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Public Meeting Transcripts

Public Meeting Regarding Citicorp and Travelers Group

Thursday, June 25, 1998

Transcript of Panel Six

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  17               MR. LONEY:  Thank you.

  18               Any other questions from the panel?

  19     If not, it is very interesting.  We thank you

  20     for coming.

  21               Our next panel is Panel Six.  Howard

  22     Sommer, George Schmitz, Eric Powell, John

  23     Ferrandino, Mark Emmert and Howard Banker.

  24               Mr. Sommer.

  25               MR. SOMMER:  Yes.  Are you ready for



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   2     my remarks?  Fine.

   3               I am Howard Sommer.  I am president

   4     and CEO of the New York Community Investment

   5     Company.  I am pleased to have this opportunity

   6     to briefly share with you the activities of the

   7     New York Community Investment Company, commonly

   8     referred to as NYCIC, an investment and loan

   9     fund located in Manhattan and servicing the

  10     capital needs of small businesses throughout

  11     the City of New York, as well as comment this

  12     morning on the important role played by

  13     Citibank in that effort.

  14               MR. LONEY:  Could we have quiet,

  15     please.

  16               MR. SOMMER:  NYCIC was created in

  17     1995 as a New York clearinghouse association

  18     multibank effort to meet the lack of

  19     institutional sources of equity capital and

  20     subordinated debt to the small business

  21     community.  Traditional sources of such funding

  22     venture capital funds, SBICs, and investment

  23     banking firms, almost exclusively focus on

  24     larger companies with relatively high-funding

  25     requirements, and with potential to convert to



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   2     public ownership within a few years.

   3               The overwhelming share of small

   4     businesses, privately owned, with sales of

   5     $500,000 or, perhaps, $5 million, whose funding

   6     need is $100,000 or even $1 million, with no

   7     near-term IPO potential, but with potential for

   8     revenue growth and employment gains, have no

   9     choice but to rely on limited personal funds,

  10     excessive debt levels or, as is often the case,

  11     conclude that they are unable to pursue

  12     expansion opportunities.

  13               This problem is even more acute among

  14     women and minority-owned businesses and those

  15     located in and near the city's low- and

  16     moderate-income areas, as these companies tend

  17     to be smaller, newer, and more

  18     undercapitalized.

  19               A related goal of NYCIC is to provide

  20     similar types of risk capital to nonbusiness

  21     economic development efforts, including private

  22     sector initiatives launched by not-for-profit

  23     groups and other community-based activities

  24     related to fostering entrepreneurial energies.

  25               For the past two-and-one-half years,



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   2     NYCIC has been identifying growing small

   3     companies with a need for patient, risk capital

   4     in the range of $50,000 to $1 million.  We are

   5     close to funding our twentieth deal, pushing

   6     our investment level past the $5 million level.

   7               Equally important is the fact that

   8     NYCIC's moneys have leveraged an additional $8

   9     million in coinvestor and bank support, thereby

  10     causing over $13 million of investment funds to

  11     support New York City's small businesses.

  12               I should also add that close to 80

  13     percent of closed deals were to companies

  14     either women-owned, minority-owned, or located

  15     in LMI census tracts.

  16               Citibank's active role in this

  17     success story has been most impressive.

  18     Citibank's Mary Cosgrove played a pivotal and

  19     leading part during the concept and planning

  20     stages, as evidenced by Ms. Cosgrove's election

  21     to the position of vice chairman.  This

  22     leadership role has been further enhanced by

  23     Citibank's financial support where the bank

  24     participated at the highest of levels of bank

  25     investment at over $1 million.



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   2               Citibank Community Development

   3     continues in an ongoing basis to offer its

   4     financial, creative and personnel resources to

   5     advance NYCIC's mission.  Examples include

   6     referrals of small business clients and

   7     prospects in need of long-term capital and

   8     access to and funding of a variety of NYCIC

   9     sales or marketing activities.

