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Bank of America – The Making of a Model Partnership
Seeking a mutually-beneficial partnership
On Monday, October 2, 1995, the day before a NACA action at a First Union stockholder meeting, Bruce Marks, NACA’s CEO, called NationsBank CEO Hugh McColl, Jr. NationsBank had a reputation for shaking up its industry, and NACA was looking for a lending partner who was ready to make a serious commitment to its revolutionary mortgage program. McColl had an eye for organizations that could produce results and invited Marks to meet with him that same day.
Both NACA and NationsBank went into the meeting with skeptical attitudes. Although NACA had a mortgage product that was both affordable to working people and a good proposition for a lender, Marks stated that McColl probably wouldn’t be interested since bankers cared about nothing except profit maximization. McColl responded that while 80% of NationsBank’s operations were aimed at profit maximization, 20% of their business was community oriented. If NACA’s programs were as good as Marks claimed, NationsBank would become NACA’s largest partner.
NationsBank staff spent the next few weeks reviewing NACA’s programs, both in Boston and other locations. They were impressed and rated NACA ‘level A’ for services and operations. When NationsBank and NACA sat down to further negotiations in Charlotte, NACA insisted that neither its mortgage product nor process be modified. NationsBank agreed and announced a $500 million commitment to NACA’s homeownership program on December 18, 1995–only two and one-half months after Marks and McColl’s original meeting.
The Bank of America partnership blossoms
This partnership has become more successful than either party imagined. NACA was impressed with the true commitment shown by NationsBank staff to strengthen and grow the relationship. In 1999, NationsBank, now renamed Bank of America, undertook to make a landmark $350 billion investment in community lending. It looked to NACA to place $3 billion of those loans. The overwhelming achievements of the partnership were revealed by a study of its customers, which can be summed up in three statistics:
- 99.75% of the borrowers are living in their homes and making payments,
- 97% reported satisfaction with the NACA program, and
- 98% said they would use Bank of America again.
This partnership has continued to grow and flourish. NACA’s advocacy against predatory lending led to a call from Hugh McColl. He requested a meeting between Bruce Marks, himself and Ken Lewis (future Bank of America CEO). At that meeting, Hugh McColl and Ken Lewis committed Bank of America to divest from their subprime lending operations through Nations credit. This would be completed within two years. NACA agreed and committed to work with Bank of America outside of the public spotlight to accomplish this. Not only was Bank of America good to its word, but they also divested Equicredit which they acquired as part of their acquisition of Barnett Bank.
When Bank of America purchased Fleet in 2003, the first community organization they met with was NACA. Due to the success of the NACA and Bank of America partnership and their desire to expand the scope of the program, the commitment was increased to $6 billion. Ken Lewis announced this huge commitment at NACA’s headquarters. This was televised live nationwide with hundreds of NACA members, community leaders and bankers in attendance.
Due to NACA, Bank of America is not burdened with a subprime lending operation like those that are currently devastating borrowers and many lenders. NACA put Fleet Finance out of business with its aggressive confrontational advocacy and worked outside of the spotlight with Bank of America to accomplish a similar divestiture.
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