COUNCIL OF THE CITY OF PHILADELPHIA COMMITTEE ON FINANCE - - - Room 400, City Hall Philadelphia, Pennsylvania Wednesday, January 31, 2007 10:15 a.m. - - - PRESENT: COUNCILWOMAN JANNIE BLACKWELL, CHAIR COUNCILMAN DARRELL L. CLARKE COUNCILMAN FRANK DiCICCO COUNCILMAN W. WILSON GOODE, JR. COUNCILMAN WILLIAM GREENLEE COUNCILMAN BRIAN J. O'NEILL COUNCILWOMAN BLONDELL REYNOLDS BROWN COUNCILMAN DANIEL SAVAGE COUNCILWOMAN MARIAN B. TASCO BILLS 060108, 060109, 060052, 060832, 060834, 060939, 060961, 060966, 070018, 070020 and 070021 - - - V A R A L L O Incorporated Litigation Support Services Eleven Penn Center 1835 Market Street, Suite 600 Philadelphia, Pennsylvania 19103 215.561.2220 215.567.2670 2
Good morning. Thank you all for your patience. We will now begin our Finance hearing. We have a busy agenda today. We will ask the Clerk to read the title of the first two bills, considered the biosolid bills.
Bill 060108, an ordinance authorizing the Water Commissioner and the Procurement Commissioner, on behalf of the City of Philadelphia, to enter into a service contract with the Philadelphia Municipal Authority, pursuant to which the City will assume certain obligations under an agreement that the Authority will enter into with the Philadelphia Biosolids Services, LLC to design, finance, build, own and maintain facilities and equipment, and provide operating services for the management of the City's wastewater treatment solids; all under certain terms and conditions; and Bill 060109, an ordinance 3 1/31/07 - FINANCE - BILLS 060052, ETC. approving an extension of the term of existence of the Philadelphia Municipal Authority and authorizing the Authority to design, build, finance, own, operate, maintain and lease facilities and equipment, and provide related services, for the management of the City's wastewater treatment solids; all under certain terms and conditions.
Thank you very much. Many of you know we've had two prior hearings on these two bills. Given the fact that there's been no resolve and that further legal action has been threatened in this area, we will announce that the Committee will not be hearing these bills and they will be called subject to the call of the Chair. So all of who you are here for those bills, 108 and 109, dealing with the biosolid issue, those hearings will not be held today. They will not be heard today. They will be held subject to the call of the Chair. We're hopeful that at 4 1/31/07 - FINANCE - BILLS 060052, ETC. some point resolution may -- we may get some resolution on the issues. COUNCILMAN DiCICCO: Madam Chair, if I may. You mentioned something about there's some legal challenges?
Legal challenges are threatened should we hear them, which would take us out of it anyway, but after having talked to a majority after our briefing yesterday in the Caucus Room and after talking to the members of this Committee with no 14 resolve, we promised everyone that we wouldn't do what we had done for two hearings past and have a big debate on the floor without any resolve. Both sides are still as deadlocked as they were. It gives Council no place to be, and, therefore, we have agreed to hold this, subject to the call of the Chair and hope that there can be some resolve between the Administration and the unions so that the company could do or not do this, but 5 1/31/07 - FINANCE - BILLS 060052, ETC. certainly it becomes an issue, a labor issue, that Council has no authority to resolve. COUNCILMAN DiCICCO: I appreciate that, but I'm still a little confused. I know we don't have any authority to negotiate any of the labor issues, but I think there's more to it than just the labor issues, isn't there? I mean, we have --
Absolutely there is. But were you at our briefing? COUNCILMAN DiCICCO: No. I didn't even know about the briefing, so I apologize. I mean, if we delay it to the call of the Chair with no specific date set, if we leave it open-ended, this thing may never get resolved.
We are happy to get a date and we're happy, if that would satisfy my colleague, to choose another date. I don't know if it means that there will be resolve, but if 6 1/31/07 - FINANCE - BILLS 060052, ETC. that -- COUNCILMAN DiCICCO: It may not, and I understand. We've had a number of things that we never get to resolve, but I think if you don't have a date certain, in my opinion, it just kind of leaves it open-ended and this thing can go on forever, without any resolution.
What we will do is before this hearing ends, then, we will ask the Clerk to get another date. So for all of you, you're welcome to stay until we get a date, but know that we will not be considering those bills today. We'll announce that formally before our hearing ends, another date, and we'll go from there. How is that? COUNCILMAN DiCICCO: Thank you.
