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Public Meeting Transcripts

Public Meeting Regarding Citicorp and Travelers Group

Friday, June 26, 1998

Transcript

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   8
        PUBLIC MEETING REGARDING CITICORP AND TRAVELERS
   9                        GROUP

  10                FRIDAY, JUNE 26, 1998

  11                     NEW YORK CITY

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   2               (8:00 a.m.)

   3               MR. LONEY:  If we could begin,

   4     please.  I want to welcome you all to this

   5     public meeting.  This is a continuation of the

   6     public meeting that we are holding on the

   7     application by Travelers Group to acquire

   8     Citicorp.

   9               Yesterday we held a meeting here.  We

  10     had approximately 90 witnesses, and I think it

  11     was a very useful exercise for everyone

  12     involved.  I am confident that today's meeting

  13     will be useful as well.

  14               Let me first introduce myself.  I am

  15     Glenn Loney, Deputy Director of the Division of

  16     Consumer and Community Affairs of the Federal

  17     Reserve Board in Washington D.C.  I am the

  18     presiding officer for this meeting.

  19               Our other panelists today, to my

  20     immediate left Scott Alvarez, Associate General

  21     Counsel from the Board's legal division, and to

  22     his left is Jim Hodgetts, Senior Vice President

  23     from the Federal Reserve Bank of New York, and

  24     to his left is Barbara Kent, who is Acting

  25     Deputy Superintendent of the Consumer Services



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   2     Division of the State of New York Banking

   3     Department, and we are particularly happy to

   4     have the State of New York Banking Department

   5     represented here today.

   6               We are here today because Travelers

   7     Group of New York has applied for the Federal

   8     Reserve's approval to acquire Citicorp, also in

   9     New York.

  10               When the Federal Reserve system

  11     considers one of these applications, we look at

  12     a number of factors under the Bank Holding

  13     Company Act.  These include financial issues,

  14     managerial issues, competitive issues and the

  15     convenience and needs of the communities

  16     affected.  In doing so, we are particularly

  17     looking at the record of performance of the

  18     parties under the Community Reinvestment Act.

  19               The Community Reinvestment Act

  20     requires the Board to take an institution's

  21     record of meeting the credit needs of its

  22     entire community into account.

  23               In addition, the transaction also

  24     involves the proposed acquisition or retention

  25     of nonbanking companies engaged in activities



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   2     permissible for bank holding companies, as well

   3     as a proposal to divest or otherwise conform a

   4     number of other activities that are not

   5     permissible for bank holding companies under

   6     current law.

   7               With respect to the proposal to

   8     conduct permissible nonbanking activities, the

   9     Board also must determine whether conducting

  10     the proposed nonbanking activities can

  11     reasonably be expected to produce benefits to

  12     the public that outweigh possible adverse

  13     effects, such as undue concentration of

  14     resources, decreased or unfair competition,

  15     conflicts of interest, or unsound banking

  16     practices.

  17               The purpose of today's meeting is to

  18     receive information regarding these factors,

  19     and we are very pleased that you have all been

  20     willing to come and testify in our public

  21     meeting.

  22               Over the two days we will have had

  23     over 120 witnesses, representing varying groups

  24     or speaking on their own behalf at these

  25     meetings.  Let me make a few remarks about the



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   2     procedures.

   3               This is what is called an informal,

   4     public meeting.  Members of the panel, those of

   5     us up here, may ask the people who are

   6     testifying questions about their testimony in

   7     this kind of a forum.  This is not a formal

   8     administrative hearing, so we are not bound by

   9     rules regarding evidence, cross-examinations,

  10     and some of those formal trappings of that kind

  11     of a proceeding.

  12               We will be here for a full morning

  13     and, as you see from the agenda, we need to

  14     stick to that schedule very rigorously in order

  15     to give everyone a chance to say what they

  16     would like to say.  We are going to ask the

  17     people today to help us stay on schedule.  The

  18     panels will be expected to keep within their

  19     allotted time, so please be mindful of the

  20     needs of others.

  21               We have a very dramatic, and as it

  22     turned out at yesterday's meeting, an effective

  23     timekeeping system that you will see from the

  24     first row will help people keep on target in

  25     terms of their timing.  The timekeepers, the



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   2     lady sitting in the middle of the front row,

   3     will give you a signal when you have two

   4     minutes left to speak and another signal when

   5     your time is up.

   6               Thank you all for coming.  There may

   7     have been some individuals who haven't had a

   8     chance to sign up in advance, and to the extent

   9     possible we want to give them a chance to speak

  10     as well.

  11               At the end of the meeting, we will

  12     throw the mike open to anyone who would want to

  13     make a presentation at the end of the time,

  14     time permitting.

  15               Witnesses may submit a written

  16     supplement to the oral testimony by July 2 and

  17     then the record for this matter will be closed.

  18               Any written supplements must be

  19     received by close of business at 5 p.m. on July

  20     2 and directed to Jennifer J. Johnson,

  21     Secretary of the Board, Board of Governors of

  22     the Federal Reserve System, Washington D.C.

  23     20551.  You may fax your submission to area

  24     code 502-457-3462.

  25               Also, if you haven't turned in copies



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   2     of your written testimony or if you have any

   3     other written statements to put in the record,

   4     please leave them with the Federal Reserve Bank

   5     staff at the registration table outside.  It is

   6     important that we get this material for the

   7     record.

   8               The transcript of the meeting will be

   9     available by June 30 for the June 25 meeting

  10     yesterday, and by July 1 for the June 26

  11     meeting today to the Federal Reserve Bank of

  12     New York.

  13               In addition, the official transcript

  14     will be available by close of business on June

  15     29 for the June 25 meeting, and by the close of

  16     business on June 30 for the June 26 meeting on

  17     the Board's website on www.bog.frb.fed.us.

  18               With that, I would like to begin this

  19     morning's proceedings.  The first panel, Number

  20     Seventeen in the agenda is made up of Marie

  21     Nahikian, George McDonald, Freddy Espaillat and

  22     Julie Colon.  If those folks would come

  23     forward.

  24               Ms. Nahikian, is that how you say

  25     your name?



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   2               MS. NAHIKIAN:  That's right.

   3               MR. LONEY:  Will you begin for us,

   4     please.

   5               MS. NAHIKIAN:  Certainly.  I do have

   6     copies, which I can either give you now.

   7               MR. LONEY:  You can leave it at the

   8     table out front.

   9               MS. NAHIKIAN:  The Queens County

  10     Overall Economic Development Corporation, which

  11     was created in 1978, has a central focus --

  12               MR. LONEY:  Excuse me.  Could you

  13     move the mike closer to you, please.

  14               MS. NAHIKIAN:  The Queens County

  15     Economic Development Corporation has a central

  16     focus to increase economic opportunity for the

  17     residents of Queens County, and this really

  18     requires Queens County to maintain multiple

  19     roles in the economic life of an area that is

  20     probably the nation's most diverse area in

  21     population and has a population equal in size

  22     to the fourth largest city in the United

  23     States.

  24               Our mission could not be met without

  25     close working relationships with sources of



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   2     national and international capital.  We work

   3     with over 75 financial institutions, and how we

   4     work with these institutions is probably best

   5     summed up in one word, and that is that we

   6     sell.  We sell Queens neighborhoods, locations,

   7     businesses, residents as essentially good

   8     investments.  And the interest in our sales

   9     pitch, so to speak, varies, but one fact is

  10     critical, and that is that the financial's

  11     institutions listen much more closely since the

  12     passage and the strengthening of the Community

  13     Reinvestment Act.

  14               The matter before the Board this

  15     morning, the acquisition of Citicorp by

  16     Travelers, speaks somewhat to our concerns and

  17     our hope.  Citicorp and its affiliates, such as

  18     Citibank, has worked closely with Queens County

  19     for the past ten years.  We've been fortunate

  20     in having the direct participation of Citibank

  21     in much of our work, and this work has taken

  22     the form of Citibank employees who were civic

  23     leaders, provide leadership within the county

  24     itself, who live in Queens County, but also

  25     more directly in lending to small business



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   2     clients.  As a financial supporter, we have

   3     enjoyed Citibank philanthropic support and

   4     providing technical assistance, particularly

   5     around issues of how to structure real estate

   6     investment.

   7               The question that is posed for this

   8     acquisition is harder.  After listening to

   9     community developers, which Citibank I think

  10     does very well, the question is, would there be

  11     action?  And action is another way of defining

  12     the purpose of this public hearing.  What

  13     actions had been taken or are proposed to be

  14     taken to meet the credit needs of our

  15     community?

  16               We have very little experience with

  17     the Travelers Group.  The issues of the

  18     availability of insurance products and the

  19     cost/risk analysis that seems to always produce

  20     higher premiums in a place like Queens County

  21     is well-known.  One hopeful note, however, we

  22     believe that the Travelers Group can learn from

  23     Citicorp:  Investing in our communities is a

  24     good business and profit does not need to come

  25     from higher costs charged for a perception of



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   2     higher risk.

   3               More information is needed about the

   4     potential for a bank holding company to conduct

   5     nonbanking activities.  If access to affordable

   6     products is available as a result of this

   7     relationship, these nonbanking activities could

   8     produce significant benefits to our community

   9     For example:  Investment health and retirement

  10     products for nonprofits and specific groups of

  11     individuals; local recruitment for training and

  12     employment opportunities.

  13               The other part of the question is,

  14     will there be a strategy to invest the $6

  15     billion increased commitment by Citicorp in

  16     community development?  So far Citibank's

  17     participation has been significant.  The

  18     commitment to increase lending and support for

  19     community economic development from the current

  20     level of $136 million to $6 billion over the

  21     next ten years should mean that the impact will

  22     be even larger.  The commitment is a major

  23     challenge, and we have encouraged that

  24     implementation strategies with the community

  25     development partners must begin immediately.



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   2               In order to move $6 billion into

   3     community development over the next ten years,

   4     I think Citicorp has realized that it requires

   5     increased resources, staff and support, to move

   6     those kinds of commitments.

   7               We urge the strategy to include the

   8     use of community development intermediary and

   9     technical assistance providers which have a

  10     knowledge of local communities.  It is the only

  11     way we'll ever seen the resources in Maspeth,

  12     in Cambria Heights or on Sutphin Boulevard,

  13     which I should just footnote has already been

  14     supported by Citicorp.

  15               I think it is important, one final

  16     concept, that there be created an investor

  17     environment.  Over the last 15 years, as you

  18     all well know, we have seen a major change in

  19     how affordable housing gets financed in this

  20     country.  In New York City alone, thousands of

  21     units have been created.  The reason why is

  22     because there was an economic concept of

  23     creating value in the marketplace, where none

  24     previously existed by coupling investment with

  25     tax credits is a strategic way of rebuilding



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   2     and revitalizing communities.

   3               This has allowed investors to analyze

   4     a different way of analyzing return and has

   5     mitigated the traditional discussion of

   6     underwriting risk.  I can remember trying to

   7     structure some of the very early tax credit

   8     deals with some of Fannie Mae's very early

   9     investments with banks in Philadelphia, and we

  10     weren't even sure what those investments should

  11     look like, but the same economic concept needs

  12     to be used.

  13               The same economic concept must be

  14     used in economic development.  Small business

  15     owners, and particularly minority and

  16     women-owners rarely have the luxury of

  17     considering an investment.  Most financial

  18     institutions cannot mitigate the risk of

  19     lending to startups or when an operation needs

  20     to grow and expand.

  21               So hopefully the combination of the

  22     Travelers and Citicorp, with Travelers' history

  23     in investment, will bring about a different

  24     kind of risk analysis that includes

  25     nontraditional equity, such as labor, family



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   2     cosigners or intellectual property, developing

   3     a secondary market for small business loans,

   4     using a pooled risk concept, and, finally, the

   5     possibility of providing leadership for

   6     federal, state and local tax credits, and to

   7     create value in small minority-owned businesses

   8     in our neighborhoods will make a huge

   9     difference.