  10               Equally important has been Citibank's

  11     commitment to the spirit of NYCIC's mission.

  12     My personal working experience with

  13     Ms. Cosgrove and other Citibank personnel has

  14     been clearly evidenced by a devotion to the

  15     cause of community development, and in NYCIC's

  16     particular case to the advancement of economic

  17     development throughout the five boroughs of New

  18     York City.  I see I have just a few seconds

  19     left.  Let me consolidate my final comments.

  20               Just coincidentally, more recently I

  21     have had an opportunity to work on a same and

  22     similar mission with the other partner in this

  23     merger, Travelers.

  24               New York State recently passed new

  25     legislation for the creation of certified



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   2     capital companies, where moneys raised from the

   3     insurance industry is to be used to fund, in a

   4     venture capital format, small businesses

   5     throughout the State of New York.

   6               Without hesitation I can tell you

   7     that without the efforts of Travelers Insurance

   8     Group and the Salomon Smith Barney Group we

   9     would never have been successful raising $30

  10     million to be used to support investment

  11     activity for small businesses within the City

  12     of New York and surrounding areas.

  13               Thank you for your time.  I hope

  14     these comments have been helpful.

  15               MR. LONEY:  Yes.  Thank you for

  16     providing them.

  17               Mr. Schmitz.

  18               MR. SCHMITZ:  Thank you.  Good

  19     morning.  My name is George Schmitz.  I am the

  20     executive director of the Leviticus Alternative

  21     Fund in Yonkers, New York.

  22               Leviticus Fund is a certified

  23     community development financial institution

  24     serving the New York, New Jersey, Connecticut

  25     tristate area.  We offer loans to nonprofit



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   2     housing groups, to women and minority-owned

   3     businesses, and recently we are establishing a

   4     niche as a lender in the childcare industry.

   5               I'd like to begin this morning by

   6     speaking of the positive impact that Citibank

   7     has had in the world of CDFIs and, in

   8     particular, to loan funds.

   9               Leviticus Fund is one of 43 members

  10     of the National Community Capital Association,

  11     most of whom are regional or national loan

  12     funds.  Citibank was among the first financial

  13     institutions to recognize the role that CDFIs

  14     play in the delivery of financial services in

  15     underserved geographic areas to nonprofit

  16     community-based organizations and to women and

  17     minority entrepreneurs.

  18               Citibank encouraged the NCCA to help

  19     its members define and conform to industry

  20     standards consistent with its community

  21     development mission and then committed $1

  22     million to provide equity grants to the member

  23     funds.  Citibank has subsequently made an

  24     additional $1 million funding commitment to the

  25     NCCA.  The second commitment is structured in



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   2     such a way that it increases the leveraging

   3     capability of NCCA and its member funds.

   4               I believe that Citibank, particularly

   5     through its community development unit, has

   6     shown an eagerness to support a variety of

   7     community development efforts, a willingness to

   8     try looking with community development

   9     organizations and community development

  10     financial institutions as to their needs and,

  11     most importantly, Citibank has demonstrated

  12     flexibility and creativity in striving to help

  13     us meet these needs.

  14               Having outlined my very positive

  15     personal impressions, I will tell you that my

  16     personal experience in working with the

  17     Citibank Community Development staff has been

  18     excellent.  Citibank and Citibankers have

  19     provided financial support and valuable

  20     technical assistance to Leviticus Funds.  We

  21     are a stronger organization able to reach a

  22     wider range of community development borrowers

  23     because of our relationship with Citibank.

  24               However, the recent history of

  25     mergers and acquisitions in the banking



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   2     industry does give me pause.  I am concerned

   3     about how these mergers might affect the

   4     delivery of financial services, particularly in

   5     low-income neighborhoods, inner cities, to

   6     minority groups and to immigrants.