You're welcome. Any other concerns from members 7 1/31/07 - FINANCE - BILLS 060052, ETC. of the Committee? (No response.)
All right. Thank you. So Bill 060108 and 109 will be held and we will announce the date in question before we leave this hearing today. All right. As has been suggested, my staff reminds me that we have -- this is another hearing before Finance on February 20th at 10:00. COUNCILMAN DiCICCO: That will be this?
So, therefore, all of you who are here for the biosolids -- COUNCILMAN DiCICCO: Madam Chair, maybe you ought to get their attention.
May I have your attention, please? COUNCILMAN DiCICCO: May we have your attention, please.
We 8 1/31/07 - FINANCE - BILLS 060052, ETC. have another hearing scheduled. We can add this to that. February 20th at 10:00 a.m. is the next scheduled hearing for Bills No. 060108 and 109 dealing with the biosolid issue. Are we clear? February 20th at 10:00. Thank you very much. Thank you all for being here. We will now ask the Clerk to read the title of Bill Nos. 060052 and 060939, commonly called the Wachovia Bank bills. And while we're here, let me note that we do have a quorum. To my left is Councilman Goode. To his left, Councilwoman Tasco. To my right, Councilman Greenlee, as well as Councilman DiCicco. Councilman Savage is here as well. So we do have a quorum. All members are present. All right. Clerk, would you please read the title of the bills? While he is doing that, we will certainly ask Vince Jannetti, Finance Director, and -- all right. Mr. Jannetti, we'll ask you to hold up. 9 1/31/07 - FINANCE - BILLS 060052, ETC. We are requesting that Jim Eisenhower come forward and be prepared to speak, and then, Mr. Jannetti, we're happy to invite you forward. Having said that, we'll ask the Clerk to read the title of both bills.
Bill 060052, an ordinance amending Section 19-201 of The Philadelphia Code, entitled "City Depositories," by revoking the depository status of Wachovia Bank, and revising the list of City depositories, under certain terms and conditions; and Bill No. 060939, an ordinance 16 amending Chapter 19-200 of The Philadelphia Code, entitled "City Funds - Deposits, Investments, Disbursements," by requiring any City Depository authorized to accept City deposits under Section 21 19-201 of The Philadelphia Code to notify the City of proposed branch closings.
Thank you very much. The Chair also notes that Councilwoman Blondell Reynolds Brown, 10 1/31/07 - FINANCE - BILLS 060052, ETC. Vice-Chair, is also here. Thank you very much. Mr. Eisenhower, please identify yourself to the record and begin your testimony.
My name is Jim Eisenhower and I'm with the law firm of Schnader, Harrison, Segal and Lewis. I'm pleased to be here this morning. I've been retained by Wachovia Bank to advise them regarding the issues before you today because of my close relationship and involvement in the Philadelphia community and my knowledge of the relevant law on these issues. Today, I'm appearing before you to comment on Wachovia's behalf for the official record prior to your consideration of Bill 060052 and 060939 and to answer any questions that you 11 1/31/07 - FINANCE - BILLS 060052, ETC. might have. First, let me say that Wachovia deeply values the banking relationship that it has with the City of Philadelphia. This relationship dates back more than 200 years and continues to provide the City with vital financial services, superior customer service and products that meet the diverse needs of a large, complex organization. In light of these longstanding and, we believe, mutually beneficial ties, it would be deeply regrettable if Council were to revoke Wachovia's status as a City depository and, thus, Wachovia wishes to assure Council that such action is neither necessary nor in the City's best interests. As you know, Wachovia recently closed two branch offices in North Philadelphia. The decision to close these locations was made after thorough and careful consideration of the impact it would have on the area and an analysis 12 1/31/07 - FINANCE - BILLS 060052, ETC. of the availability of services to the affected areas. Specifically, Wachovia reached this business decision only after ensuring that it would continue to maintain a strong, viable network in the area with surviving Wachovia locations less than four-tenths and eight-tenths of a mile from the closed locations. In addition, an analysis of the two zip codes where its former branches were located shows 11 bank branches representing nine different financial institutions within those zip codes. Wachovia continues to maintain one of the largest branch networks in the City with more than 75 percent of its financial centers in or adjacent to low- and moderate-income neighborhoods. It is committed to finding a suitable successor in both of the recently closed locations that will provide traditional financial services that will enhance and serve the area. Indeed, it has already been in close dialogue with several institutions 13 1/31/07 - FINANCE - BILLS 060052, ETC. and hopes to announce the successors in the near future. Wachovia has been a strong supporter of struggling neighborhoods in Philadelphia for many years, having invested millions of dollars into these areas to ensure their long-term sustainability. This continued investment will continue into the future, as demonstrated by planned future openings at 34th and Chestnut and at 52nd and Jefferson, both of which are located in low- and moderate-income areas. Before reaching the branch closing decision, Wachovia not only provided all branch closure notifications required by government regulators but did so in a fully transparent manner, providing written notice to all customers based at these locations and posting conspicuous notice for more than 90 days prior to the closings. In addition, it reached out to community leaders in the area with which it had an ongoing 14 1/31/07 - FINANCE - BILLS 060052, ETC. relationship to discuss the proposed closures and did so in a transparent and open manner. While Wachovia did not notify certain signatories to community agreements that Wachovia's predecessors had entered into in 1998, we believe these agreements expired in 1992, and the parties were not customers at these locations nor had they kept up any ongoing dialogue with the bank. In other words, we believe Wachovia provided all notification that was required by regulators and by its internal policies and has made every effort to ensure that there are no negative impacts upon the surrounding neighborhoods. This Committee is now considering Bill No.