  10               Is the $6 billion commitment enough?

  11     The answer is no.  Is it significant?  Yes.

  12     The only correlation I can draw is that Queens

  13     County is a 60-percent owner of a shopping

  14     center, one of the first built in the Hollis

  15     neighborhood in Queens.  We've received about

  16     $200,000 in income from the ownership, net

  17     income from the ownership of this shopping

  18     center as a limited partner.

  19               Recently the corporation made a

  20     commitment to invest $25,000 in the Queens

  21     Access Neighborhood Fund with two premises.

  22     One, it can be used to be invested or loaned as

  23     risk and, two, that it would be a magnet to

  24     pool other funds.

  25               Is $25,000 significant in that



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   2     neighborhood?  No.  But the way that money is

   3     structured is significant because it could be

   4     used for the risk and because it represents

   5     almost 15 percent of the total net income on

   6     that project.

   7               I think that those kinds of

   8     guidelines in looking at the notion of making

   9     an investment in a community versus just

  10     lending products to a community could make a

  11     dramatic difference in how the $6 billion

  12     increases.

  13               Thank you very much.

  14               MR. LONEY:  Thank you.

  15               Mr. McDonald.

  16               MR. MCDONALD:  Thank you for the

  17     opportunity to testify this morning.  I gladly

  18     volunteered to testify before you today

  19     regarding the many years of support that

  20     Citibank has offered The Doe Fund, which I am

  21     the president and founder of, and the

  22     confidence I have that Citibank will continue

  23     its commitment to our work well after the

  24     merger with Travelers.

  25               The mission of The Doe Fund is to



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   2     empower formerly homeless individuals to work

   3     and to realize their potential to live as

   4     responsible, productive and self-sufficient

   5     individuals.

   6               In 1990, The Doe Fund launch Ready,

   7     Willing & Able, an innovative work and job

   8     skills training program which provides homeless

   9     participants with meals, housing, social

  10     services, basic education training and above

  11     all, paid work opportunities.  Since its

  12     inception, the program has helped over 500

  13     individuals to secure full-time employment and

  14     permanent housing and to achieve lives of

  15     productivity and independence.

  16               The Doe Fund's original Ready,

  17     willing & Able residence is located in Bedford

  18     Stuyvesant, Brooklyn.

  19               In 1996, The Doe Fund expanded the

  20     program to the formerly city-operated Harlem

  21     Men's Shelter, and on May 4th of this year, The

  22     Doe Fund launched a Ready, Willing & Able

  23     program in Jersey City, New Jersey.  We also

  24     operate the same program in Washington D.C.

  25               Today The Doe Fund serves over 800



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   2     formerly homeless member and women annually and

   3     Ready Willing & Able stands as a model welfare

   4     to work program for homeless service providers

   5     nationwide.

   6               The success and expansion of Ready

   7     Willing & Able as has been experienced over the

   8     years would not have been possible without the

   9     support and guidance of Citibank.  In 1991,

  10     shortly after The Doe Fund opened the doors of

  11     its first Ready Willing & Able residence, vice

  12     president and director of corporate

  13     contributions, Mr. Paul Ostergard, and several

  14     Citibank colleagues, visited the program.

  15     Impressed by the program's work-based

  16     philosophy and recognizing the great need and

  17     potential among our city's homeless population,

  18     Citibank awarded The Doe Fund a grant of $5,000

  19     and expressed a sincere interest in developing

  20     a relationship with what was then a fledgling

  21     organization.

  22               Since that first visit, Citibank has

  23     provided The Doe Fund with annual grants in

  24     support of our work in excess of $50,000.

  25     Citibank employees also frequently make



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   2     matching gifts to support our work, and one

   3     employee, Ms. Peggy Cohen, a vice president of

   4     private banking, has served on The Doe Fund's

   5     board of directors since 1995.  Ms. Cohen, who

   6     served as chairperson of our board from 1996 to

   7     1997, has tirelessly given of her time and

   8     energy in support of our work.

   9               In addition to financial support over

  10     the years, Citibank has generously provided

  11     banquet rooms in its corporate headquarters for

  12     community and board of director's meetings.

  13     Last spring Citibank hosted a community

  14     breakfast for prospective individuals and

  15     foundation donors which resulted in a grant of

  16     $75,000 from a local family foundation.

  17               Most recently, the Citicorp

  18     Foundation has awarded The Doe Fund a grant of

  19     $10,000 in support of a revenue-generating shoe

  20     making business, Harlem Shoemakers, Inc.  With

  21     the help of internationally renowned shoe

  22     designer, Joe Famolare, The Doe Fund is working

  23     to open a shoe factory in Harlem.  Harlem

  24     Shoemakers will employ low-income Harlem

  25     residents, graduates and trainees of the Ready



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   2     Willing & Able program.

   3               Citibank is currently considering a

   4     $500,000 line of credit for that business.  I

   5     might add parenthetically on lines of credit,

   6     we're a small not-for-profit.  We do about $12

   7     million a year now and have about 150 employees

   8     from none in 1990.  So we grew during a period

   9     of time that was -- we could call it a

  10     depression in the northeast.  And it is very

  11     difficult to get banks to give lines of credit

  12     to not-for-profits.  I went to every bank in

  13     New York City, and the only bank that would

  14     give us the line of credit was Citibank.

  15               Given that relationship, I feel

  16     confident that they will continue to support

  17     our work and grassroots organizations like our

  18     own after they merge with Travelers.

  19               Now, I might say, and I know it is

  20     the not the subject of the hearing today, but

  21     Travelers has been very supportive of our work.

  22     Travelers is a terrific philanthropic company.

  23     We only see good things coming about, as the

  24     merger of these two great companies make for

  25     greater support for our organization.



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   2               Thank you for the opportunity to

   3     testify.

   4               MR. LONEY:  Thank you, Mr. McDonald.

   5               Mr. Espaillat.  Is that how you say

   6     that?

   7               MR. ESPAILLAT:  Yes.

   8               Good morning, ladies and gentlemen,

   9     my name is Freddy Espaillat and I am a graduate

  10     of the Academy of Finance at Brandeis High

  11     School in New York City.

  12               Last summer I had what I felt was the

  13     opportunity of a lifetime --

  14               MR. LONEY:  Could you put the mike

  15     closer to you, please.

  16               MR. ESPAILLAT:  I applied to Salomon

  17     Smith Barney for a summer internship they

  18     sponsor as part of the Academy of Finance

  19     program.  I sent in my resume, was interviewed

  20     for the position and was placed in the high net

  21     worth department at Salomon Smith Barney.

  22               This was my first job in the real

  23     world and everyone at Salomon Smith Barney made

  24     me feel like I was part of the organization.

  25     My supervisor, Tina Monahan, took me out to



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   2     lunch at least once a week and give me many

   3     responsibilities.

   4               I worked on the computer inputting

   5     data into the database.  I updated client

   6     portfolios, and I was included in daily

   7     department meetings.  My internship at Salomon

   8     Smith Barney taught me the value of teamwork,

   9     punctuality, and gave me the ability to network

  10     with coworkers.  I feel all of these things

  11     will help me build a better future.

  12               In addition, I feel that my

  13     internship greatly advanced my computer skills

  14     which will help me when I go either to Barouch

  15     College or DeVry Institute where I plan to

  16     study computer programming and business

  17     management.

  18               I don't believe that I would have had

  19     the opportunity to do any of these things if

  20     Sandy Weill and the Travelers Group did not

  21     create these opportunities for the students in

  22     the Academy of Finance.

  23               In conclusion, I would like to say

  24     that I believe that the expansion of the

  25     Travelers Group will make even more internship



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                                                                454
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   2     opportunities for many more students in the

   3     Academy of Finance.

   4               Thank you very much for the chance to

   5     speak to you today.

   6               MR. LONEY:  Thank you very much.

   7               I can't see that far.

   8               MS. CHIN:  My name is Margaret chin.

   9               MR. LONEY:  You are speaking for

  10     Mr. Galan?

  11               MS. CHIN:  I am speaking on behalf of

  12     Mr. Julie Colon.

  13               Good morning.  My name is Margaret

  14     Chin.  I am the executive director of the Asian

  15     Americans for Equality Fair Housing Center.

  16     I'm also speaking on behalf of our affiliates,

  17     Asian Americans for Equality and Renaissance

  18     Economic Development Corporation.

  19               AAFE is a community-based nonprofit

  20     organization founded in 1974 to advocate for

  21     equal opportunities for minorities.  We are

  22     located in Chinatown, Lower East Side and

  23     Flushing, Queens.  Serving an estimated 20,000

  24     people annually, AAFE's programs and services

  25     include housing development, home ownership,



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   2     housing rights, entitlement services

   3     counseling, citizenship counseling, civil

   4     rights, economic development and technical

   5     assistance.  AAFE has been actively advocating

   6     for greater community reinvestment by banks

   7     since its inception in the '70s.

   8               The AAFE Fair Housing Center conducts

   9     education and outreach, testing and assists in

  10     the filing of complaints in the areas of fair

  11     housing and fair lending to Asian American

  12     communities in all five boroughs.  The

  13     Renaissance Economic Development Corporation is

  14     a federally certified Community Development

  15     Financial Institution, with a loan pool of

  16     approximately $1 million to conduct lending

  17     throughout the five boroughs in concentrated

  18     areas of Asian and Latino immigrant

  19     communities.

  20               Today I would like to make you more

  21     aware of the specific needs of the Asian

  22     community generated by cultural and linguistic

  23     differences, the impact of the Community

  24     Reinvestment Act on the Asian-American

  25     community, specific ways in which CRA can be



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                                                                456
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   2     strengthened to benefit low-income and minority

   3     communities and the recommendation to Citibank

   4     in light of this merger.

   5               Asian-Americans are the fastest

   6     growing population in both the United States

   7     and New York City.  The number of

   8     Asian-Americans in New York City has doubled

   9     from 1980 to 1990 from 3 percent to 7 percent

  10     of the city's population, accounting for nearly

  11     half a million people.  By the year 2,000,

  12     Asians are expected to compose over 10 percent

  13     of the New York City's population.

  14               Today, the diversity of the Asian

  15     community is represented by over two dozen

  16     nationalities, each with its distinct language,

  17     religion and culture, its distinct challenges

  18     and potential.  Two out of three of us were

  19     born in our native countries, and the majority

  20     of those who chose to come here have difficulty

  21     with language and its dominant culture.

  22               The staggering four-fold growth in

  23     the past 20 years of the Asian population has

  24     spawned many challenges in its wake.  The Asian

  25     community lives in one of the most densely



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                                                                457
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   2     populated areas in the nation.  In New York

   3     City's Chinatown, there are 189 persons per

   4     acre.  Other areas of the city have only 37 per

   5     acre.  This density is accurately reflected in

   6     the fact that in Chinatown, two or three

   7     families often live together in a single

   8     apartment.  95 percent of the housing stock in

   9     Chinatown predates 1939, exacerbating the lack

  10     of services and investment by the larger

  11     community.

  12               The Asian community is a savers

  13     community.  The increased population brought

  14     tremendous deposits into banks operating in

  15     Asian-concentrated enclaves.  In Chinatown

  16     alone, the deposits total $4 billion.  But most

  17     banks do not have mortgage officers who speak

  18     Asian languages.  Also, Chinatown landlords are

  19     unable to access affordable financing for

  20     building improvements.  This lack of capital

  21     allows for extensive housing deterioration,

  22     causing dangerous conditions that leads to

  23     fires, deaths and homelessness.  Chinatown's

  24     housing stock is among New York City's oldest

  25     and has some of the most run-down conditions.



.
                                                                458
   1

   2               According to a letter published by

   3     Ming Pao Daily News, this was in 1997, this was

   4     the rate of home ownership, and the Asian was

   5     rated among the lowest in terms of home

   6     ownership rate.  Nationally among whites is

   7     70.8 percent; women at 49.5 percent;

   8     African-American at 44 percent; Latinos at

   9     43.9; and Asian at 42 percent.