   7               I'm aware that the Community

   8     Reinvestment Act has been strengthened in

   9     recent years, but the Community Reinvestment

  10     Act does not apply beyond the banking industry.

  11               I believe that we'd all be better

  12     served if CRA could have a wider reach; in

  13     particular, if CRA could be applied in other

  14     areas of the financial services industry, in

  15     particular to the insurance industry, to

  16     investment brokerage firms, to mutual funds,

  17     and even FCRA could have stronger clout with

  18     some of the GSEs, particularly Freddie Mac.

  19               It is my hope that as the Travelers

  20     Group and Citicorp form Citigroup that Citibank

  21     may play a leading role, as it has in the past,

  22     in educating other sectors of the financial

  23     services industry about the important role that

  24     community development organizations play in our

  25     day-to-day lives.



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   2               I welcome the recent announcement of

   3     the ten-year $115 billion commitment to lending

   4     and investing in low-income and moderate-income

   5     communities and to small businesses.  I look

   6     forward to continuing a positive relationship

   7     with Citigroup, and I anticipate further

   8     dynamic and creative initiatives that will

   9     challenge other financial institutions over a

  10     range of industries to follow suit.

  11               I also hope that many of the issues

  12     that arise around this merger would also

  13     challenge Congress and the regulatory agencies

  14     to relook at the Community Reinvestment Act and

  15     its impact.

  16               Thank you very much.

  17               MR. LONEY:  Thank you.

  18               Mr. Powell.

  19               MR. POWELL:  Good morning.  My name

  20     is Eric Powell, and I currently serve as the

  21     vice president, director of finance, for the

  22     New York City Housing Partnership.  I am

  23     formerly the executive director for the New

  24     York Mortgage Coalition.

  25               The New York City Housing Partnership



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   2     is a national leader in housing development and

   3     advocacy.  Since 1982, the Housing Partnership

   4     has developed more than 13,000 homes in 50

   5     neighborhoods across New York City.  Working

   6     with the government, community groups for

   7     profit developers and banks, the Partnership

   8     Housing programs have transformed city

   9     neighborhoods and resulted in private

  10     investment totalling nearly $1 billion.

  11               The New York Mortgage Coalition is a

  12     five-year organization administered by the New

  13     York City Housing Partnership.  The coalition

  14     is a consortium of eleven lenders and eight

  15     not-for-profit community-based organizations

  16     providing home ownership counseling to low- to

  17     moderate-income communities throughout New York

  18     City, Long Island and Westchester.

  19               The New York City Housing Partnership

  20     has had a positive working relationship with

  21     Citibank for several years.  Citibank has been

  22     a leader, among leading institutions, in its

  23     commitment to affordable housing and community

  24     development initiatives.

  25               In 1994, Citibank established a $1



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                                                                195
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   2     million line of credit to provide low cost

   3     loans for minority builders, contractors and

   4     subcontractors, working in the Housing

   5     Partnerships, New Homes, and Neighborhood

   6     Builders programs.

   7               These loans have enabled small

   8     businesses, enterprises owned by minorities and

   9     women, to gain access to credit and to benefit

  10     from business opportunities generated by

  11     Partnership developments.

  12               Citibank has also provided nearly $17

  13     million in construction loans for several

  14     Housing Partnership developments, including 147

  15     two-family homes at Soundview Village in the

  16     Bronx, five two-family homes in Elmhurst,

  17     Queens, and 31 units at Lakewood Gardens in

  18     South Jamaica, Queens.

  19               This year Citibank is expected to

  20     provide nearly $17 million in construction

  21     financing for 216 units in the Saratoga Square

  22     section of Brooklyn.

  23               In addition, Citibank has provided

  24     permanent mortgage loans for partnership home

  25     buyers in several developments.  The



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                                                                196
   1

   2     partnership has also benefitted from Citibank's

   3     involvement in the Neighborhood Entrepreneurs

   4     program which helps locally-based property

   5     managers renovate and acquire city-owned

   6     buildings.

   7               Citibank has provided loans totalling

   8     nearly $53 million for the rehabilitation of

   9     more than 600 neighborhood entrepreneur units

  10     in Brooklyn, the Bronx and Harlem.