060939, which would require all City depositories to provide notice of branch closings 120 days in advance. This bill would simply duplicate notification requirements that are already required by federal 15 1/31/07 - FINANCE - BILLS 060052, ETC. regulators and that were fulfilled here by Wachovia, except that it would do so with an inconsistent reporting period, thus making all City depositories issue the same type of notices on two different dates instead of on the same date. In addition to fulfilling all of its notice requirements regarding these particular branch closings, Wachovia has already consistently fulfilled its broader obligations to the community, particularly to low- and moderate-income neighborhoods. For example, it has acted in accordance with each of the community agreements that it entered into at the time of the First Union/CoreStates merger. Today, Wachovia's practice is to issue general commitments to the community as a whole rather than making individual agreements with individual community groups. On July 30th, 2006, Wachovia submitted a comprehensive strategic plan, as required by a City ordinance, pledging 16 1/31/07 - FINANCE - BILLS 060052, ETC. over $500 million in loans, investments and services over the next three years to low- and moderate-income neighborhoods, persons and businesses in the City of Philadelphia. Wachovia made this commitment as a demonstration of its ongoing desire to be a responsible corporate citizen in the City of Philadelphia and to do its part in strengthening these neighborhoods. In the first five months of the current plan, it has provided over $96 million in affordable housing loans and over $17 million in small business loans in low- and moderate-income areas of the City. Another area in which Wachovia has sought to strengthen the community is through its commitment to affordable housing finance and small business loans. On affordable housing, Wachovia is one of the largest producers of prime affordable mortgages in the state and in the city. In 2005, Wachovia originated 2,351 affordable loans to low- and 17 1/31/07 - FINANCE - BILLS 060052, ETC. moderate-income borrowers or in low- and moderate-income census tracts in the City. These affordable housing loans include Pennsylvania Housing Finance Agency programs, but are not limited to these programs, as Wachovia also offers dozens of other options designed to meet the unique needs of its borrowers and offer them a variety of product choices. Wachovia intends to maintain its position as one of the top producers of affordable home loans by providing over $150 million in home purchase lending and over $190 million in home refinance and home improvement lending over the next three years. That's a commitment that we've made. Some of the actions it has already taken to further improve its performance include providing $500,000 in downpayment assistance to lower income Philadelphians; partnering with the Philadelphia Housing Authority to provide more homeownership opportunities -- 18 1/31/07 - FINANCE - BILLS 060052, ETC. that's one we're particularly proud of -- hosting seminars on expanding homeownership opportunity; removing income limitations from its community lending products in areas where the minority population is greater than 50 percent; hosting financial empowerment seminars targeted to women and minorities; and establish in Philadelphia as a pilot market for its newly released Hispanic Marketing Collateral program. As for the area of small business loans, Wachovia has made this one of its prime business objectives, as demonstrated by its community commitment to the City of Philadelphia, through which Wachovia intends to provide over $155 million of small business loans in low- and moderate-income census tracts over the next three years.