  10               AAFE has found that home ownership

  11     rate is an important vehicle for the Asian

  12     community to enter the mainstream society and

  13     to improve local communities.  The lack of

  14     Asian home ownership is caused by a dire lack

  15     of information about home ownership and access

  16     to credit and its related benefits available to

  17     the local communities.

  18               To overcome these obstacles, AAFE has

  19     led a multipronged effort to meet the

  20     challenges of the Asian community.  Our work to

  21     meet the challenges of the language and

  22     cultural barriers has resulted in unprecedented

  23     success, accounting for more awareness and

  24     access to mainstream services.

  25               In 1984, AAFE developed the first



.
                                                                459
   1

   2     ever housing development project to utilize the

   3     federal Low Income Housing Tax Credit program,

   4     launching a public/private partnership that

   5     continues to gain steam today.  In the past ten

   6     years, AAFE has raised over $40 million to

   7     develop 400 units of affordable housing.  Also

   8     working with public and private partnership, we

   9     counsel and access over $5 million of

  10     affordable mortgages for over 500 families.

  11               AAFE has a long history of

  12     partnership with Citibank.  Citibank holds the

  13     largest proportion of AAFE's financial

  14     businesses.  AAFE is one of Citibank's Partners

  15     In Progress, which contributes to AAFE's

  16     housing development on the lower east side.  We

  17     have seen Citibank take a leadership position

  18     in serving the Asian-American community in the

  19     delivery of retail products, but we encourage

  20     Citibank to deeper its commitment to economic

  21     and community development to the Asian-American

  22     community in the New York metropolitan area and

  23     in Citibank's other major service areas.

  24               AAFE looks to continue to work with

  25     Citibank to deepen their investments and



.
                                                                460
   1

   2     activities with the Asian-American and other

   3     immigrant and minority communities.

   4               We recommend, one, focusing on

   5     partnering to provide long-term credit, 30

   6     years versus the typical 10-year term, for

   7     investment in new construction, such as new

   8     in-fill housing throughout on the Lower East

   9     Side.  Today AAFE needs over 10 million in

  10     long-term equity to continue our rate of

  11     development.  More would be needed to meet the

  12     needs, or to spur greater activities on a

  13     national level.

  14               Partnership to spur community

  15     development and home ownership initiatives with

  16     the Asian-American community on a national

  17     level.  Cosponsoring national economic

  18     development summits for the Asian-American

  19     community.  Cosponsoring technical assistance

  20     workshops to increase the development capacity

  21     of community groups.

  22               Partnership with other organizations

  23     and AAFE to create a community advisory group

  24     to provide input directly to Citibank on local

  25     and national issues that affects low and



.
                                                                461
   1

   2     moderate and minority communities.

   3               Provide more multiyear capacity

   4     building grants to stabilize and expand the

   5     work of nonprofit partners who have been forced

   6     to fill the void of shrinking government

   7     resources to spur economic growth in our

   8     communities.

   9               In this time of mega-merger, we

  10     expect Citibank to expand its role in providing

  11     financial services and spurring economic and

  12     community development within the communities

  13     they serve, especially the low and moderate

  14     income, immigrant and minority communities.  It

  15     will be a big challenge but continuing to work

  16     with community groups who understand the needs

  17     can make the difference.

  18               Thank you for the opportunity to

  19     speak today.

  20               MR. LONEY:  Thank you.  I might ask

  21     you, Ms. Chin, have you asked Citibank about

  22     that?  You presented that list of your requests

  23     to them.  Have you gotten a response?

  24               MS. CHIN:  We've been having

  25     discussions with Citibank.  The executive



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                                                                462
   1

   2     director is not here for AAFE, but we do have a

   3     long-working relationship with them, and I know

   4     they support many of our projects, and I think

   5     one of their vice presidents, Wendy Takhaja,

   6     she is on the board of the Fair Housing Center.

   7     So we will be discussing some of this, but we

   8     would like to make the proposal in public.

   9               MR. LONEY:  Any questions?

  10               MR. ALVAREZ:  I had a question for

  11     Ms. Nahikian.  You spoke of the importance of

  12     having both equity investments as well as

  13     credit available for starting small businesses

  14     and revitalizing communities.  If you start

  15     from the premise that banks have very limited

  16     ability to make equity investments, their legal

  17     authority is very limited in that area so they

  18     are primarily lenders, and you look at

  19     Citibank's commitment, or commitments of other

  20     banks that have made similar kinds of

  21     commitments to make CRA kind of lending, what

  22     would, in your view, be the most effective way

  23     that the banks could use their credit abilities

  24     in order to help revitalize the community?

  25     What kind of partnerships are available to



.
                                                                463
   1

   2     bring equity into serve as a base for that kind

   3     of bank credit?

   4               MS. NAHIKIAN:  I raise the issue of

   5     equity or investment because I think the

   6     opportunity with Travelers presents some of

   7     that, perhaps for the first time.  Banks, of

   8     course, do loan money.  That is their function.

   9     I think there are three or four different ways

  10     that credit issues could be addressed.

  11               One is the notion that you have to

  12     view underwriting of small businesses and what

  13     brings value and what can be used as collateral

  14     or equity in a lending situation.  I think that

  15     has to be looked at differently.  I think that

  16     you do have to look at things like family

  17     equity, labor, some of the things that may not

  18     traditionally be on the chart when you try to

  19     value enough equity into a business to support

  20     a loan.

  21               I think another critically important

  22     thing is the creation or working maybe in a

  23     pool-risk situation to create some secondary

  24     markets for small business loans.  I think

  25     everyone recognizes that on one hand small



.
                                                                464
   1

   2     businesses have a high failure rate.  On the

   3     other hand, they are the fastest growing source

   4     of employment in our country.  I think it is

   5     particularly true with minority and women

   6     owners, that because of leadership from some of

   7     our financial institutions and CRA, we are

   8     seeing a number of new businesses and the

   9     business owners get loans.

  10               What we found is that the second loan

  11     is even higher because it falls in a much more

  12     traditional hole of do you have enough equity,

  13     do you have enough operation.  Particularly

  14     women business owners seem to have a very hard

  15     time getting the second line, the expansion,

  16     the growth loan.  Those are some of the

  17     recommendations I would make.

  18               I certainly think that AAFE has made

  19     some excellent suggestions, because I think

  20     that having direct input through an advisory

  21     group will make a big difference.  I'm not sure

  22     that any of us know exactly what these products

  23     look like.  We just know that the risk analysis

  24     doesn't work, but these are strong economic

  25     institutions in our community that need



.
                                                                465
   1

   2     support.

   3               MR. LONEY:  Thank you.

   4               Any other questions?  If not, I will

   5     thank the panel.

   6               (Continued on next page)

   7

   8

   9

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  11

  12

  13

  14

  15

  16

  17

  18

  19

  20

  21

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  23

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                                                                466
   1

   2               MR. LONEY:  I have to adjust the

   3     schedule a little bit.  Our next group will be

   4     comprised of a couple of folks scheduled from

   5     panel 18, and one from panel 19.  I would ask

   6     Jerry Weber and Jane Canner, and Dr. Francois

   7     de Cassagnol to come forward please.

   8               MS. WEBER:  I'd like to thank you for

   9     inviting me here.  I am working, and I am the

  10     director of branch management for The New York

  11     Association for new Americans which is the

  12     largest resettlement agency, refugee

  13     resettlement agency in the country basically.

  14     We have a fifty-year history and we started off

  15     with the resettlement of holocaust survivors

  16     coming from Europe.

  17               We have a really new relationship

  18     with Citibank.  It's approximately two years

  19     old, and I must say that it's a good

  20     relationship because it's a relationship backed

  21     with commitment.

  22               We resettle roughly anywhere between

  23     ten and 15,000 people a year.  Most of the

  24     folks now coming from the former Soviet Union.

  25     We also have settled folks from Vietnam, from



.
                                                                467
   1

   2     Tibet, from Liberia, et cetera.

   3               We also have a very large citizenship

   4     program helping folks who become citizens and

   5     provide legal assistance in that area.  Most of

   6     our costs are absorbed through foundations,

   7     public and private support and some small fees

   8     to cover costs that the INS has in fact asked

   9     to be collected, so we do that.

  10               We are located right down here in

  11     Battery Place, but we work in four of the five

  12     boroughs.  The only borough we do not work in

  13     at this moment is Staten Island.

  14               What Citibank has offered us in terms

  15     of commitment is two things.  One is a vision

  16     of a real commitment to work together to

  17     revitalize the areas and to put some resources

  18     into some parts of Brooklyn where we have a

  19     large number of folks from the former Soviet

  20     Union living, and that's a part of South

  21     Brooklyn.

  22               The other thing that Citibank has

  23     done already, and Mr. McDonough from the Doe

  24     Foundation talked about, you know lines of

  25     credit and so on.  They have been very good



.
                                                                468
   1

   2     about that, and, in fact, have lowered some of

   3     the costs to almost nil, so that we could move

   4     money and work with money, because we do

   5     provide assistance for the first four months

   6     for our clients to keep them off public

   7     assistance.  So it's not only monetary

   8     assistance from the philanthropic community but

   9     we also work very hard to move clients into the

  10     area of self-sufficiency, and, you know I just

  11     need a very quick anecdote here, is that when I

  12     deal with folks who come from the former Soviet

  13     Union, a lot of them their first job is their

  14     last job, and it's a whole different mind set

  15     coming to this country.  It is not your first

  16     job is necessarily your last job.  It's your

  17     beginning.

  18               But where Citibank has been extremely

  19     helpful right now, we are working with them in

  20     the micro enterprise program where we got some

  21     OR grant to do some micro enterprise.  They

  22     have a member one of their vice presidents

  23     sitting on our panel, they are providing

  24     technical assistance for us and you know I very

  25     quickly run that through.



.
                                                                469
   1

   2               The other place they are is matching

   3     up some of our creative folks with SBA loans

   4     giving them technical assistance in how to do

   5     that working through that with them and helping

   6     them any way they can.  Our clients come from

   7     folks who have limited, limited, limited

   8     education, not the folks who are computer

   9     literate to the nth degree, but their whole

  10     computer literacy is main frame, okay, so there

  11     is a transaction there that goes on, I can't

  12     get into the technical end, because you'll see

  13     how computer illiterate I am.

  14               MR. HODGETTS:  I probably wouldn't

  15     notice.

  16               MS. WEBER:  But that in fact is where

  17     we can now nurture some of our people to start

  18     as entrepreneurs into moving up the ladder of

  19     success.

  20               The other area that Citibank is

  21     working with us on is the whole thing of

  22     planning towards the future and working with us

  23     to do some community revitalization, some

  24     economic development, both from a housing point

  25     of view and from a small business point of view



.
                                                                470
   1

   2     so that that community becomes self sufficient

   3     as a whole and becomes dependent upon itself to

   4     survive and I think that's extremely important.

   5               Lastly, their branch in Sheepshead

   6     Bay has a number of folks who are bilingual,

   7     trilingual, we'll name it, who have worked with

   8     our folks in teaching them the banking system,

   9     in helping them through that system, because

  10     one of the things we've done, since we do cash

  11     assistance in the first four months, is we have

  12     used the ATM systems so that checks and money

  13     do not move along, and they have been very

  14     helpful in moving our clients through the steps

  15     and educating them in the whole banking system.

  16     So I thank you for your time.

  17               MR. LONEY:  We thank you.

  18               Ms. Canner.

  19               MS. CANNER:  On behalf of Classroom

  20     Inc., New York City nonprofit organization,

  21     where I'm director of programs, I am pleased to

  22     be here to support Citibank in the work

  23     accomplished through their foundation to

  24     improve communities across the country.

  25               Classroom Inc., has a two-fold



.
                                                                471
   1

   2     mission to engage students in productive

   3     learning experiences that will help them in

   4     their transition to the world beyond school and

   5     to provide teachers with the tools and support

   6     they need to enhance their effectiveness.

   7               To accomplish our mission we create

   8     computer-based simulations of real life

   9     experiences for use by students in middle and

  10     high schools and we provide ongoing

  11     professional development opportunities and

  12     support for educators participating in our

  13     program.