  11               Earlier this year Citibank awarded an

  12     $80,000 grant to the Housing Partnership's new

  13     initiatives program, which administers the

  14     working-capital loans for neighborhood

  15     contractors in both the New Homes and

  16     Neighborhood Entrepreneurs program, and

  17     provides technical assistance to program

  18     participants.

  19               Under new initiatives, the Housing

  20     Partnership is working with the U.S. Department

  21     of Housing and Urban Development to preserve

  22     federally-assisted affordable housing units.

  23               Citibank has been an active partner

  24     in the New York Mortgage Coalition.  As a

  25     member of the New York Mortgage Coalition,



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                                                                197
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   2     Citibank has helped the New York Mortgage

   3     Coalition Group provide free purchase

   4     counseling to prospective home buyers in New

   5     York City, Long Island and Westchester.

   6               The bank offers attractive,

   7     affordable housing loan products with low

   8     downpayment and low interest products.  It also

   9     offers flexible financing for two- to

  10     four-family homes, and provides support for

  11     outreach and community group seminars for

  12     first-time home buyers.

  13               Recently Citibank awarded the New

  14     York City Housing Partnership $4,000 as a part

  15     of its community summer intern program.  With

  16     funds from this program, the partnership will

  17     hire an intern to work as an assistant project

  18     manager in the New Homes program.

  19               In closing, our partnership with

  20     Citibank has helped us achieve our mission of

  21     creating affordable housing and assisting local

  22     communities in realizing the benefits of

  23     economic development.  We anticipate the

  24     following approval of its merger with Travelers

  25     Group, Inc.



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                                                                198
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   2               Citibank will remain an active

   3     part -- at least we expect Citibank to remain

   4     an active partner in support of the New York

   5     City Housing Partnership as well as the New

   6     York City Mortgage Coalition.

   7               Thank you.

   8               MR. LONEY:  Thank you, Mr. Powell.

   9               Mr. Ferrandino.

  10               MR. FERRANDINO:  Thank you.  Good

  11     morning.

  12               My name is John Ferrandino.  I am the

  13     vice president for the National Academy

  14     Foundation and the national director of the

  15     Academy of Financing at the National Academy

  16     Foundation.

  17               The National Academy Foundation is a

  18     not-for-profit educational organization that

  19     combines the knowledge and experience of

  20     education, business, and government leaders to

  21     better prepare young people in high school for

  22     their future.

  23               The National Academy Foundation uses

  24     a model that involves career academies -- which

  25     are theme-based schools -- within schools



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                                                                199
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   2     across the country that provide young people

   3     with the experience and opportunity to combine

   4     a curriculum that is industry validated with an

   5     internship in the financial area, the financial

   6     field, or other fields related to it.  As these

   7     partnerships take place in forming academies,

   8     it is critical to understand that these are

   9     located throughout the country and mostly in

  10     the urban centers of the country.

  11               The first academy, in the area of

  12     finance, opened in Brooklyn in 1982 with 35

  13     students.  As of September 1998, the National

  14     Academy Foundation will have nearly 300

  15     academies in finance, travel and tourism, and

  16     public service in 33 states across the

  17     currently, plus the District of Columbia.  In

  18     just three years, projections say that we will

  19     have over 500 academies in all 50 states.

  20               Through its extensive outreach and

  21     expansion, we are on the forefront of the

  22     school-to-work movement.  It is a focus of and

  23     model for reform within American education.  Of

  24     the more than 20,000 students who have gone

  25     through the academies, at the present time it



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                                                                200
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   2     is estimated that 65 percent have been

   3     identified as being at risk of dropping out of

   4     school due to their socioeconomic

   5     circumstances.  Over 65 percent of these

   6     students are also identified as being young

   7     people of color.