Some of the actions it's taking to further improve its small business lending include establishing Philadelphia as a pilot market for its newly released Hispanic 19 1/31/07 - FINANCE - BILLS 060052, ETC. Marketing Collateral program; lowering its maximum -- minimum loans, excuse me, to $5,000; offering its streamlined and flexible SB Express program; partnering with Consumer Credit Counseling of the Delaware Valley, the Enterprise Center, Resources for Human Development and the Greater Philadelphia Urban Affairs Coalition to provide counseling and education services to Philadelphia-based small business owners; and providing a $1 million investment to CDFIs in Philadelphia to increase access to capital for small business. Wachovia is proud of the work that it has done to support low-income persons in areas within the City of Philadelphia and will continue to improve and strive to invest our capital and resources to strengthen the quality of life in this city. This can be demonstrated by the fact that Wachovia maintains an outstanding Community Reinvestment Act rating with the Office 20 1/31/07 - FINANCE - BILLS 060052, ETC. of the Comptroller of the Currency, both in the Philadelphia area and overall as an institution. It is committed to doing all it can to make Philadelphia as strong and as vibrant as it can be, and it's proud of its leadership and support for all of Philadelphia's communities. 5 million to Philadelphia-based non-profit organizations. This included eight grants made in 2006 totalling more than $2 million. 6 million paid through the Wachovia Foundation, the Wachovia Corporation or by way of sponsorships. Among these organizations were the Free 21 1/31/07 - FINANCE - BILLS 060052, ETC. Library of Philadelphia, the School District of Philadelphia, the Greater Philadelphia Urban Affairs Coalition and Congreso de Latinos Unidos, Incorporated. Non-profit organizations in greater Philadelphia benefited from more than 15,000 hours of volunteer activity through the bank's Wachovia Volunteers program, and more than 1,000 Philadelphia residents learned the basics of budgeting, savings, credit management and homeownership through Wachovia financial education seminars. This commitment to the community is not limited to Wachovia's employees or to the programs that the bank sponsors. Wachovia prides itself on the community leadership of its senior executives here in Philadelphia. For instance, you long chairs select Greater Philadelphia -- the regional economic development arm of the Greater Philadelphia Chamber of Commerce. Denise McGregor Armbrister, Executive Director 22 1/31/07 - FINANCE - BILLS 060052, ETC. of the Wachovia Regional Foundation, was recently appointed by Governor Rendell to serve on the Philadelphia School Reform Commission. Kevin Dow, Community Affairs Manager for Wachovia's Midatlantic Banking Group is President of the Board of Directors of the Philadelphia Cultural Fund. And Don Scott, head of Wachovia's Government Banking Group in Pennsylvania, is the former Chair of the Board of Directors of the African-American History Museum and is Co-Chair with the Greater Philadelphia Urban Affairs Council. Wachovia genuinely desires to continue its status as a City depository so that it can continue to serve the City and its residents into the future. It will continue to work with the City leaders and with members of Council to effectively serve the community and ensure that credit and banking services are available to the largest possible number of people now and into the future. Thank you very much. 23 1/31/07 - FINANCE - BILLS 060052, ETC.
Thank you very much, Mr. Eisenhower. We may ask you to repeat some -- isolate some answers.
As I said earlier, Madam Chair, Wachovia has the highest CRA rating and outstanding both as an institution and in the City of Philadelphia.
How is Wachovia working to ensure that the needs of Philadelphia's low-income areas are being met?
Well, Wachovia, as I said, issued a three-year strategic plan approximately -- or several months ago that outlines the steps that it would take to better meet the needs of low- and moderate-income persons in areas in the City. This includes over a half billion in lending 24 1/31/07 - FINANCE - BILLS 060052, ETC. over the next three years and sizable investments of dollars, time and corporate energy.
Could you respond to concerns that Wachovia doesn't operate an adequate number of branches in low-income neighborhoods?
Well, Wachovia is, I believe, the largest bank in the City in terms of branches. We have made every effort to keep branches open where it makes good business sense and we believe we serve the community. In addition to that, as I said, in the area, the two branches that we have closed, we did so after a lot of consideration and after analysis of the fact that there are Wachovia branches remaining open very close by, and we are also proactively discussing with possible successors their opportunities to perhaps open branches in those locations.
Just a couple more questions and I'll open it 25 1/31/07 - FINANCE - BILLS 060052, ETC. up. Would you respond to the allegations of Wachovia's lending record to City residents and businesses in low-income neighborhoods.
Wachovia's lending record I think is improving. We're doing more every day. We've been engaged in discussions with members of Council and with the community, and we know we can do better and we're committed to doing better, as we said in our strategic plan last year, and our numbers are going up.
How can a member of the public find out more if they would like to know more about Wachovia's commitment to our City?
