Capuano Testifies Against Fleet Bank/BankBoston Merger; Asks Federal Reserve Board to Extend Comment Period
July 7, 1999 -- Today U.S. Representative Michael Capuano testified at the Federal Reserve Bank of Boston against the merger of Fleet Bank and BankBoston. He called for an extension of the public comment period until the banks provide more information about the merger's impact on community investment and loans to low- and moderate-income individuals.
In registering his opposition, Rep. Capuano emphasized that he had asked the two banks repeatedly for a variety of information relating to the merger. Many of those questions are still unanswered today and many more were only answered yesterday - leaving little time for analysis.
"If this information is not provided, and the comment period is not extended, I cannot support the merger at this time. . .I have asked repeatedly for simple information since the beginning of this process in March and was only provided with this information yesterday afternoon. If the banks will not respond to a reasonable request from a U.S. Congressman for information, there is no reason to believe that they will be responsive and committed to communities in my district and throughout New England. For these reasons, I must strongly oppose the merger at this time."
A recent study by Professor James Campen of the University of Massachusetts/Boston states that the number of loans to low and moderate income (LMI) homebuyers decreased by a substantial amount following the merger of Fleet Bank with Shawmut. In contrast, Professor Campen asserts that the level of LMI loans was maintained, and in some cases increased, after BankBoston's acquisition of BayBanks.
Rep. Capuano wrote to Fleet Bank and BankBoston shortly after the study was made public asking for a detailed response to these issues. To date, the banks have been unable to provide information to rebut this analysis.
Additionally, the two banks recently announced a $14.6 billion "community commitment". However, no details of this proposal have been released, making it virtually impossible to assess the level of this commitment. Rep. Capuano has asked for more detailed information so that the public can determine if the needs of the communities will be met by this proposal.
Finally, much discussion has occurred in recent weeks regarding the total amount of the commitment. According to several reports, the $14.6 billion the banks have pledged over the next five years is actually less that the current level of investment made by both banks separately. Specifically, the amount dedicated to small business lending and to community investment has been criticized as too low. Rep. Capuano has asked that Fleet and BankBoston respond to these reports as well, so that community groups and the public have an opportunity to analyze these figures. The banks began providing some of these answers yesterday afternoon at a meeting with community groups. However, in written testimony submitted this morning, Rep. Capuano stated: "This is insufficient for the communities I represent. Promises do not help people buy homes, they don't encourage new small businesses and they don't revitalize our neighborhoods."