  14               Classroom Inc., is committed to

  15     serving those young people who most need to

  16     believe in a world beyond the school where they

  17     can indeed achieve, and who sadly often have

  18     the fewest resources available to them.

  19     Participating students are afforded an

  20     opportunity too seldom available to our

  21     financially and socially disadvantaged

  22     children, access to technology, and not mere

  23     access, but constructive access through

  24     effective software.

  25               Through our relationship with



.
                                                                472
   1

   2     Citibank we have been able to create

   3     simulations and offer these learning tools to

   4     thousands of teachers and students across the

   5     country.

   6               In 1994, Citibank provided support

   7     for our first banking simulation Chelsea Bank

   8     and subsequently fully funded the development

   9     production of a financial services stimulation,

  10     a course with a community bank which was

  11     completed in 1996.

  12               These banking simulations served to

  13     bring students to a level of financial literacy

  14     and to help them understand the role of the

  15     bank in their community.  They are introduced

  16     to a variety of concepts such as profit and

  17     loss, interest rate, credit worthiness,

  18     mortgages and loans.

  19               The simulations are also designed to

  20     encourage these students to competency that I

  21     have identified by the US Department of Labor

  22     Secretary's Commission on Achieving Necessary

  23     Skills or SCAN competencies, things such that

  24     they will need in the world of work such as the

  25     effective use of resources, the ability to work



.
                                                                473
   1

   2     collaboratively with others and proficiency

   3     with technology.

   4               External resources that has been done

   5     on our work today and on the simulations

   6     provides evidence that they are effective.

   7     Indiana University has been studying students

   8     use of the Chelsea Bank, and has found that

   9     students using it are effectively in the SCAN

  10     skills, and the case studies show that the

  11     students have learned about banking customers

  12     and awareness of the world of work.

  13               At another more recent research study

  14     at the University of Pittsburgh Learning

  15     Research and Development Center has been

  16     studying our financial services simulation

  17     because we're a community bank and they have

  18     reported that it's one of the best simulations

  19     available to use in schools to work programs in

  20     schools, and that it provides many

  21     opportunities for the students to learn and use

  22     a variety of SCAN skills and our own internal

  23     research has corroborated this.

  24               Citibank and the Citicorp Foundation

  25     have helped us position our simulations in a



.
                                                                474
   1

   2     variety of school districts across the country.

   3     With Citibank taking the lead, we have been

   4     introduced into school districts of Las Vegas,

   5     Nevada and Sioux Falls, South Dakota where we

   6     are serving hundreds of middle and high stool

   7     students.

   8               We began our work in Sioux Falls in

   9     1997 and are expanding it there this year and

  10     in Sioux Falls our work has now been embraced

  11     at the state level, and with Citibank's support

  12     we would hope to be expanding there.

  13               We have also begun to look at

  14     partnerships in the States of Florida and

  15     Georgia where Citibank is an active community

  16     member.  In addition, our simulations are used

  17     in areas where Citibank is not our primary

  18     partner, such as in New York City, Philadelphia

  19     the State of West Virginia, Houston and other

  20     places across the country.

  21               We deeply value our relationship with

  22     Citibank and Citicorp Citibank leaders share

  23     our goal for improving teaching and learning in

  24     schools so that students may look forward to a

  25     stable and productive future.



.
                                                                475
   1

   2               We have confidence that Citibank will

   3     continue to play an important role as a

   4     community development financial leader and that

   5     its support will continue as a corporate value

   6     after the proposed merger.

   7               Thank you.

   8               MR. LONEY:  Did I understand you to

   9     say Citibank is not your primary partner in New

  10     York City?  Is that what you said?

  11               MS. CANNER:  No, I'm sorry, I said

  12     they have been the lead role for bringing us

  13     into Sioux Falls and Las Vegas.  They help us

  14     produce the simulations which are in widespread

  15     use in New York City.

  16               MR. LONEY:  Dr. de Cassagnol.

  17               DR. de CASSAGNOL:  Thank you.  I have

  18     provided some information for you all.

  19               I am Dr. Cassagnol.  I'm the founder

  20     and chairman of Dr. Cassagnol Cyber Banking

  21     Group, and Dr. Cassagnol Foundation.  Certified

  22     minority fully centered by the state and some

  23     of the government.  Dr. Cassagnol Foundation is

  24     non-profit, tax exempt, and I have to make it

  25     very clear that we do not seek the contribution



.
                                                                476
   1

   2     of organization or contribution from anybody,

   3     that we doing everything by ourself.  And what

   4     I would like to see, make it very clear that I

   5     support the merger.

   6               I had a long talk with Matthew Lee

   7     yesterday.  I tried to convince him to give me

   8     his blessings, and he had done that.  I could

   9     not convince him to wear the Travelers logo,

  10     but he understands and knows our procedure and

  11     the message we send to these people.

  12               We want to pay for the communities

  13     and some of them do it in a different way. In

  14     my role as a community person, Matthew Lee is

  15     my neighbor and friend, and I'm very happy that

  16     he understands my position that I support the

  17     merger.  He tried to convince me to not to say

  18     that I support Citicorp, because for some

  19     reason he doesn't care that much for Citicorp.

  20               (Laughter)

  21               And I don't know why, but, anyhow, I

  22     told him I support Travelers because I had a

  23     lot of good contact with Travelers.  I have sat

  24     with them, and they have pledged that they work

  25     together with me.  With all fairness to



.
                                                                477
   1

   2     Citicorp, I have never tried to get in contact

   3     with Citicorp, because of the reason that I

   4     have had a lot of contact with other banks and

   5     I have gone nowhere with them, so I try to save

   6     them the aggravation by not being in contact

   7     with them.

   8               The Travelers, I have presented a

   9     huge project to them.  This is one of the

  10     projects to, the vice-president in charge of

  11     property casualty, and that project

  12     incorporates the development of the cyber

  13     village.  In the cyber village we have

  14     everything in it from cyber university on line,

  15     a greeting cards, everything you can find,

  16     cyber view, cyber banking, everything you can

  17     find in a village, but electronically.

  18               I have presented a huge package like

  19     that to them, and we have set up the mechanics

  20     to start working together.  One of the promise

  21     I had to make to Matthew Lee yesterday that if

  22     for any reason that Travelers decided not to

  23     work together with me, to give him a call, and

  24     we'll get our volunteers and go to the

  25     building.



.
                                                                478
   1

   2               I do not plan to do that because

   3     Travelers seems to be, you know, very receptive

   4     to me, to my organization and I plan to work

   5     together with them, and in that way I support

   6     Citicorp.

   7               This is the 21st century project and

   8     I totally believe we have to spend a lot of

   9     time and money in developing that project.

  10     This is the 21st century project, and this is

  11     another opportunity for an organization like

  12     the Travelers to work together, to create the

  13     kind of economic development that probably will

  14     not find people like myself to work with.

  15               This is a unique experience, and what

  16     I would like to happen is to work with me and

  17     create about two thousand jobs, you know, for

  18     the next five, ten years, and I strongly

  19     believe that we can do it, because I only use

  20     commercial hack library and that hack library

  21     can be converted to an unlimited amount of

  22     products, and all we have to do is have people

  23     working together with us to help people like

  24     the people of my Inner City, to make them a

  25     little bit happier, because the frustration and



.
                                                                479
   1

   2     aggravation with them is people are not

   3     listening.

   4               And as you can see the way they take

   5     all the umbrellas yesterday was to catch the

   6     attention of people really making the decision.

   7     Again, that I want to make it very clear that I

   8     support the merger.  Based on my talk with

   9     Matthew Lee yesterday, I don't think because of

  10     me, I don't think he will want me to deal in my

  11     project, and not create the jobs that was

  12     promised to create in the Bronx, so he supports

  13     me and I will ask the Fed in their

  14     consideration not to deny the merger, to give

  15     Travelers and Citibank an opportunity to people

  16     like myself, and create the kind of

  17     opportunities that people like Inner City are

  18     looking for.

  19               And, again, I'm extremely happy to

  20     support the merger.  And then I hope that

  21     anything I can do to help to support those

  22     activities to prevent any delays, because I do

  23     understand people like myself create a lot of

  24     aggravation for some of those people with

  25     Matthew Lee, and I do not want that to happen,



.
                                                                480
   1

   2     the same thing that happened with the state

   3     merger.

   4               We just want to go on and start doing

   5     the work that we need for the community.  Thank

   6     you.

   7               MR. LONEY:  Thank you.  Any questions

   8     of these folks?

   9               MR. ALVAREZ:  I have a question for

  10     Mr. Weber.  In dealing with immigrants -- in

  11     fact, any of the three may want to answer -- do

  12     you deal with a bunch of immigrants in

  13     particular that come from cash based economies,

  14     and they're coming here and beginning to

  15     navigate around the financial system in the

  16     United States, the bank-serving economy, is

  17     there much resistance or difficulty in folks

  18     getting adjusted to a different kind of system?

  19               MS. WEBER:  Yes, especially at the

  20     beginning.  One of the issues is trust of the

  21     institution.  They come from a place where very

  22     honestly without a cash economy they don't

  23     survive.  That's the way they've done business.

  24     That's the way they've done business for

  25     generations, and it's something that we have to



.
                                                                481
   1

   2     work with, and explain and we do a whole thing

   3     on acculturation, and part of that is to move

   4     along and to teach people gradually the system

   5     and how it works for them, and that they can

   6     trust the system.

   7               And, remember, you got folks who came

   8     off the plane.  You know, years ago you'd come

   9     off the boat.  But now you got folks coming off

  10     the plane with the same fears.  They don't know

  11     how to get from the airport to where they're

  12     going, and they don't know how to get on the R

  13     or the N.  So, you know, we start at that

  14     point.  We meet them at the airport.

  15               And, you know, I would say two months

  16     of or three months of trauma, you know,

  17     depression.  You know, they've left an

  18     environment they're very comfortable with.

  19     Many of them have been forced to leave and

  20     they're coming here.

  21               Now, it's a little better there

  22     because there are relatives here now that take

  23     them in, but it takes a lot of getting used to.

  24     And, you know, if you come to our offices from

  25     the first to the fourth month you will see it



.
                                                                482
   1

   2     in the dress, how they dress when they first

   3     come here and how they slowly become Americans

   4     in their dress and some of their gestures even

   5     within that short period of time, but, yes, it

   6     is an issue.

   7               MR. HODGETTS:  I have a question of

   8     Dr. Cassagnol.  You believe that the merger

   9     will result in increased community development

  10     activity in the South Bronx?

  11               DR. de CASSAGNOL:  The only way the

  12     merger can resolve in increased economic

  13     activities in the Bronx is for people like the

  14     Travelers and Citicorp to work with people like

  15     myself.

  16               MR. HODGETTS:  More than they do

  17     today?

  18               DR. de CASSAGNOL:  Well, I don't

  19     want, I look at Travelers as a friend, and I do

  20     not want to say anything to challenge them or

  21     to challenge Citicorp, but what I would like to

  22     see or what people like Matthew Lee and other

  23     community activists would like to see, is for

  24     us to get involved in creating things for

  25     ourself creating jobs.



.
                                                                483
   1

   2               We do not need $5,000, you know,

   3     contribution a year for the community.  We

   4     don't need that.  We need to create the

   5     mechanism to develop jobs in the community and

   6     people like myself can be a link between these

   7     people and Travelers or Citibank, but it is, as

   8     I indicated in some of my writings, it is

   9     impossible to be in a community like New York

  10     City, almost 57 percent minorities and not

  11     doing anything for this group, and saying that

  12     we're doing something for the community.

  13               You don't have to be a rocket

  14     scientist to understand that.  You cannot

  15     increase community activities by not getting

  16     people like myself and other people get

  17     involved in creating those jobs.

  18               I have a huge amount of resources

  19     that I can help creating those jobs.  It has

  20     been impossible for some of the banks to work

  21     together with me for one reason or the other.