Jeff Gish is Wachovia's Community Relations Executive here in Philadelphia, and members of his staff -- he and members of his staff will be happy to discuss Wachovia's commitment with interested persons. I know Jeff has 1/31/07 - FINANCE - BILLS 060052, ETC. met with many members of Council. He's also met with community groups throughout the City, and he's always open to those kinds of discussions.
And finally for me, and then we'll certainly open it up to the rest of the Committee, we're really concerned about Wachovia's opinion and attitude about taking all of this very seriously. We're in a time when banks are changing hands all the time, but we have great needs, people who need mortgages, people who don't want to just use a bank as a check-cashing agency. How can you assure us that Wachovia hears us, that you're taking this matter serious and that you will improve not only communication but in ways that have brought us to this hearing in the first place, take us seriously?
Well, Madam Chair, first of all, we've submitted, I think, detailed responses to many of the issues that are raised today in writing. 27 1/31/07 - FINANCE - BILLS 060052, ETC. Wachovia has asked me to come and testify, touch on some of those things that we submitted in writing and to answer your questions as best I can and also continuing to keep a dialogue with the City and members of Council on issues of concern. I think if you look at all of the things that Wachovia is doing in the City of Philadelphia, particularly charitably and reaching out to minority communities throughout the City, I think you can see an improving record from the bank and a commitment to doing better.
Thank you. Any other questions? Councilman Goode is next.
Good morning, Mr. Eisenhower. 28 1/31/07 - FINANCE - BILLS 060052, ETC.
Thank you for your opportunity. Are you the only representative for Wachovia in Council Chambers today?
Are they prepared to answer questions on their lending performance?
Well, the bank has made the decision to have me as their representative here today, and it's my goal to answer your questions as best I can. If I can't answer your questions, I will go back and get the answers for you and provide them to you.
So Wachovia felt comfortable that you were qualified 29 1/31/07 - FINANCE - BILLS 060052, ETC. to talk about their lending record?
I am not a banker, sir, but I do have a knowledge of the Philadelphia community and the relevant law in this area, and I've worked with Wachovia for some time in issues of this.
And you don't think that this Council and this Committee should be insulted that Wachovia sent its lawyer?
I would hope not, Councilman Goode. That's certainly not the intent. The intent of Wachovia was to engage in a dialogue and show its willingness to engage in an ongoing dialogue, and I would hope that my presence and my representation --
But Wachovia 30 1/31/07 - FINANCE - BILLS 060052, ETC. did in fact send its lawyer --
Wachovia did in fact send their lawyer in response to the consideration of these bills.
Our position is that if Council is inclined to pass that bill, the notice requirements should be in line with the federal requirements, which are 90 days.
So if the bill were amended to 90 days, Wachovia 31 1/31/07 - FINANCE - BILLS 060052, ETC. would have no objection to the bill?
Wachovia does -- we have a legal issue, sir, as you know, regarding the preemption doctrine and federal law and state law. So I'm not really authorized to concede that we would not oppose it, but we certainly believe that if it's going to be passed, the requirement should be consistent with the federal requirements.
So you're not sure what Wachovia's legal position is on Bill No. 939?
Well, as I've said, our position is if Council is inclined to pass that bill, the reporting requirements should be consistent with the federal requirement.
Okay. In your testimony you state that Community Legal Services has selectively chosen statistics to paint an inaccurate picture of Wachovia's performance focusing on particular areas of the NCRC report in 32 1/31/07 - FINANCE - BILLS 060052, ETC. which Wachovia's performance was lacking. Is that a true statement?
How many areas were actually examined within the NCRC report?
I can tell you. There were four: home mortgage lending, home improvement loans, home refinance loans and small business lending. Wachovia was number one in terms of home improvement lending and home refinance lending. Wachovia was dead last in terms of home mortgage lending and small business lending. Is that accurate?
Yes, that's an accurate statement. 33 1/31/07 - FINANCE - BILLS 060052, ETC.
So we've cleared up any inaccuracies that may have existed?
Well, it's an accurate statement that that is what the report said.
Why doesn't Wachovia execute community reinvestment agreements?
We believe it's better to engage in a dialogue with the community as a whole rather than engage in piecemeal agreements throughout the City that sometimes can be inconsistent with each other and difficult to enforce. And I think we've done that. The strategic plan that we filed with the City last year is comprehensive. It was done after dialogue with members of Council and representatives of the community throughout the City, and it's a comprehensive citywide plan, and we think that's the better way to go. 34 1/31/07 - FINANCE - BILLS 060052, ETC.
