumenthal and Nappier said BofA officials have confirmed that they intend to keep the 1999 commitment negotiated at the time of the previous merger. But the state officials pointed out that the agreement, which included $2.9 billion in community reinvestment funds, concludes at the end of 2004, and should be the beginning, not the end, of the newly merged bank’s commitment to Connecticut.
Nappier and Blumenthal also said Connecticut, the nation’s wealthiest state but also home to four of the country’s poorest cities, “is different fundamentally from almost every other state in the Fleet region and even in the Bank of America market.”