  22     They will say, well, these affairs, you know,

  23     we cannot do this, we cannot do that, and we

  24     are hurting people.  Like these people

  25     yesterday with the red umbrellas, they are



.
                                                                484
   1

   2     hurting.  Their aggravation is to trying to

   3     catch people's attention and I think in my

   4     position the resources that we have we can

   5     create that link between them and Travelers.

   6               If Travelers work with me, continue

   7     working, because it pays to work with me, with

   8     all fairness to Citicorp, I have never get in

   9     contact with them, so I cannot give, but if

  10     they put their heads together, work together

  11     with me, I have provided information to

  12     Citicorp people, some of the vice presidents --

  13     Ms. Pamela is here?  She is there.

  14               I provided information to her.  I

  15     provided information to them.  I provided thick

  16     package like that to the Travelers' people.

  17     All they have to do is find the mechanism to

  18     work together with me and create those jobs and

  19     we can only develop an activity, but it is not

  20     going to happen if you don't work with people

  21     like myself, it's not going to happen.

  22               It's just like a dream, and that will

  23     have to be fulfilled myself or people like

  24     myself.

  25               MR. HODGETTS:  Thank you.



.
                                                                485
   1

   2               MR. LONEY:  Thank you very much.

   3               I understand from panel 19 scheduled

   4     for 9 o'clock we have Robert Sanchez, Carmelo

   5     Loran and Truda Cleeves Jewett.  Would you come

   6     up, please.

   7               MR. LONEY:  Mr. Sanchez, will you

   8     begin with the panel, please?

   9               MR. SANCHEZ:  I'm Robert Sanchez and

  10     I own United Business Forms, we're printers in

  11     Long Island City.  I'm also vice-chairman of

  12     the National Hispanic Business Group.

  13               Now, part of our mission at the

  14     National Hispanic Business Group is we seek to

  15     expand opportunities to our members by

  16     fostering a dialogue in economic exchanges with

  17     corporate America, about a year ago we reached

  18     out to the Travelers Group, and found them

  19     very, very accommodating.  They met with us.

  20     As a matter of fact, they nominated someone

  21     from our Hispanic Corporate Achiever Award and

  22     then they, most importantly, facilitated a

  23     luncheon meeting with an executive from their

  24     purchasing department with some of our

  25     executive committee members.



.
                                                                486
   1

   2               So the point of my testimony this

   3     morning was that we found the Travelers Group

   4     to be on the right page as far as fostering

   5     economic development in the Hispanic community.

   6     The national Hispanic business group feels all

   7     we need is an opportunity to open the door a

   8     little bit and we'll do our job and get

   9     business in corporate America.

  10               That's the basis of my testimony this

  11     morning.

  12               MR. LONEY:  Thank you Mr. Sanchez.

  13     Mr. Loran.

  14               MS. LORAN:  Thank you.  Good morning.

  15     I represent the Occupation Training

  16     Institution.  We are a non-profit organization

  17     based in the Bronx.  We provide vocational and

  18     educational training to adults and youth,

  19     specifically youths from the Bronx where I

  20     live.

  21               The reason I'm here today is to

  22     really testify in favor of the merger between

  23     Travelers group and Citicorp.  We've been

  24     involved with Citicorp in expanding our

  25     operation.  The Citicorp services our parent



.
                                                                487
   1

   2     company, and two years ago became its own

   3     entity to the division and the entrepreneurship

   4     of the executive director and the board of ESS.

   5               We identify Citicorp Bank as one of

   6     our bankers to be able to help us expand our

   7     program.  Due to the fact that we provide

   8     vocation training in the auto mechanic field

   9     which is a very diverse field, and a very

  10     lucrative field for those individuals who have

  11     a mechanical aptitude.

  12               Citibank through its effort to the

  13     Community Revitalization Act came to us and

  14     provided us with assistance to assist us in how

  15     best to serve our need, and reinforce our

  16     philosophy of strengthening the community.

  17               As some of our panelists have spoken

  18     in the past in terms of revitalizing the

  19     community, I think Citibank has a sensitivity

  20     that needs to be, I think, recognized here

  21     today that they help in strengthening the

  22     infrastructure.  How can a bank or any other

  23     entity provide services if individuals are

  24     unemployed?

  25               They see that as a first step in



.
                                                                488
   1

   2     trying to provide help to the community.  We

   3     provide the vocational training and the job

   4     placement.  Then the Citibank helps them of

   5     course with the banking services of course and

   6     maybe they are now available to take out loans.

   7               Citibank has been working with me to

   8     provide us help with the business plan and

   9     other areas.  We are in a 24 month process to

  10     purchase city land and build a structure

  11     multicertification in academic training within

  12     the central Bronx, which is the industrial

  13     park.  Right now we're located in the annex

  14     area and we are also expanding part of the

  15     operations into the Hub and 129th Street.

  16               I know questions were asked of one

  17     other panelist.  I will say that Citibank has

  18     been sensitive to the community needs

  19     specifically in the Bronx.  We provide services

  20     to residents in all five boroughs.  I look

  21     forward to working with Citibank.  I have not

  22     worked with Travelers Group, but I know in the

  23     marriage between Citigroup and Travelers if

  24     Citigroup educates Travelers in some of the

  25     needs to the community and be more sensitive to



.
                                                                489
   1

   2     the need I believe that the merger will help

   3     not only these businesses, but also the

   4     community.  Thank you very much.

   5               MR. LONEY:  Yes, Ms. Jewett.

   6               MS. JEWETT:  Thank you.  Thank you

   7     for asking me to testify today.  I am Truda

   8     Jewett, the assistant executive director of the

   9     Childrens Aid Society here in New York City.

  10               Childrens Aid is one of the oldest

  11     and largest social service agency in this city.

  12     It's been here for 145 years.  It serves more

  13     than 120,000 children and their families each

  14     year with a budget of about $45 million this

  15     year.

  16               We could not survive without

  17     government help, without individual help,

  18     without corporate and foundation help.  We've

  19     been fortunate, I think in that we've had the

  20     good fortune to be involved in what is now all

  21     the Travelers Group.  We've had less, really

  22     less involvement with Citicorp, but between

  23     Travelers starting with Primerica, Salomon,

  24     Smith Barney and Citicorp, I think in the last

  25     few years those organizations have contributed



.
                                                                490
   1

   2     more than $500,000 to Childrens Aid Society.

   3               That money had gone specifically for

   4     child care and for education.  Interesting, all

   5     of them have been particularly interested in

   6     these two very important issues here in the

   7     city.

   8               Perhaps as important, if not even

   9     more important than the financial support is

  10     the leadership that this represents, and by

  11     that I mean physically the leadership from

  12     Mr. Weil and his wife, Mr. Diamond and his

  13     wife, Mr. Denim from Salomon and his wife, and

  14     Mr. Coleman and his wife from Smith Barney.

  15               Between those individuals, their

  16     friends and employees, they have contributed

  17     more than $1.5 million in the last two years to

  18     the Childrens Aid Society.

  19               This leadership by example I think is

  20     something that's very important in the

  21     community, and while we haven't had the close

  22     involvement with Citicorp, I can only hope that

  23     that would increase with this merger so that I

  24     support it.

  25               MR. LONEY:  Thank you, Ms. Jewett.



.
                                                                491
   1

   2     Do we have any questions of this panel?

   3               MR. HODGETTS:  Mr. Loran, does

   4     Citibank have a lending or investment

   5     relationship with your organization or with

   6     your graduates?

   7               MS. LORAN:  The parent agency that's

   8     referred to currently has their business bank,

   9     business account with Citibank, and we haven't

  10     reached the next level because of the fact that

  11     as I said before, we've just begun the creating

  12     of OCI, and we're looking more into eventually

  13     in trying to receive more funding.

  14               What I hope to do is we are in

  15     October of this year starting a program for

  16     youth in the Bronx, and to incorporate banking

  17     and budgeting, that hopefully the Citibank will

  18     help us in terms of that.  Thank you.

  19               MR. HODGETTS:  Thank you.

  20               MR. LONEY:  Are there any other

  21     questions?  If not, I will thank the panel for

  22     coming.

  23               Let me just ask the audience, Lloyd

  24     Williams, Cary Sanchez, or John Defano?  Are

  25     any of them in the audience?  If not, we're



.
                                                                492
   1

   2     scheduled for a break, and we're early for that

   3     break, but since the folks who were scheduled

   4     to testify aren't here, I think we have no real

   5     choice but to take the break.  We'll come back

   6     at the next panel scheduled for 9:40.

   7               (Recess) up low piece?

   8               My name is Lillian Rodriguez Lopez

   9     and I serve as the acting president of the

  10     Hispanic Federation, a membership organization

  11     representing the Latino human services sector

  12     in New York, and New Jersey.

  13               I am pleased to have been given this

  14     opportunity to address you about the proposed

  15     merger.  I can speak with authority about the

  16     philanthropic activities of Citibank, and its

  17     impact in the Hispanic community as well as

  18     Citibank's commitment to economic development

  19     in New York City neighborhoods.

  20               Citibank was one of our first

  21     supporters and has remained a supporter since

  22     our inception in 1990.  Our partnership has

  23     resolved around the collection and analysis of

  24     data on Latinos that serves to promote a

  25     greater understanding of our social, economic,



.
                                                                493
   1

   2     and political roles in the city.  They have

   3     helped us to share with the larger community,

   4     our dreams, our aspirations, and our reality.

   5     Citibank has supported the publication of

   6     Hispano-Stats, one of our yearly publications

   7     for the past three years.

   8               With Citibank assistance, we

   9     distributed over ten thousand copies of our

  10     first Hispano-Stats, which presented a

  11     demographic and economic profile of Latino New

  12     Yorkers.  We still receive requests for the

  13     inaugural Hispano-Stats from elected officials,

  14     funders, students and many of our member

  15     agencies.

  16               Our second edition of Hispano-Stats

  17     helped interpret the political strength and

  18     potential of the Hispanic community in 29 New

  19     York City neighborhoods, and the third one

  20     which we'll be issuing shortly will profile

  21     Hispanic institutions providing services to

  22     communities throughout the State of New York.

  23               This I say just to illustrate

  24     Citibank's commitment to a better understanding

  25     of the Hispanic community in New York.



.
                                                                494
   1

   2     Citibank has also been committed to

   3     strengthening the economic fiber of the Latino

   4     community.  Three years ago, Hispanics in

   5     northern Manhattan joined together to create an

   6     economic development institution dedicated to

   7     growing neighborhoods and assisting Hispanic

   8     and Dominican with small business.

   9               Citibank has been a partner in this

  10     enterprise and today, the Audubon Partnership

  11     for Economic Development grows stronger.  Just

  12     one month ago the empowerment zone awarded to

  13     the Audubon Partnership, a three quarter

  14     million dollar grant to help Dominican

  15     merchants in this area.

  16               This is a fine accomplishment for

  17     such a young nonprofit organization.  I could

  18     share much more with you about Citibank, but my

  19     time is limited.  I just want to say that they

  20     have been a very strong supporter of the

  21     Hispanic community.

  22               MR. LONEY:  Thank you.

  23               (Continued on next page)

  24

  25



.
                                                                495
   1

   2               MR. LONEY:  Thank you.  I would just

   3     say to the panel, if you have written testimony

   4     and you want to make sure it all gets in, leave

   5     a copy with the registration desk in the front;

   6     the entire statement will be put in the record.

   7               Ms. Middleton.

   8               MS. MIDDLETON:  Good morning and

   9     thank you for affording me this opportunity to

  10     speak before this panel.  My name is Shirley

  11     Middleton, and I am the founder of WLM Bridge

  12     the Gap Family Day Care, which was established

  13     to provide professional, educational, and

  14     affordable childcare services in a safe and

  15     motivating environment.

  16               As for our children and their

  17     families, our broad range and comprehensive

  18     program addresses these changing needs that

  19     help our clients to maintain human dignity to

  20     be functional and productive members of

  21     society.  We provide job training development

  22     and offer entrepreneurial training to the

  23     family day care providers and new small

  24     business operators and home businesses.