What is your understanding of the purpose of a community reinvestment agreement?
Well, I think it's the goal of the City to make sure that City depositories are doing everything they can to improve their performance, particularly with low- and moderate-income residents of the City. And we share that goal, and that's why we filed the plan and are committed to fulfilling it.
So the purpose of your three-year strategic plan is what?
To improve our performance, particularly with aiding low- and moderate-income residents of the City, through our services.
If I was to suggest to you that your plan does not do that, in fact that your plan invests less in the future than it has in the past, would that be an accurate statement? 35 1/31/07 - FINANCE - BILLS 060052, ETC.
Let's run through your commitment, then. You've committed $505 million in low- and moderate-income neighborhoods over three years; is that correct?
May I have one moment while I reference the plan? I'm sorry. Would you --
$505 million is the commitment for low- and moderate-income neighborhoods over three years; is that correct?
And of the $505 million, $350 million in home loans in low- and moderate-income areas over three years; is that correct?
I don't have 36 1/31/07 - FINANCE - BILLS 060052, ETC. the breakdown, but I'm sure you've got the number.
I have a calculator for you as well if you need one. The commitment for small business lending is $155 million?
I'll ask you a question just for the record. Is this actually an increase in loan dollars for low- and moderate-income areas? 37 1/31/07 - FINANCE - BILLS 060052, ETC.
Your understanding from where? Did Wachovia tell you that it was an increase in loan dollars?
I guess you can disagree when you look at numbers, but that's my conclusion.
Let's analyze it publicly, then. In 2004, according to the NCRC report, Wachovia was ranked dead last in small business lending. In that year, Wachovia did 653 small business loans in low- and moderate-income areas in 2004. You can write that down, 653 small 38 1/31/07 - FINANCE - BILLS 060052, ETC. business loans in 2004 in low- and moderate-income areas. For 2005, Wachovia gave the City a goal of 741 small business loans in low- and moderate-income areas. Do you know how many loans they actually did?
They did 348. So the year in which Wachovia ranked dead last, they did 653 small business loans. They set a higher goal the next year of 741 small business loans but only did 348. Can you explain that?
I cannot, but I will get an answer for you on that, Councilman Goode, and I'll get back to you and submit it to you.
But even in that pitiful year where they did 348 small business loans, that amounted to $72 million in 2005. But your annual commitment on your strategic plan amounts to about $52 million per year. Can you 39 1/31/07 - FINANCE - BILLS 060052, ETC. explain that?
You're saying that we loaned 72 but our commitment was 52?
No. What I said was in the year 2005 where you did 348 small business loans, that amounted to $72 million in small business lending, but your commitment going forward is 155 million over three years, which amounts to only $52 million per year.
I cannot, but I will get you an answer to that specifically.
In the year in which you ranked dead last in small business lending, you did 653 loans. The following year after you ranked dead last you did 348 loans. That was still $72 million in small business lending, but 40 1/31/07 - FINANCE - BILLS 060052, ETC. your commitment for this year is only about $52 million in small business lending. What's there to answer? It's less money.
I'm sure you've got the numbers right, Councilman Goode. It's a fair question, and that's why I'm here to get you the answers, and I'll do that. You have my commitment that I will do that.
In 2005, Wachovia did 348 small business loans. Do you know how many loans Bank of America did in low- and moderate-income neighborhoods?
723. In the year in which Wachovia did 348 small business loans in low- and moderate-income areas, do you know how many loans Citizens Bank did?
It did 757. 41 1/31/07 - FINANCE - BILLS 060052, ETC. In 2005, the year in which Wachovia did only 348 small business loans in low- and moderate-income areas, do you know how many loans PNC did?
I cannot, but you have my commitment that I'll get you an answer to that.
Exactly how many small business loans has Wachovia done in their strategic plan?
Since you've executed your strategic plan, this three-year strategic plan that you're bragging about, how many small business loans have you done since the execution of your --
Well, the plan was only filed several months ago. I believe it was over the summer. 42 1/31/07 - FINANCE - BILLS 060052, ETC.
I do not know the answer to that, sir, but I will get it for you.
You don't know, but no one else is here available to answer those questions either?
I don't know if any one person could answer every one of your questions, Councilman Goode -- can answer all of your questions, but my responsibility is to get you the answers, and that's my commitment to you and I'll do it.
