Testimony Public Meeting
Bank of America Acquisition of Countrywide
April 29, 2008
By Frederick D. Smith of Operation HOPE
- Ms. Chairwoman, regulators and participants:
- I am pleased to represent Operation HOPE, a Los Angeles-headquartered non-profit financial literacy and empowerment organization, and our Chairman John Hope Bryant, who is also Vice Chair of the President’s Advisory Council on Financial Literacy, chaired by Charles Schwab.
- My financial services career has included the private sector, a federal government agency, the State of California and Operation HOPE. I currently head HOPE Coalition America for Operation HOPE, where we have aided everyone from Katrina survivors to those impacted by the subprime mortgage crisis. I am here to support corporate activities that are in the best interest of customers, stockholders, investors and communities.
- The two financial institutions that are the subject of discussion today have long corporate histories and their current financial positions and public images are well known.
These two institutions are like the Tale of Two Cities: one rich and reasonably responsible, a democracy, where all boats rise; the other, rich and seemingly irresponsible, at most an economic democracy, where capitalism has become a win/lose, us-against-them game. A place where the only boats to rise are yachts.
We support Bank of America, as we have a long and multi-faceted history. Their employees volunteer, teaching financial literacy in schools across the state of California and in Atlanta, Georgia. We have over 200 Bank of America HOPE Corps volunteers, 129 actively providing youth financial literacy to school-age students in classes of 20 to 25, with over 1,000 young people educated this year, and others have provided mortgage assistance to homeowners.
The bank has given back, making a multi-year financial commitment to support our work since 2003. They just recently made a 2-year commitment to support our Mortgage HOPE Crisis Hotline started in February of last year providing free information and guidance to homeowners facing or who anticipate facing mortgage payment challenges. Through April 24th of this year we have received requests for assistance from over 17,000 (17,540) individuals and we are assisting 4,626 homeowners, including (1) negotiating a 4.75% 30-year fixed loan for one client; (2) stopping a foreclosure and negotiating a repayment plan including reducing the interest rate from 8.5% to 7% fixed; (3) assisting a single mother with two children who had $30,000 past-due principal and interest, negotiating $20,000 in past due principal and interest to be paid when the loan matures and factoring in a future rate reduction from 8.9% to approximately 7.5%. We have also converted several clients from adjustable loans to market rate fixed loans.
Our experience so far is that we have seen very few Bank of America sub-prime horror stories, and too many from Countrywide. Also, we have no corporate experience to draw from with Countrywide, as they have never expressed an interest in supporting or being involved with our work through a partnership to improve communities.
We regularly meet with senior management of Bank of America, but have never done so with Countrywide. Again, not interested. Bank of America is a responsible lender and a good home for the seemingly haggled and frustrated borrowers of Countrywide.
At HOPE, we had to ask ourselves with respect to this proposed acquisition: if not Bank of America, then who?
In my view, the relevant issue is how this acquisition will affect homeowners with loans originated, purchased or serviced by Countrywide. Who will hold the existing deposits/accounts, who will collect loan payments, and who will set policies to negotiate requests for home loan modifications?
Bank of America has requested approval to acquire the assets and liabilities of Countrywide and I would prefer that a regulated, controlled and historically responsible institution, Bank of America, control these assets and liabilities. Operation HOPE supports this acquisition by Bank of America.
Frederick D. Smith