  25               Bridge the Gap Family Day Care



.
                                                                496
   1

   2     network has established a relationship and a

   3     commitment with Citibank to support our

   4     community entrepreneurial and economic training

   5     program.  They have supported these programs

   6     and others through grants, and they have been

   7     mainstays of our board of directors.

   8               Citibank has been servicing our

   9     community through a joint effort for the past

  10     two years, for the past two-and-a-half years.

  11     We have trained approximately 60 family day

  12     care providers in developing their business as

  13     a professional business, who now have had

  14     access to opening up a business account with

  15     the proper credentials.

  16               The staff of Citibank assists with

  17     the training of the providers, helping the

  18     providers to develop business plans; also, in

  19     terms of how to report their quarterly taxes;

  20     setting up payrolls; and, also, assisting them

  21     in opening up the business account that will

  22     suit their business; also, they have training

  23     in PC Banking; and, also, they have helped with

  24     the credit plans of these providers; and they

  25     have had seminars on mortgages and commercial



.
                                                                497
   1

   2     buying.

   3               Bridge the Gap supports the merger of

   4     Citicorp and Travelers Insurance to become one.

   5               We, the members of the Bridge the

   6     Gap, hope for the merger because change must

   7     come within all our lives.  We do not agree

   8     with their past servicing, servicing of the

   9     minority communities across this land.  We will

  10     not quote statistics because it is all in the

  11     record.

  12               To go forward, we believe history is

  13     a lesson we all must learn from.  History keep

  14     us from making the same errors over and over.

  15     History has posed to us many opportunities;

  16     some have been partially implemented and some

  17     have not been acknowledged.  We all have a

  18     history, but we were not a part -- it was not a

  19     part of our lives.  Many changes came about by

  20     war, enslavement and cheating.  No matter what

  21     the methods used, history remains on the

  22     record.

  23               Today and the future is what we are

  24     addressing going into the new millennium.

  25     Although we support the merger of these two



.
                                                                498
   1

   2     financial institutions, we put before you this

   3     day the following proposal:

   4               Let us begin by developing a

   5     community business consultant group that will

   6     be directly involved with the local community

   7     small businesses and home businesses; also, to

   8     have staff or members from this financial group

   9     to be able to be a part of the small business

  10     not-for-profit board, in terms of helping them

  11     in managing their business for the first five

  12     years of operation, because doing business in

  13     the first five years, for one who does

  14     not-for-profit business development -- to have

  15     the team review with the businesses, and

  16     seminars, how to maintain good records, tax

  17     reporting, business accounts, reviewing their

  18     books every three months -- this will provide

  19     the kind of support for the business to go on

  20     and not become a failing business and here we

  21     are again in trouble.

  22               Instead of always giving us loans to

  23     start up a business, provide many startup

  24     business grants instead of loans, as I said

  25     before.  Because this creates problems; we



.
                                                                499
   1

   2     start out with a loan and we end up in a hole.

   3               We also would like partnerships to be

   4     developed with the various programs of our

   5     community, educational programs, between

   6     Citibank, also, economic development programs

   7     within our community.

   8               The other thing, instead of giving

   9     students loans all the time, let us develop

  10     some kind of grant or scholarship for students,

  11     at least for the first two years, so when they

  12     graduate from college they will owe 25,000 and

  13     30,000 before they get a job.

  14               As we outlined in this partial

  15     proposal, we challenge you to be committed to

  16     all of the minority communities across the

  17     land.  Once again we get into classifying

  18     minorities, Afro-American women, and who knows

  19     better but myself and as a single parent.

  20               Thank you for allowing me this

  21     opportunity.

  22               MR. LONEY:  Thank you, Ms. Middleton.

  23               Ms. Johnson-Claxton.

  24               MS. JOHNSON-CLAXTON:  Good morning.

  25     My name is Grace Johnson-Claxton.  I am the



.
                                                                500
   1

   2     president of Johnson Home Care Services.  We

   3     are a nursing agency that places nurses in the

   4     home.

   5               Citibank has been very instrumental

   6     in assisting us in our payroll and also in

   7     helping us to acquire larger headquarters.

   8     They also have assisted us in making available

   9     different opportunities for our employees, like

  10     direct deposit, and give an offering to our

  11     employees, mortgages at a lower rate, and car

  12     loans.

  13               I enjoy a very positive relationship

  14     with my bank, bank manager -- her name is Kathy

  15     Wheeler -- and also with my personal banker

  16     whom made the request for me to be here today,

  17     Gus Patraco.  I am very grateful to the support

  18     and help that the bank had given to me.

  19               My credit line they have increased,

  20     and, as I said, that assisted me very much with

  21     my payroll because many a nights before the

  22     credit line -- and the business keep, you know,

  23     burning up on the cash flow -- we had to divest

  24     to meet our payroll.  That has really afforded

  25     me to have good sleep at night.  It has given



.
                                                                501
   1

   2     me that assurance, because the payroll, it's

   3     very much a headache for a small business.

   4               One of the things that I appreciate

   5     that Citibank have done, many banks have been

   6     known to not want to deal with minority women

   7     owned.  The true testimony, this has not been

   8     the case.  Many banks have been known to

   9     redline.  We are located in East Flatbush,

  10     which is a predominantly immigrant population,

  11     and it is the new headquarters that, with the

  12     help of Citibank through SB loan, we got it at

  13     the lower rate with that assistance.  That

  14     really is a true testimony that they have met

  15     that criteria, which is a need in the

  16     neighborhood that we have, by lending to

  17     minority, by lending to a woman and by lending

  18     also in the East Flatbush minority-owned

  19     neighborhood.  The loan that we had, it was at

  20     a lower interest rate, which really helped us

  21     also.

  22               Once again, I am giving my support to

  23     this merger because I believe that it would be,

  24     much more programs would be beneficial to our

  25     community, and I support this merger, and I



.
                                                                502
   1

   2     also support the help that they are giving me

   3     and also thanking my bank manager and my

   4     personal banker.

   5               Thank you.

   6               MR. LONEY:  Thank you very much.

   7               It is good to sleep at night, isn't

   8     it?

   9               MS. JOHNSON-CLAXTON:  That was a big

  10     problem for me.

  11               MR. LONEY:  Mr. Gotto.

  12               MR. GOTTO:  Thank you, Governor Loney

  13     and panel.  I am pleased to be here today to be

  14     able to address this public meeting concerning

  15     the proposed Travelers/Citicorp merger.  My

  16     name is Alberto Gotto.  I am the Provost for

  17     Federal Affairs at Cornell University and the

  18     dean of the Joan and Sanford I. Weill Medical

  19     College in New York City.

  20               Here as the dean of the medical

  21     college in New York City, practicing physician

  22     and medical educator, I have no special

  23     credentials in business economic matters, but I

  24     do want to speak about an area in which I do

  25     have special and particular knowledge, and that



.
                                                                503
   1

   2     concerns the excellent corporate citizenship of

   3     the Travelers Group and its chairman and CEO

   4     Sanford I. Weill.

   5               Mr. Weill received his bachelors of

   6     arts degree from Cornell University in 1955

   7     and, of course, as we all know, he's had a

   8     remarkably successful career in business since

   9     then.  But just as remarkable as his business

  10     success has been the extraordinary degree to

  11     which Mr. Weill has volunteered his time,

  12     effort, his vision and his financial resources

  13     to support educational, civic and cultural

  14     organizations that make meaningful

  15     contributions to our society as a whole.

  16               Mr. Weill's been on the Board of

  17     Overseers in the medical college since 1982,

  18     and we have been especially fortunate to

  19     witness the depth of his dedication and

  20     commitment to enable Cornell State the

  21     cutting-edge of medical education, research and

  22     patient care.

  23               In 1995 he became the chairman of the

  24     Board of Overseers.  I'd like to just give a

  25     few examples to illustrate Mr. Weill's



.
                                                                504
   1

   2     commitment.

   3               He and Mrs. Weill endowed the Joan

   4     and Sanford Weill Medical Education Center

   5     which made it possible for us to introduce a

   6     problem-based learning curriculum.  This has

   7     been extraordinarily popular with our students

   8     and the faculty.  Cornell has currently over

   9     7,000 applicants.  We accept 100 medical

  10     students each year.  And, we wouldn't be able

  11     to do this program without this new educational

  12     center which provides one computer for every

  13     two students and really has state-of-the-art

  14     educational facilities.

  15               We are in the process of implementing

  16     a strategic plan.  We are expanding our

  17     research space by 25 percent and are increasing

  18     the size of our research faculty by recruiting

  19     30 new faculty in three areas -- structural

  20     biology, neuroscience, gene therapy and genetic

  21     medicine.  These are all going to be very

  22     important areas of research going into the 21st

  23     century.  It will enable us, we believe, to

  24     make New York more competitive in regaining our

  25     share of federal grants.



.
                                                                505
   1

   2               Mrs. Weill, on April, the 30th,

   3     announced a commitment, personal commitment of

   4     $100 million to fund this strategic research

   5     effort of the medical college.

   6               We for 30 years, Cornell Medical

   7     College, has had a Summer Minority Research

   8     Fellowship.  This has been highly successful.

   9     The program enrolls college juniors and seniors

  10     and gives an intensive summer experience.  Each

  11     student receives a stipend and housing, as well

  12     as travel expenses.

  13               From 1969 to 1983, we supported this

  14     with federal grants.  And in 1985, under

  15     Mr. Weill's leadership, the Travelers Group has

  16     stepped forward and provided an endowment to

  17     ensure the continuation of this program.

  18               Since 1969, more than 700 minority

  19     students have participated in this program, and

  20     an extraordinary number, over 90 percent of

  21     them, have gained admission to U.S. medical

  22     schools; over 100 of them have come to Cornell

  23     Medical School.  Cornell has one of the best

  24     records in the country in underrepresented

  25     minority students, one of the highest



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                                                                506
   1

   2     proportion of underrepresented minorities of

   3     any medical school in the country.  We accept

   4     students on a needs basis, and 43 percent of

   5     the tuition is discounted with either grants or

   6     loans.

   7               We renamed the medical college in

   8     honor of Mr. and Mrs. Weill's extraordinary

   9     support of the medical college over the years

  10     and it is now the Joan and Sanford I. Weill

  11     Medical College of Cornell University.

  12               Mr. Weill, since 1991, has served as

  13     the chairman of Carnegie Hall's board of

  14     trustees.  He cochaired the steering committee

  15     to raise $60 million for Carnegie Hall, and in

  16     1997 was honored by New York State with the

  17     Governor's Arts Award.

  18               Just one final example, with regard

  19     to one of the comments of the earlier speakers

  20     about grants for minority businesses.  On July,

  21     the 15th, Mr. Weill and the Reverend Jessie

  22     Jackson will cochair a meeting under the

  23     sponsorship of the Rainbow Coalition to be held

  24     at Cornell Medical College.  Represented there

  25     will be corporations with $3 trillion of assets



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                                                                507
   1

   2     and pension funds and the stated goal of this

   3     program is to provide money for minority

   4     businesses.

   5               I think Mr. Weill is amply dedicated

   6     or demonstrated his dedication both personally

   7     and through his leadership with Travelers and I

   8     am confident with this merger there will be a

   9     continuing and ongoing support of the community

  10     and civic activities throughout New York.

  11               Thank you.

  12               MR. LONEY:  Thank you, Mr. Gotto.

  13               Are there any questions?

  14               MR. ALVAREZ:  I had a question for

  15     Ms. Middleton.

  16               You suggested at the end of your

  17     remarks a list of things that you thought could

  18     be improvements.  I was wondering, you also at

  19     the beginning of your remarks mentioned a few

  20     of those same things that you thought City was

  21     doing now, some of the services, the lending

  22     programs, technical assistance and training.  I

  23     was wondering if you could differentiate a

  24     little bit for us or clarify a little bit for

  25     us the areas you thought City was stronger and



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                                                                508
   1

   2     the areas you were pointing out where they

   3     could improve more.