I already have the answers. I really want your response to those answers. Part of this data actually comes from Wachovia in terms of their submission in terms of community reinvestment goals and data that they actually submitted regarding how many loans they did in the previous year and how they met their goals and 43 1/31/07 - FINANCE - BILLS 060052, ETC. didn't meet their goals. The Greater Philadelphia Urban Affairs Coalition recently launched a Business Builder program where five different banks committed $18.25 million to serve underserved markets in terms of small business lending. Why wasn't Wachovia a participant in that Business Builder program if its performance of small business lending is so inadequate?
Well, Wachovia is a participant in many different programs, Councilman, and how they make decisions at a strategic level at the bank is not my responsibility, but if that is a good program, and I'm sure it is, and one you recommend, I'm sure it's one that we would consider and try to get involved in.
If Wachovia ranked dead last in small business lending and there is a small business lending task force that crafts a program to serve underserved markets, why would 44 1/31/07 - FINANCE - BILLS 060052, ETC. Wachovia opt out? Wachovia was in fact at the table. It's not that they were unaware of it. They helped craft the program but chose not to put any money in it. Why is that?
That's a business decision made by the bank, Councilman Goode, and if there are specific answers to that question, I'll get them for you.
What we're here to discuss is actually a business decision being made by this Council.
What we're here to discuss today is a business decision made by this Council. The next question I'll ask you is, as Wachovia's lawyer, isn't it perfectly legal for us to just revoke Wachovia's depository status?
I think the City of Philadelphia can choose to do business with whomever it wishes to. I 45 1/31/07 - FINANCE - BILLS 060052, ETC. think it would be a mistake to do that with this bank.
I wasn't referring to the City of Philadelphia. I was referring to the Philadelphia City Council. Isn't it Council's legal authority to revoke Wachovia's depository status?
Okay. Let's move from small business lending to home mortgage lending. Wachovia also ranked dead last in 2004 in terms of home mortgage lending but first in home improvement lending, as I stated. In terms of Wachovia's three-year strategic plan, Wachovia home mortgage and improvement loans, the commitment is, as I said, about $117 million per year. The total commitment for three years is $350 million. Over three years that's $117 million per year. But in the year after Wachovia ranked dead last, Wachovia 46 1/31/07 - FINANCE - BILLS 060052, ETC. actually did home mortgage and improvement loans amounting to $339 million in low- and moderate-income areas. So if Wachovia did $339 million in 2005, how is the commitment for 350 million over three years an increase in lending?
I'd have to look at those numbers and get back to you on that, sir.
The numbers are this: In 2005 in terms of home mortgage and improvement loans, Wachovia did $339 million in low- and moderate-income areas, but the commitment over the next three years is only $350 million over all three years.
Which is about $117 million a year. So if the commitment going forward is $117 million a year, when Wachovia actually did $339 million in 2005, how can that possibly be 47 1/31/07 - FINANCE - BILLS 060052, ETC. an increase in lending?
Well, it's a commitment for specific numbers that we intend to fulfill. Why there's a variation from numbers that we've done in the past --
I don't know the prior numbers, Councilman Goode. I'll take you that you've analyzed those numbers correctly.
I know the numbers. I'm sure Wachovia knows the numbers, but that's why they sent their lawyer rather than the bankers. Thank you.
Thank you very much. And let me note that Councilman O'Neill is here, as well as 48 1/31/07 - FINANCE - BILLS 060052, ETC. Councilman Ramos. So all members of the Committee are present. We'll entertain questions now from Councilman Savage, Councilman Greenlee and Councilwoman Reynolds Brown, in that order. Thank you.
On December 7th you closed two banks within Philadelphia. One was in Councilman Clarke's district and the other was in my Council district, which was located at 101 East Allegheny Avenue. I was extremely disturbed that you did close that bank. I'm concerned about maintaining access to daily banking activities. What can be done to keep these branches open?
Well, as I said in my testimony, we decided to close 49 1/31/07 - FINANCE - BILLS 060052, ETC. those branches after careful consideration, and one of the key factors that we looked at -- and I'm just going to refer to my notes because I want to be absolutely specific about it -- is that there are Wachovia locations within four-tenths and eight-tenths of a mile from both of those branches and there are nine other financial institutions within the zip code. So that's one thing we did take into consideration. The second is ongoing discussions that we have with possible successors who may be interested in those two branches, and we're doing everything we can to make it easy for a successor who may be interested to move into those branches to do so quickly and effectively.
Can you identify those institutions that you're having a dialogue with?
I can't. They're ongoing negotiations and we have 50 1/31/07 - FINANCE - BILLS 060052, ETC. not reached any agreements at this point. But we are hopeful that we will.