   8               The Travelers Group and Sandy Weill

   9     have served as the key factor in the growth and

  10     development of the National Academy Foundation,

  11     from one Academy of Finance in 1982 to a

  12     national leader in the school-to-career

  13     movement.  Roundly acknowledged as the founder

  14     of the Academy of Finance, Mr. Weill has played

  15     a major role with the Travelers Group in making

  16     sure that this program has grown.

  17               It is of important interest to

  18     understand that academies of finance, which

  19     were designed by educators as a replicable

  20     model appropriate for various industries and

  21     geographic regions, with measured benefits to

  22     young people, teachers, schools, and the

  23     corporate community at large.  With this

  24     win-win proposition in place, the academy model

  25     has grown rapidly, with broad corporate support



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   2     nationally.

   3               At the present time the Travelers

   4     Group and its subsidiary companies provides

   5     leadership in the following areas:  There are

   6     over 250 to 300 summer internships provided

   7     across the United States, 100 of which are in

   8     New York City.  There are members of the local

   9     advisory board in every major city of the

  10     country represented by various components of

  11     the Travelers Group.  And in addition to that,

  12     there is major corporate funding that goes into

  13     providing scholarships and direct support for

  14     curriculum-enrichment activities and other

  15     kinds of growth activities for young people in

  16     the country.

  17               From 1990 to the present, the

  18     Travelers Group has donated over 4.5 million to

  19     the National Academy Foundation which has

  20     helped to support the development of

  21     computerized, industry-validated curriculum,

  22     comprehensive staff development programs, and

  23     technical assistance and quality assurance from

  24     the national staff.  This academy program has

  25     been acknowledged nationwide and is now being



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   2     developed to pursue the various other parts of

   3     the urban communities of our country.

   4               In addition to the support provided

   5     to NAF's national activities, the Travelers

   6     Group and its subsidiaries, local offices, and

   7     employees, and the Travelers Foundation

   8     sponsors paid internships, scholarships, grants

   9     to local programs and other services that

  10     directly impact the education and improve the

  11     lives of the young people involved in the

  12     National Academy Foundation programs.

  13               In the New York City area alone, as I

  14     said, there are a hundred student interns.

  15     Together Salomon Smith Barney and the Copeland

  16     Companies -- both Travelers Group

  17     subsidiaries -- provide business advisory board

  18     leadership, paid internships and scholarships

  19     for Academy of Finance students in nearly every

  20     major city of the United States.

  21               Employees from all of these companies

  22     go into classrooms on a regular basis and

  23     discuss with students the future of the

  24     financial services industry and provide direct

  25     content instruction as part of their community



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   2     involvement.

   3               The Travelers Foundation makes grant

   4     funding available to every Academy of Finance

   5     across the country that demonstrates it has

   6     involvement from Travelers Group employees.

   7               While Travelers Group has made a

   8     significant contribution to the National

   9     Academy Foundation and the Academy of Finance

  10     as an individual corporation, its impact on

  11     broadening the base of NAF's support to more

  12     young people has been one of its greatest

  13     contributions.

  14               Under the leadership of Mr. Weill,

  15     who is chairman of the board of directors of

  16     the National Academy Foundation, a base of

  17     support has expanded to include the CEO of

  18     Merrill Lynch, the CEO of Prudential

  19     Securities, the CEO of Bloomberg Information

  20     Services, and the CEO of McGraw Hill companies.

  21               These additional companies coming on

  22     board and becoming partners with the National

  23     Academy Foundation have allowed us to grow and

  24     make sure that every young person who is

  25     involved in the program has access to paid



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                                                                204
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   2     internships during the summer that are

   3     educational, experiential within the industry,

   4     and provide young people with career

   5     opportunities for the future.

   6               At the present time, 90 percent of

   7     all the students who have graduated from the

   8     academy programs have gone on to post-secondary

   9     education.  As the Academy of Finance student

  10     population has grown, we presently have 70

  11     percent of these young people are of color and

  12     over 60 percent are female.