   4               MS. MIDDLETON:  The area in which

   5     they were strong, in terms of providing the

   6     technical assistance to help to educate us, in

   7     terms of what kinds of banking accounts that we

   8     should open as a small not-for-profit business

   9     or as a for-profit business; also, the

  10     introduction to us about the PC Banking, which

  11     I was one of those that they are teaching;

  12     also, the area in terms of how to keep our

  13     records, how to pay our taxes.  They were very

  14     strong in the whole business area of

  15     developing, to help us to go forward and to be

  16     a part of the board so that we can continue on

  17     so we will not have, within two years, failed

  18     as we have done.

  19               The other areas I have mentioned, in

  20     terms of grants to small businesses, if you

  21     give us a loan and we have no capital, etc.,

  22     what happens?  You are giving us a loan for

  23     $70,000.  If our businesses fail or we begin to

  24     go under or we cannot keep the business going

  25     because we lack that continuity to keep going



.
                                                                509
   1

   2     forward, that would only mean that our business

   3     is going to fold, and what has happened in the

   4     Harlem community, many businesses have folded

   5     because of this, and then we end up paying the

   6     money back or we end up going to court because

   7     they are forcing us to pay the money back which

   8     we don't have.  So it has to come out our

   9     personal needs.

  10               So instead of giving us loans to

  11     start us out with, which is starting us out at

  12     a handicap, start us out at a mini-grant which

  13     we will then be able to develop and go forward

  14     from there.  That is our major problem, to be

  15     able to continue to go forward.  That is where

  16     at this point we need that kind of assistance

  17     and we are not getting it at this particular

  18     point.

  19               MR. ALVAREZ:  Thank you.

  20               MR. LONEY:  Any other questions?  If

  21     not, I thank you, our panel, very much.

  22               We are going to combine Panel

  23     Twenty-one and Twenty-two.  Could I ask Edward

  24     Sheeran, Vicki Hurewitz, April Tyler, Greg Todd

  25     and Florence Rice to come up, please.



.
                                                                510
   1

   2               Mr. Sheeran, will you begin for us,

   3     please.

   4               MR. SHEERAN:  Thank you.  Good

   5     morning.  I am Edward Sheeran.  I am special

   6     assistant to the Mayor of the City of Yonkers,

   7     Westchester County.  I am also the executive

   8     director of the Yonkers Industrial Development

   9     Agency.

  10               The City of Yonkers is the largest

  11     city in Westchester County and the fourth

  12     largest in the State of New York with

  13     approximately 190,000 residents.  Yonkers has

  14     the largest number of high poverty level census

  15     tracts in the County of Westchester.  For over

  16     a decade the New York State Financial Control

  17     Board has been overseeing the city's financial

  18     activities.

  19               Citibank, one of the nation's largest

  20     banking institutions, serves the residents of

  21     the County of Westchester with 18 full service

  22     branch banking facilities.  The areas Citibank

  23     has elected to service within Westchester

  24     County are affluent upscale areas.  These areas

  25     are as follows:



.
                                                                511
   1

   2               Armonk, Bedford, Bronxville,

   3     Chappaqua, Eastchester, Harrison, Hastings,

   4     Larchmont, Mamaroneck, Mount Kisco, New

   5     Rochelle, Ossining, Pelham Manor, Rye,

   6     Scarsdale, Somers and two branches in White

   7     Plains.

   8               Last year Citibank opted to close its

   9     only manned branch in the City of Yonkers.

  10     Accordingly, Citibank has no manned facilities

  11     to provide day-to-day banking services to the

  12     190,000 residents of the largest city in the

  13     County of Westchester.

  14               Recently I spoke with Citibank's

  15     Westchester County senior management regarding

  16     Citibank's redlining of the City of Yonkers.  I

  17     was advised that it was Citibank's strategy to

  18     provide banking services to its customers

  19     through technology rather than bricks and

  20     mortar and that Citibank would not be adding

  21     additional branch facilities to its network.

  22               This statement was contradicted

  23     following a Craines June 15, 1998 publication

  24     when it reported that Citibank had branches

  25     under construction in the State of New Jersey



.
                                                                512
   1

   2     and, in particular, in Fort Lee and Englewood.

   3               Clearly, Citibank's strategy is to

   4     provide day-to-day personal banking services to

   5     affluent upscale communities and to ignore the

   6     day-to-day banking needs of the less affluent

   7     communities.  We believe its Westchester

   8     network of branches is an orchestrated example

   9     of this and proves that the 190,000 residents

  10     of the City of Yonkers are not being given the

  11     same banking convenience that are provided by

  12     Citibank to towns, villages, and hamlets within

  13     the County of Westchester.

  14               We, in the City of Yonkers believe in

  15     addition to providing day-to-day banking

  16     services, large financial institutions such as

  17     Travelers Group and Citicorp should be obliged

  18     as good citizens to participate in the economic

  19     revitalization of cities, such as the City of

  20     Yonkers.  We believe they should utilize their

  21     vast resources, both financial and otherwise,

  22     to promote, encourage and finance economic

  23     development.  By doing this, they will be

  24     contributing to the creation of jobs and

  25     increasing the quality of life for all our



.
                                                                513
   1

   2     citizens.

   3               Citibank's activities to date have

   4     been to the contrary.  The future must be based

   5     on past performance.  Frankly, we are not

   6     satisfied with the manner in which our city has

   7     been ignored and our citizens treated by the

   8     powerful Citibank.

   9               Should the acquisition be approved,

  10     Citibank will be the largest and most powerful

  11     institution in the country.  This may be very

  12     good for the affluent upscale areas, but if

  13     Citibank's past is any indication of the

  14     future, then our 190,000 residents in the

  15     largest city of Westchester County can expect

  16     more of the same from the nation's most

  17     powerful financial institution.

  18               I am here today on behalf of the

  19     citizens of Yonkers to request that the

  20     approval of the acquisition of Citicorp by

  21     Travelers Group be denied until such time as

  22     Citibank institutes and delivers programs that

  23     provide services to the citizens of the City of

  24     Yonkers equal to the services they provide to

  25     the citizens of the 18 affluent upscale



.
                                                                514
   1

   2     communities in the County of Westchester.

   3               Thank you.

   4               MR. LONEY:  Thank you, Mr. Sheeran.

   5               Ms. Hurewitz.

   6               MS. HUREWITZ:  Good morning

   7     distinguished members of the Federal Reserve

   8     Board.  Thank you for giving me this

   9     opportunity to express my opinion about the

  10     Citicorp/Travelers merger.  My name is Vicki

  11     Hurewitz, and I am here representing the

  12     organization SENSES, which stands for the

  13     Statewide Emergency Network for Social and

  14     Economic Security.

  15               We work on a variety of public policy

  16     issues which affect low-income people here in

  17     New York State.  SENSES is a member of the

  18     National Community Reinvestment Coalition.

  19               As I thought and read about the

  20     Citicorp/Travelers merger and HR10, the

  21     financial modernization bill that would allow

  22     the merger if passed, I decided there were

  23     three questions I wanted to address in my

  24     testimony.

  25               First, if this were a standard



.
                                                                515
   1

   2     mega-merger like so many we have seen lately,

   3     how are these two institutions doing in terms

   4     of their fair lending and community

   5     reinvestment obligations under current law?  A

   6     merger can be denied if either party has not

   7     met these obligations.

   8               Second, I am puzzled as to how this

   9     merger can occur since HR10, the financial

  10     modernization bill, is still making its way

  11     through Congress.

  12               Third, what are the most important

  13     issues around HR10 that should be addressed

  14     before the law passes?

  15               How are the institutions doing under

  16     the mortgage law?  The Home Mortgage Disclosure

  17     Act requires Citicorp and all its lending

  18     subsidiaries and affiliates to report out

  19     detailed information on every home purchase,

  20     home improvement, and refinance application

  21     taken.

  22               Using 1996 HMDA data, I performed a

  23     limited analysis on Citibank's lending in all

  24     the metropolitan areas of New York State.  I

  25     only examined those markets where an individual



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                                                                516
   1

   2     institution took more than 30 applications,

   3     statisticians considering this an ample sample

   4     size.

   5               I compared the market penetration of

   6     Citicorp entities among black borrowers to all

   7     categories of borrowers.  I also compared the

   8     bank's loan denial rate to black versus white

   9     applicants to the same rate for all lenders in

  10     the individual markets.  The reason I only

  11     looked at these particular indicators is that I

  12     am still in the process of database

  13     development.  In the future I will able to look

  14     at many more indicators of bank lending

  15     performance around the state.

  16               Three Citibank entities, Citibank New

  17     York State, Citibank Mortgage and Citibank NA

  18     accepted applications for home purchase loans

  19     in 1996.  Citibank NA is minimally active in

  20     two markets upstate, Buffalo and Rochester.

  21     The other two lenders are primarily downstate

  22     in the New York City and Long Island areas.

  23               With the exception of Citibank New

  24     York State in the two upstate markets, all the

  25     Citibank entities had a lower market share of



.
                                                                517
   1

   2     black applications than of all applications.

   3     In all areas for all the Citibank entities, the

   4     loan denial rates to black versus white

   5     borrowers were higher than the rates for all

   6     lenders in the markets.  In Rochester, for

   7     example, blacks were denied at over nine times

   8     the rate of whites compared to 1.8 times as

   9     often for the aggregate lenders.

  10               These same patterns occurred in

  11     Citibank's Home Improvement and Refinance

  12     applications.  Again, with home improvement

  13     applications Citibank New York State was active

  14     upstate and Citibank NA downstate.  And in all

  15     cases market penetration was lower than among

  16     black borrowers than white.  With the exception

  17     of Citibank NA in the Long Island area, loans

  18     were denied to blacks at slightly higher rates

  19     than to whites, although the differences are

  20     not as marked as they were with home purchase

  21     loans.  The same thing was true with the

  22     refinance application.

  23               Travelers Insurance Company unlike

  24     Citibank is not required to report under HMDA

  25     nor is it covered by the Community Reinvestment



.
                                                                518
   1

   2     Act.  It is, however, covered by the Fair

   3     Housing Act of 1968.

   4               Currently HUD is investigating a Fair

   5     Housing complaint brought by the Fair Housing

   6     Council of Washington D.C.  The complaint

   7     alleges that the company's policies have a

   8     discriminatory impact on African-American and

   9     Latino policy seekers and neighborhoods.  In

  10     the D.C. area, Travelers has a policy whereby

  11     the minimum house value that it will insure is

  12     $250,000.  This automatically excludes from

  13     coverage 90 percent of homes in

  14     African-American and Latino neighborhoods.

  15               Travelers also -- is my time up?

  16               Travelers also has a policy of

  17     limiting coverage to homes which are less than

  18     45 years old.  This has the impact of excluding

  19     almost twice as many homes in minority

  20     neighborhoods as in white neighborhoods.

  21               Interestingly, Washington D.C. is one

  22     of the four cities that has been in Travelers

  23     Urban Availability of Insurance program, a

  24     program which was founded 1994 to improve the

  25     availability of insurance in urban areas.  I



.
                                                                519
   1

   2     wonder what the company's policy would be in

   3     Washington D.C. without this program.

   4               Given that Travelers has this suit

   5     pending against it and given my HMDA findings

   6     on Citibank, I am convinced that even if this

   7     were a standard mega-merger, it should not be

   8     allowed until these fair lending issues are

   9     addressed.

  10               Regarding Citibank, I am well aware

  11     that the Community Reinvestment Act is mostly

  12     about making credit available in low- and

  13     moderate-income areas.  However, it is stated

  14     in the legislation that "in arriving at an

  15     institution's (CRA) rating, the agencies

  16     consider whether there is evidence of

  17     discrimination in violation of the Fair Housing

  18     Act or the Equal Credit Opportunity Act or

  19     evidence of other illegal credit activities."

  20               I am also aware that HMDA has never

  21     been used to prove discrimination; however, as

  22     my analysis shows, the data can point to

  23     patterns that need further investigation.