And you gave 90 days' notice to the closing, you said in your testimony?
Thank you, Madam Chair. Good morning, Mr. Eisenhower.
Staying on the notification issue, I know you said -- I think it was the first question to Councilman Goode -- that you'd like to see it 90 days, but you won't agree that you would not oppose it. 51 1/31/07 - FINANCE - BILLS 060052, ETC. Since there seems to be a lot of concern about the cooperation of Wachovia, wouldn't it make a lot more sense to agree to a 90-day since it fits the federal guidelines anyway?
Well, Councilman, perhaps it's coming at it from a legal perspective.
I am a lawyer, and there are larger issues dealing with -- which are national in scope, dealing with this question of federal and state preemption of banking operations, which affects all banks, not just Wachovia. And so that's an issue that is somewhat larger than all of this and that's why --
If we sort 52 1/31/07 - FINANCE - BILLS 060052, ETC. of cut through the legalese of what you just said, what you actually are saying is that Wachovia's issue is whether this Council has any right to pass any banking legislation; is that correct?
What you're saying is that this is none of our business.
And that only state and federal legislatures can legislate on these matters; is that what you're saying? Just be clear about it.
That is not what I'm saying, and, in fact, if you look at the history, Councilman, as you know, while we have not legally conceded that issue, we have filed reports that the City has required, we have engaged in discussions with the City, we have cooperated with the City even though we have not conceded that legal point. 53 1/31/07 - FINANCE - BILLS 060052, ETC.
But the point you were making to Councilman Greenlee is that you could never be for the bill because you're not for our right to legislate on this matter.
Yeah. Thank you. Thank you, Madam Chair. Thank you, Councilman Goode. The issue of any kind of written agreement with the community -- and I don't expect you to get into specifics here, but are you open on behalf of the bank to have a written agreement with -- I'm not giving out any secrets that there's going to be people speaking here who, CLS and others, who have concerns. Are you open to that, to 54 1/31/07 - FINANCE - BILLS 060052, ETC. those kind of agreements, again, without getting into the specifics right now?
We are open to a dialogue with those groups, and we are in a dialogue with them. And we are reaching out our hand for a continued dialogue and further discussions. It is our policy to not enter into piecemeal agreements with separate and distinct and numerous community organizations, because we think that's kind of self-defeating. It's better to have a strategic plan for the City as a whole, which is transparent, which you can read, which you can ask questions about and we'll get you the answers. That's our position.
Okay. Could I just respectfully just put on the record that I think given, again, the concern that a lot of people have, both Committee members and others, that consideration of some kind of agreement -- and, again, you lawyers and the bank have to work that out -- might 55 1/31/07 - FINANCE - BILLS 060052, ETC. be in order in this case. And if I could just put on the record, too, that I think -- and certainly I know your qualifications. I'm not questioning that, but I think it would have been in the best interest of Wachovia to have some of their people here also so they could have answered some of the other questions that you just couldn't answer today, and I understand why you couldn't, but that's just for the record. If you could relay that, I'd appreciate it.
Thank you very much. Councilwoman Reynolds Brown.
Good morning, Councilwoman. 56 1/31/07 - FINANCE - BILLS 060052, ETC.
It states here in literature that I have that Wachovia, we know, closed the branches without notice or consultation to groups it has signed agreements with. A, has there been a review of procedures, bank procedures, when it comes to closings going forward? And, two, are you prepared to share with us what those new standard operating procedures are when it comes to notification to the surrounding world that Wachovia is making those type of decisions?
Correct. Yes. What we did in this case, as I stated -- and, again, I'll just go back on those notes to make sure that I'm absolutely clear about it -- we provided written notice to customers. We posted at the locations 90 days prior to the closing notices that the branches were going to be closed, and we did have discussions with many community leaders.
And you 57 1/31/07 - FINANCE - BILLS 060052, ETC. did?
The groups themselves that were in these agreements, these agreements go back some time. It's our view that they were expired sometime ago, and they're not groups that we have been in ongoing discussions with for a number of years on either side. They haven't been in communication with us on a regular basis; we haven't been in communication with them. So we feel that we did give ample notice, particularly to the customers.
And so going forward will there be anything new and/or different procedurally with regards to bank branch closings?
Well, we intend to comply with the law and we intend to give full notice to our customers. I think that you can always have better communications. You can always talk to more people rather than less. And I think that is the goal of 58 1/31/07 - FINANCE - BILLS 060052, ETC. Wachovia going forward, and we're committed to doing that.