  13               In conclusion, I know that this

  14     merger will bring together two major forces

  15     that will continue to support the growth and

  16     development of American urban education.

  17               Thank you.

  18               MR. LONEY:  Thank you,

  19     Mr. Ferrandino.

  20               Mr. Emmert.

  21               MR. EMMERT:  I am Mark Emmert, the

  22     chancellor of the University of Connecticut,

  23     and I'd like to thank you for the opportunity

  24     to testify today in this public meeting.

  25               I'd like to specifically speak to the



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                                                                205
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   2     record of the Travelers Group as a corporate

   3     partner in its manifestation of corporate

   4     responsibility and its relationship with the

   5     University of Connecticut and its support of

   6     education and community development in the City

   7     of Hartford in the State of Connecticut.

   8               The University of Connecticut is the

   9     flagship of the Connecticut State higher

  10     education system, with specific

  11     responsibilities for enhancing social, cultural

  12     and educational environments of the state.  As

  13     well as its core mission as an educational

  14     institution, we have to worry a good deal about

  15     economic development of our communities and how

  16     we are participants in that development.

  17     Fulfilling this multifaceted mission requires

  18     us to seek out and join with mutually-supported

  19     partners, such as the partnership that exists

  20     with the Travelers Group and the University.

  21               Let me briefly describe some

  22     manifestations of this partnership.  Earlier

  23     this year the University and Travelers

  24     announced a major agreement under which

  25     Travelers has donated over 30,000 square feet



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                                                                206
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   2     of space in Travelers Education Center in

   3     downtown Hartford to the University for three

   4     years.

   5               The Travelers Education Center has

   6     now given the University a high-quality urban

   7     location from which we offer courses and

   8     programs that enhance the vitality of downtown

   9     Hartford.  This space also permits the

  10     University to expand our educational activities

  11     into Connecticut's urban centers, which were

  12     heretofore impossible for us to do.

  13               Under the Education Center agreement

  14     with Travelers, we are now able to offer

  15     undergraduate and general studies courses,

  16     courses on information systems and operations

  17     management, and MBA level coursework.  We have

  18     just also decided to offer our masters of

  19     science in accounting program at the Education

  20     Center.  And in this way we are able to use

  21     educational resources more effectively and to

  22     serve larger and more diverse populations than

  23     we could have otherwise.

  24               The University and Travelers are also

  25     working together to promote the business



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                                                                207
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   2     education -- excuse me -- to promote the

   3     education of talented high school students from

   4     inner city Hartford through the continuing

   5     support of the Academy of Finance, which we

   6     just heard so nicely described.

   7               There are two high schools inside the

   8     Hartford community that are involved in the

   9     Academy of Finance, as well as the University,

  10     in this partnership.  The University is now

  11     also matching the scholarship commitments

  12     supported by an endowment that Travelers has

  13     provided for a Travelers' scholarship fund by

  14     offering tuition scholarships to Academy of

  15     Finance graduates that attend the University of

  16     Connecticut.

  17               These most recent actions on the part

  18     of Travelers are an extension of the

  19     University's long history of partnership with

  20     the company.

  21               Travelers has supported numerous

  22     other programs at the University of

  23     Connecticut.  Its nearly $2 million in

  24     contributions to the University -- beyond the

  25     recent Education Center donation -- include the



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                                                                208
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   2     Travelers Chair in Geriatrics and Gerontology

   3     at the Health Center, continuing support for

   4     the Travelers Center on Aging, at all of our

   5     campuses, scholarships, and a variety of

   6     contributions to the University's Research

   7     Foundation to assist faculty efforts in high

   8     school writing programs, in math and science

   9     laboratories, in corporate training, small

  10     business development, our pharmacy school, and

  11     evaluation of tutorial programs for Hispanic

  12     students.

