FLORENCE HAGINS
Plan ‘essential’
As consumers brace for the arrival of the first national bank to enter the Massachusetts market, community development organizations are preparing ways to protect their cash flow and have petitioned Bank of America to adopt a plan specific to the Bay State that will ensure access to credit and investment in low- and moderate-income communities in the Bay State.
Bank of America, however, has a nationwide community reinvestment plan, and at present it is uncertain whether the bank would be receptive to a separate plan for Massachusetts.
Leaders of 14 nonprofit and affordable housing organizations from across the state last week submitted to Bank of America a plan to continue and expand on the community investment programs undertaken by Fleet Bank in the wake of the pending merger between the two financial institutions.
In a letter to Bank of America Chairman and Chief Executive Officer Kenneth Lewis and FleetBoston Chairman and Chief Executive Officer Chad Gifford, the nonprofit leaders proposed a five-year plan for Bank of America to work with underserved communities across Massachusetts.
“We have been instrumental in getting good investment plans from Massachusetts banks. When we heard that Bank of America and Fleet were merging, we saw this as an opportunity to again be able to get a good community investment plan for Massachusetts due to the merger and [address] how can Bank of America can meet the low- and moderate-income citizen banking needs,” said Maureen Flynn, deputy director of the Massachusetts Association of Community Development Corporations, which represents over 70 CDCs in the commonwealth. “That is what [banks] are required to do under the federal Community Reinvestment Act laws, so when we started the process, we joined together with other groups to devise this plan that we submitted to Bank of America for their consideration. The plan represents as many diverse interests as possible, as those groups represent different aspects of the low- to moderate-income communities in Massachusetts.”
The five-year plan includes proposals for Bank of America to participate in the Soft Second Program – an affordable mortgage program created to address racial disparities in lending that has served 7,000 homebuyers since 1991. It also proposes the bank offer a basic bank account with low-cost checking and savings accounts, monthly checking fees under $3, low minimum balances and other consumer-friendly cost-reduction measures; participation in the Massachusetts Housing Partnership, a legislatively created quasi-public state agency that finances loans through participating bank credit lines to aid low- and moderate-income families; setting aggressive goals for community development funding in low- and moderate-income communities; pursuing an ambitious program of small-business lending with loans of under $100,000 and under $50,000 to businesses grossing less than $1 million a year; and diversifying the workforce at the bank with a goal that at least 20 percent of employees and 20 percent of vendor contracts go to persons of color and another 20 percent of vendor contracts be awarded to women-owned enterprises.
National Commitment
According to Flynn, the MACDC has been a part of every major bank merger discussion for the past 10 years, negotiating and helping to establish what the banks are going to do for community investment plans. Flynn said it is important for Bank of America to engage in a plan specifically for Massachusetts, despite the bank being a national company based in Charlotte, N.C.
“Our concern is that when Bank of America and Nations Bank merged in 1999, they announced a footprint-wide plan for a $350 billion commitment to the entire Bank of America footprint. We are concerned that this might happen again,” said Flynn. “Although this was a good commitment to say they would do $350 billion [worth of] investments in communities nationwide, in Massachusetts we have our own needs and concerns. We have our own programs and plans to help small businesses and personal banking. We want to give Bank of America the [message] that we are interested in a Massachusetts plan, and not a national plan.”
But according to a spokeswoman at Bank of America, a Massachusetts-specific plan has not been decided upon and the bank is currently standing behind the success of the community development programs the bank has supported nationwide with their $350 billion plan.
“We are one of the leaders of community development and we have been for some time, and we are very committed to our communities in our franchise,” said Eloise Hail, spokeswoman at Bank of America’s headquarters in Charlotte, N.C. “We have a 10-year, $350 billion commitment to community development and we are a leader in loans and investments to community development financial institution.”
Hail said Bank of America has “innovative programs” in job training and placement, financial literacy, support for continuing financial education and support for urban and rural development.
“Both BofA and Fleet have earned outstanding ratings in CRA [scores] and we are the No. 1 SBA [Small Business Administration] lender in the nation,” said Hail. “We are committed to the Northeast and to New England and we are very committed to community development in communities that we serve. Our track record is outstanding and we stand by that.”
Currently, the MACDC has a community reinvestment agreement in place with Fleet, which was formulated when Fleet merged with BankBoston and is set to expire in 2005. Flynn said the MACDC and other CDCs in Massachusetts expect to extend a similar agreement to what is currently in place beyond that time.
“We want [Bank of America] to continue to do what Fleet has committed to doing, but Bank of America is bringing to the table four times the amount of assets that Fleet has and that brings along an obligation to do more for the community,” said Flynn. “The issue is really whether we are going to have an agreement and Bank of America has not agreed to anything. Merging of two huge banks will take some time, but we don’t want that to be an excuse for not presenting a plan in a timely matter.”
The Massachusetts Affordable Housing Alliance expects Bank of America to commit to Boston and Massachusetts communities and provide the same level of participation that Fleet has in the past, said MAHA Assistant Director Florence Hagins.
Hagins said the proposal given to Bank of America included programs that are currently being used in low- and moderate-income communities with Fleet, including the Soft Second Program.
“The new national bank coming in needs to make sure there is a strong commitment to Boston and to all of Massachusetts. All the things we are proposing to them are essential and we have participated with Fleet in all of them,” said Hagins. “It’s important that we don’t get a rubber stamp of approval for a national program. We stopped dealing with dollars and started dealing with numbers and MAHA is talking about 3025 loans over 10 years. We think that’s reasonable.”
Thomas Callahan, executive director of MAHA, said, “a Massachusetts-specific commitment is the most important thing [BofA] can do. Whether the bank packages [programs] to New England or the Northeast is fine, but there are specific programs that are specific to Massachusetts.”
Flynn said the 14 nonprofit and affordable housing organizations continue to make programs available and stressed the importance of being able to have a local contact for local communities.
In the event that Bank of America does not accept the plan presented to it, or does not itself propose a comparable agreement, Flynn said MACDC and other organizations will rally to keep low- and moderate-income community housing plans in place.
“We feel it’s devastating in terms of losing a hometown bank in the communities that we represent and that is why we feel that we need something specific for Massachusetts. If Bank of America doesn’t have a plan, we will marshal our coalition resources and advocate that they should get a plan in place as soon as possible and if they don’t, there will be increasing pressure from coalition groups to get a plan in place,” said Flynn. “We are willing to see this as an opportunity for Massachusetts … the positive side is bringing a huge bank and its resources into the community. On the other hand, if we don’t see the positive results for the communities that we represent, we would be incredibly disappointed. Bank of America needs to think about Massachusetts and needs and step up to the plate.”
