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Urban Reinvestment by Bank of America

Posted to MichiganNow.org on Thursday, May 29, 2014

2 way radio interview between Chris McCarus and Matt Elliott May 29, 2014.

CMC: Matt Elliott, President of Bank of America in Michigan. We are at the Grand Hotel. What are you working on here?

Elliott: I’m working on trying to connect what we do in our daily lives and also in the community to what needs to be done to help make Michigan a better place and help improve the financial lives of our customers and communities.

CMC: Bank of America around the country and in this state is one of the banks that has dirt on its hands from the financial crisis of 2008.

Elliott: We work on what we can control. When it comes to housing we have done over 40,000 loan modifications since the beginning of the crisis. We’ve done lots of home donations: over 850 properties to various land banks around the state to combat blight.

CMC: Recently Bank of America had suffered financial losses in quarterly earnings. Is that correct?

Elliott: It was an adjustment to our regulatory capital ratios for a regulatory filing. It wasn’t necessarily a loss. There have been losses from the mortgage crisis that are well documented. But the good news is that it hasn’t impaired our ability to invest in the state. We’ve generated over a half billion dollars of loans to small business over the last two years, many of whom are in Southeast Michigan.

Elliott: We have raised over $150 billion of capital for the auto industry globally since this crisis began.

CMC: This is the Detroit Regional Chamber Mackinac Policy Conference. That includes people from the City of Detroit that is 80% African-American. Many of those folks had sub-prime mortgages. What is Bank of America doing to change the negative effects of that sad story?

Elliott: We try as much as we can to help homeowners stay in their homes. One of the best ways to do that is talk to someone face to face. We have two customer service centers in Southeast Michigan. One is in the Guardian Building downtown. That allows the homeowner to come in with the paper work they have and have a face to face conversation with somebody. More often than not they’re able to walk out that day with an answer. That helps them get back on the road to a modification so they can stay in their home. That’s better for the home owner first and foremost. It’s better for the community and for us.

CMC: When this banking crisis began in 2008 what did the federal and state government require big banks like Bank of America to do to help struggling homeowners?

Elliott: The rules that have been laid out are meant to provide relief to homeowners struggling to make their payments and stay in their homes. That has led to loan modifications and in some cases short sales or deed-in-lieu of foreclosure. So that assistance has been offered by all the banks that have joined the various settlements. In addition to that we continue to work with homeowners even if there is no federal program involved. If it’s the right thing to do and we can do it we will.

CMC: What statistics do we have about the number of foreclosures going down?

Elliott: The foreclosure inventory is going down. I don’t have the current statistics. I can tell you that we are less active in our customer assistance centers. That tells you there still are troubled homeowners out there. Make no mistake about it. But there are fewer today than there were 2 or 3 years ago.

CMC: Do you have any numbers in your head from 2-3 years ago?

Elliott: I don’t but I think the foreclosure and delinquency rates were probably double where we are today. We see an improving trend with homeownership and broadly in the economy.”

CMC: The auto industry is bailed out by the federal government. The economy (in Michigan) picks up. Some people are starting to forget that there was a banking and real estate crisis. We see a lot of building and construction out in the far suburbs of our cities which could be a repeat of the mistakes that led to the banking crisis of 2008. What is Bank of America’s plan to be wiser this time?

Elliott: I think the lending and investing environment is different this time compared to others. I have been in the industry 20 years. While I think the lending environment is more liberal than it was and more advantageous to homeowners and other borrowers it’s not at the same level it was pre-crisis. We’ve got a couple projects within the city worth noting: the Broderick Tower and the Whitney Building, both of which, especially Broderick, were started during the crisis. It became a framework for other developers to use for redeveloping the urban core of Detroit. This was going on before companies like Quicken Loans moved downtown. That framework has been duplicated elsewhere. There are a lot of projects coming on line.

CMC: Can you describe the strategies and name percentages of reinvesting in the cities instead of the suburbs?

Elliott: I can tell you there is more energy than I’ve ever seen around development in the city. From a commercial point of view it’s started downtown and in mid-town. But it’s expanding outwards. M-One Rail will really help that. We’re an investor in that.

CMC: How much money has Bank of America put into M-One?

Elliott: We’ve donated $250,000 to date. And as time goes on we’ll see where we go with that.

CMC: That’s out of a project that is a total of $140 million.

Elliott: That’s true. But our contribution was in line was other organizations of our size. We weren’t there to try to invest the full project cost. There were other sources of capital for that. But from our point of view the biggest element is that the redevelopment that occurs along a light rail line done in an urban area is significant for at least a mile in each direction. We think that’s a great start for redeveloping the city.

CMC: That message though becomes political. The state attempted to create an authority 24 times to allow the suburbs and the city to build a regional transit system. They have now created the authority but it’s very slow and not effective. People still point to the politicians mainly in Oakland County as being the problem.

What would you suggest politicians and voters do?

Elliott: I think the alignment we have between the city and suburbs that you see at this conference is more of what we need. It comes down to having a shared vision for what the region can become. I think increasingly, all over the state and not just Southeast Michigan, that there is the belief that it’s important to have a strong Detroit in order to have a strong state. If you start there, usually that alignment leads to good things.

CMC: Next Wednesday June 4 at the Detroit Zoo some colleagues are putting together a conference on Business Leaders for Transit. Have you heard about it?”

Elliott: I have not.

CMC: Perhaps you can go.

CMC: What is the business case for mass transit in Detroit.

Elliott: The business case for mass transit is that if we want everybody to have an opportunity to participate on the economic playing field they have to be able to get to work. Mayor Duggan said yesterday that hundreds of thousands of people rely on the bus system everyday in the city and it’s under capacity. You start there and add M-1 Rail and then tie it together with the RTA it begins to work better for the citizens of the region.

CMC: Matt Elliott you live in Oakland County?

Elliott: I do.

CMC: What would you be willing to do as a resident to make this happen?

Elliott: It comes down to what the ask is. I want to be part of it personally and also as an organization we want to be part of the solution.

CMC: Let’s say you have a $200,000 house and the ask is to pay another $200 a year on your taxes just for mass transit.

Elliott: Again, that’s one of those hypotheticals you have to evaluate in the context of what the actual situation looks like. I would imagine we will all be dealing with questions like that when it comes to water, when it comes to transit in the future.

See Paul Childs of M1 and his presentation to the Regional Transit Authority Board April 23.

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Paul Childs, CEO of M1 Rail, after his presentation to SEMCOG April 23, 2014. The organization's office is on the 14 floor of 1001 Woodward. The conference room is at left.

Paul Childs, CEO of M1 Rail, after his presentation to SEMCOG April 23, 2014. The organization's office is on the 14 floor of 1001 Woodward. The conference room is at left.

Matt Elliott, President of Bank of America for Michigan at Mackinac Island, May 29, 2014. The home in this photo is next to the Grand Hotel. Most of the property on the Island has been in the hands of families for generations. It is unlikely that this one was caught up in the banking and mortgage crisis of 2008.

Matt Elliott, President of Bank of America for Michigan at Mackinac Island, May 29, 2014. The home in this photo is next to the Grand Hotel. Most of the property on the Island has been in the hands of families for generations. It is unlikely that this one was caught up in the banking and mortgage crisis of 2008.

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