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Cities, banks share common interest: Bank America CEO.

Cities and banks share the same community interests and must work together to meet the needs of citizens in the 90s and beyond, Bank of America CEO Richard M. Rosenberg told delegates at a Sunday luncheon address.

"Our link is based on a fundamental reality--that banks can only be as successful as the cities in which they do business...and that cities cannot grow and prosper without the resources of strong, healthy banks," he said.

A plan proposed by incoming NLC president Glenda Hood, to create a partnership between a corporate advisory council and NLC was lauded by Rosenberg as a way to explore possibilities for "developing new approaches to old problems."

Rosenberg then offered itemse for the agenda, citing three primary objectives: policy reform, partnerships, and new perspectives.

Policy Reform

Calling policy reform the most important aspect, Rosenberg said, "Nothing short of a comprehensive reform of our current banking regulations will allow our industry to reach its full competitive potential--and develop the kind of resources that can contribute to vital healthy communities." To achieve that goal, Rosenberg believes true nationwide banking with interstate branching must be allowed as stated in amendments to the McFadden Act and that banks must be allowed to compete in the financial services marketplace.

Rosenberg pointed out that the United States, according to an editorial in The New York Times, is the only industrial nation which keeps its banks out of the securities and related financial industries. "Asking Congress to bring banks in the 21st Century might be too much, but why not into the 20th," the editorial questioned.

Banking reform need not signal the end of banking competition, Rosenberg said. He suggested that instead, expanded powers would "actually lead to stronger and more effective regulatory controls," and above all, choices.

Large, well capitalized banks benefit communities primarily through municipal finance and community development, according to Rosenberg. He told delegates of a recent Bank of America venture in Nevada which will make available $18 million in loans for affordable housing projects over the next three years. Rosenbergy said the venture was planned to create "a comprehensive community lending program commensurate with our expanded presence in the state."

Ronseberg is concerned about the scarcity of affordable housing in this nation, but optimistic about the ability of banks and cities to assess the current situation and move forward to solve the problem. He calls on city governments to rethink their often prohibitive construction and related fees which can drive up the cost of housing.

Partnerships

Rosenberg called for "partnerships that redefine the relationship between banks and cities ... cities and community groups ... and community groups and banks." This will require "expanding transactional relationships into consultive relationships where banks add value by bringing technical expertise and non-traditional resources to the table."

Bank of America is doing several things to make this a reality in the communities where it does business. In San Francisco, the bank has a senior executive assigned to the Mayor's Fiscal Advisory Committee at city hall. HE works on a pro bono basis in consultation with the committee on a broad range of issues.

Rosenberg's bank also has created an investment securities policy "that has become a model for municipal treasurers across the country looking for low-risk, common sense investment strategies."

Perspective

Rosenberg says Bank of America learned the lesson of perspective the hard way. The bank was in a crisis situation five years ago. "One of our early problems was that we just did not believe we could be as bad as our losses and sliding earnings seemed to indicate.

Bank of America learned from the ompetition and decided to become better than their competitors. To do that, the bank's leadership had to take a hard look at themselves and try to become the type of company it would choose to invest in.

"City leaders may benefit from the strategy. If Bank of America had to ask whether, as an investor, we would invest in our own business, the equivalent question for a civic leader might be: 'Would the voters vote to pay taxes for this program?' If the answer is 'no,' perhaps it is time for a change.
COPYRIGHT 1991 National League of Cities
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Copyright 1991 Gale, Cengage Learning. All rights reserved.

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Title Annotation:Richard M. Rosenberg of the Bank of America
Author:Ryder, Julianne Ryan
Publication:Nation's Cities Weekly
Date:Dec 16, 1991
Words:694
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