  13               I am pleased to testify to Travelers'

  14     well-defined and productive sense of corporate

  15     responsibility toward higher education and to

  16     underline the positive impact it is having on

  17     higher education and community development in

  18     Connecticut.

  19               Let me end by responding to what I

  20     believe was an assertion that I heard earlier

  21     today, that those testifying in support of

  22     Travelers or Citicorp are a direct or indirect

  23     beneficiary of their largess.  On behalf of the

  24     students and faculty and communities who we

  25     serve and who have been supported through



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                                                                209
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   2     Travelers philanthropy, I plead guilty.

   3     Indeed, I hope to be guilty for many years to

   4     come of being a recipient of the largess of

   5     these corporations.

   6               Thank you very much.

   7               MR. LONEY:  Thank you, Mr. Emmert.

   8               Mr. Banker.

   9               MR. BANKER:  Thank you and good

  10     morning.  We appreciate the opportunity to

  11     describe and to disclose Citibank's support of

  12     the Low Income Housing Fund, of which I am the

  13     program manager for New York.

  14               LIHF is a 14-year-old national

  15     community development lending institution.  We

  16     have made loans in about 19 states, about $135

  17     million in originations and packages, and I

  18     need to describe a little bit more about LIHF

  19     to properly put into perspective the support

  20     Citibank has rendered.

  21               Our mission is to address problems

  22     created by lack of capital in low-income

  23     neighborhoods by acting as a link between

  24     community-based development organizations,

  25     capital markets, and other sources of financing



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   2     and support.  Our goal, since our creation in

   3     '84, is to increase capital for low-income

   4     communities, primarily by providing funding for

   5     low-income housing and community facilities at

   6     affordable rates and terms.

   7               Our work has contributed to the

   8     creation of almost 14,000 units of housing, and

   9     77 percent of our financed projects serve very

  10     low-income individuals, families or supportive

  11     housing persons, and 20 percent target

  12     low-income families.  So LIHF's name is, in

  13     fact, clear and true in that we seek to finance

  14     the very lowest income, individuals and

  15     families, throughout the projects around the

  16     country that we provide financing for.

  17               Since our inception, Citibank has

  18     provided $715,000 in capital grants from four

  19     banks and affiliates, primarily, they are a

  20     California Savings Bank affiliate, but also

  21     made loans to us from their affiliate in

  22     Nevada, in the mid-Atlantic regions, with fixed

  23     loans in Washington, D.C.  So they have

  24     supported us around the country and have

  25     accepted packaged loans of approximately $4.7



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   2     million.  That is the second largest loan

   3     packaging agreement we have with any lender.

   4               The key to the capital grants for the

   5     Low Income Housing Fund is, over two-thirds of

   6     our operating budget comes from fees and

   7     interest spread, and so capital grants are

   8     critical not only to fund, in an ongoing way,

   9     projects we see before us, but to allow us to

  10     not have to compete with our borrowers for

  11     scarce operating support.

  12               So a capital grant is a better

  13     approach to working with the Low Income Housing

  14     Fund than an administrative grant.  Although,

  15     Citibank has provided about $65,000 in

  16     administrative grants in New York and

  17     California.

  18               It is the policy of the Low Income

  19     Housing Fund, some might say cleverly, to

  20     neither support nor argue against nor provide

  21     for CRA challenges to the lender.  We seek to

  22     act as a true intermediary between the

  23     development, nonprofit development communities

  24     and lenders.  We do that by making loans.

  25               Citibank has been a supporter of the



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   2     Low Income Housing Fund since its inception.

   3     Before we had a $10 million fund balance.

   4     Before our balance sheet didn't look like much

   5     of anything at all, and that is difficult to

   6     quantify, but it is clear to say that their

   7     support has been long-standing, far-reaching

   8     and not in a single approach.

   9               We thank you.

  10               MR. LONEY:  Thank you, Mr. Banker.

  11               Any questions from the panel?

  12               If not, then I will thank the panel.

  13               We are scheduled to take a break

  14     until 12:50 for lunch.

  15               (Luncheon recess)

Last update: December 3, 2010