  24               Before going on with this merger, I

  25     request that HUD investigate Travelers'



.
                                                                520
   1

   2     underwriting criteria in other urban areas

   3     where it writes policies to determine if there

   4     are possible hidden discriminatory patterns

   5     that prevent protected classes from getting

   6     property insurance.  I also request that the

   7     Federal Reserve look at Citicorp entities

   8     underwriting criteria for the three HMDA

   9     reportable loan types to see what is

  10     responsible for the bank's poor showing among

  11     black borrowers across New York State.

  12               How could this merger occur -- time

  13     is up.

  14               MR. LONEY:  If you want to wrap up.

  15               MS. HUREWITZ:  I will continue.

  16               I just want to say, I am opposed to

  17     the merger for three reasons:  The fair lending

  18     records of the two applicants, the illegality

  19     of the merger, and the potential power of HR10

  20     to destabilize the American economy.

  21               Thank you very much.

  22               MR. LONEY:  Thank you.

  23               If you want to put your full

  24     statement in, it will get into the record if

  25     you will leave a copy with the registration



.
                                                                521
   1

   2     desk up front.

   3               MS. HUREWITZ:  Thank you.

   4               MR. LONEY:  Ms. Tyler.

   5               MS. TYLER:  Good morning.  My name is

   6     April Tyler and I am a democratic leader in the

   7     West Harlem community.  On behalf of myself, my

   8     coleader Joseph Aplin and the residents of

   9     Harlem's 70th Assembly District, I thank you

  10     for the opportunity to testify and present

  11     information on Citibank's record in the Harlem

  12     community and to register my objection to this

  13     proposed merger.

  14               I will focus on the core lending

  15     record in Harlem, but I'd like to reiterate a

  16     few points that have been covered in prior

  17     testimony by many of my colleagues and many of

  18     Citicorp Travelers Watch.

  19               This transaction is illegal, as the

  20     prior testifier just stated.  The public's

  21     privacy rights may be trampled on.  Both

  22     institutions have not been forthcoming with

  23     information that's been requested numerous

  24     times, and we feel the danger of creating such

  25     a large international financial entity, a



.
                                                                522
   1

   2     portion of which is protected by U.S.

   3     taxpayers' dollars, may be deemed too big to

   4     fail.

   5               The companies' individual records

   6     with regard to inner city neighborhoods leaves

   7     much to be desired.  Travelers has virtually no

   8     brokers in low- and moderate-income

   9     neighborhoods, and Citicorp has few branches

  10     and does almost no lending.  This hardly bodes

  11     well to a more promising future with the

  12     proposed new entity.

  13               On the prior panel, one of the

  14     panelists stated that we must look to the

  15     future, but we must also not ignore the

  16     history.  So let's take a look at Citibank's

  17     history in the Harlem community and other

  18     communities of color.

  19               The loan rejection rates are more

  20     than doubled that of whites given comparable

  21     circumstances.  In the Harlem community, which

  22     is Community Boards 9 and 10, which are bounded

  23     by 110th Street, 155th Street from Riverside

  24     Drive to Fifth Avenue, there are only two

  25     branches.  One branch is on 111th Street and



.
                                                                523
   1

   2     Broadway and another branch is on 152nd Street

   3     and Amsterdam Avenue.  No branches are north of

   4     125th Street where the majority of the

   5     African-American and Latino population lives.

   6               One might think that this area was

   7     excluded from Citibank's service area, but it

   8     is not.  In the two branches, that are

   9     inconveniently placed for the majority of the

  10     populations in these two community boards,

  11     there are $233 million on deposit; there is no

  12     direct lending for multifamily housing at all

  13     by Citibank; and, as we all know, the majority

  14     of New York City's housing stock is that type.

  15               But what lending do they do?  One- to

  16     four-family mortgages, co-op and condo loans.

  17     In Community Board 9, which is Central Harlem,

  18     there were only three loans originated in 1996.

  19     Community Board 9 did a little better:  27

  20     loans were originated.  That sounds really

  21     good, but the majority of those loans were

  22     originated in the area south of 125th Street,

  23     right around Columbia University where the

  24     majority of the population is white.  Only six

  25     loans of the 27 were to African-Americans or



.
                                                                524
   1

   2     Latinos; one was to a Latino.  So so much for

   3     the prior panelist's statement about empowering

   4     Latinos.

   5               The banks that exist have high-fee

   6     structures for banking services.  The brochures

   7     say that you can experience less expensive and

   8     more convenient banking.  Not so if you live in

   9     the Harlem community.  Given this record, it is

  10     amazing that Citibank has received an

  11     outstanding CRA rating.

  12               The proposed new entity made a

  13     commitment of $115 billion, but not to improve

  14     in the areas stated above.  There is no

  15     guarantee that any of the money will be

  16     targeted and invested in New York City or in

  17     low-income neighborhoods.

  18               More than half of that $115 billion

  19     commitment is for consumer loans, student

  20     loans, credit cards and such.  The portion for

  21     small business lending isn't targeted to

  22     low-income areas.

  23               We urge you to reject this

  24     application and demand immediate improvement in

  25     their performance right now, not some nebulous



.
                                                                525
   1

   2     promise for the future.

   3               Thank you.

   4               MR. LONEY:  Thank you, Ms. Tyler.

   5               Mr. Todd.

   6               MR. TODD:  Good morning.  My name is

   7     Greg Todd.  I am the marketing director with

   8     BEC New Communities.  I would like to thank the

   9     Federal Reserve Bank of New York for sponsoring

  10     this hearing today.  I very much appreciate the

  11     opportunity to speak on behalf of BEC New

  12     Communities.

  13               BEC is a 14-year-old community-based

  14     nonprofit housing group.  To date we have

  15     developed about 900 units of housing from

  16     city-owned properties.  In so doing, we have

  17     invested almost $100 million in the communities

  18     of Bedford Stuyvesant, Crown Heights and Sunset

  19     Park.  In addition, we have sold over 200 units

  20     of ownership housing, including both

  21     condominiums and two- and three-family homes.

  22     BEC also sponsors a community-based credit

  23     union with over 2,000 members and $2.2 million

  24     in assets.

  25               Our organization grew out of an



.
                                                                526
   1

   2     interdenominational organizing effort.  BEC

   3     stands for "Brooklyn Ecumenical Cooperatives."

   4               I personally came to Brooklyn about

   5     20 years ago from Michigan.  Before coming

   6     here, I completed a masters in business

   7     administration degree and worked briefly in a

   8     bank.  I had heard much of Citibank.  I knew it

   9     to be a leader in the area of consumer banking,

  10     having been one of the first banks in the

  11     nation to issue credit cards and one of the

  12     first to make extensive use of automatic teller

  13     machines.

  14               I, in fact, had such faith in

  15     Citibank that it is where I opened my checking

  16     and savings account and where I currently have

  17     a home mortgage.

  18               Unfortunately, in recent years I feel

  19     Citibank's vision has become less focused on

  20     its home here in New York and more directed to

  21     a national and international audience.  For

  22     example, the branch I used to keep my accounts

  23     at on 13th Street and Fifth Avenue near Sunset

  24     Park was sold to Home Savings Bank -- now a

  25     part of Greenpoint Bank -- about 15 years ago.



.
                                                                527
   1

   2               Shortly thereafter, Citibank expanded

   3     the number of ATMs at its branch in Park Slope,

   4     a more affluent area.  This pattern appears

   5     typical of what it is doing throughout the City

   6     of New York.

   7               Citibank maintained in 1996 20

   8     branches in Brooklyn.  That number,

   9     incidentally, is now down to 15, of which only

  10     12 are full service.  The total amount of

  11     deposits on these branches in 1996 was $2.1

  12     billion.

  13               According to the Home Mortgage

  14     Disclosure Act provided by the RTK Foundation,

  15     during 1996 Citibank received 1,228

  16     applications from Brooklyn residents.  Of

  17     these, they actually approved 547 or about 44.5

  18     percent of the applications taken.  By

  19     comparison, in 1996 among banks in Brooklyn

  20     that took in at least ten applications, the

  21     overall approval rate was 52 percent, 7.5

  22     percentage points above Citibank's approval

  23     rate.

  24               Assuming an average loan amount of

  25     $150,000, Citibank returned to its communities



.
                                                                528
   1

   2     in Brooklyn about $82 million in mortgages in

   3     1996.  This amounts to about 3.9 cents in

   4     lending for each dollar deposited by Brooklyn

   5     residents.

   6               I must add that of the over 200

   7     mortgages or about $12 million in home mortgage

   8     lending given to purchasers of BEC developed

   9     homes none were granted by Citibank.

  10               Similarly, of the $100 million in

  11     construction lending used by BEC for

  12     residential development in Brooklyn, none was

  13     from Citibank.

  14               As a leading community group in

  15     Brooklyn, BEC feels that Citibank needs to do

  16     better.  Rather than reaching out to lend in

  17     the developing countries around the globe, why

  18     not lend in the developing neighborhoods in

  19     Brooklyn, for many residents are immigrants who

  20     left just those developing countries that

  21     Citibank appears so eager to lend to.

  22               We feel it is time that Citibank

  23     returned to its role as an innovative leader

  24     right here in New York.  If Citibank wants to

  25     take deposits of Brooklyn residents, we feel it



.
                                                                529
   1

   2     should be willing to give back its fair share

   3     in loans to the Brooklyn community.

   4               Thank you for your consideration.

   5               MR. LONEY:  Thank you, Mr. Todd.

   6               Ms. Rice.

   7               MS. RICE:  Yes.  Good morning, and I

   8     am glad to be here, and thank you for giving me

   9     this opportunity.

  10               I am Florence M. Rice, president of

  11     the Harlem Consumer Education Council.  I must

  12     say I oppose -- I am opposed to the merger of

  13     Citicorp Group and the Travelers Insurance

  14     because of their practice of racism through

  15     redlining and refusal to loan to

  16     African-Americans.

  17               I am very concerned with Citigroup

  18     and the Citicorp and Travelers merger.  I want

  19     to see a better world, but we can't see a

  20     better world with racism running rampant like

  21     it still does.

  22               Living in New York State all my life,

  23     and at my age of 79, I understand very well

  24     institutional and economic racism, as I have

  25     experienced it in this country all my life,



.
                                                                530
   1

   2     along with my brothers and sisters.

   3               As slaves, African-Americans were

   4     forced to build the wealth of this country for

   5     the benefit of white Americans.  Today I'm

   6     going to speak to you about the three robbers

   7     of African-Americans, and I think I would like

   8     to say the speakers of City Watch are the ones

   9     that has said many of the things that I have

  10     said, so there is no sense in repeating it.

  11               What I wanted to do, I wanted to do

  12     something different.  I call it the three

  13     robbers of African-Americans; they are racism,

  14     power and control.

  15               The belief is that race is the

  16     primary determiner of human traits and capacity

  17     and that racial difference produced an inherent

  18     superiority of a particular race.  Many white

  19     people practice racism in the corporate

  20     world -- antagonism toward African-Americans,

  21     especially as a result of the racist belief, a

  22     belief in the superiority of the white race,

  23     prejudice based on this, and the theory,

  24     ability, to determine by these races in our

  25     society.



.
                                                                531
   1

   2               Race riot is caused by racial

   3     dissension and hatred -- which is many times

   4     perpetrated by the corporate world -- power,

   5     and the ability to produce a result, possession

   6     to control authority and influence others,

   7     having such power of controlling groups, that's

   8     what happens in today's world.

   9               I would like to speak third on

  10     control, the power of direct command under the

  11     corporate CEOs and the board of directors,

  12     because that is where much of this racism stems

  13     from, the power of restraining, the power or

  14     authority to manage the regulation of economic

  15     activity, especially by the corporate world

  16     direct, one that controls a means of

  17     determining the policy of a business.

  18               The records of Citicorp and certainly

  19     Travelers speak for themselves.  I'm deeply

  20     concerned.  Like someone here said, if we're

  21     talking these large companies, I'm concerned it

  22     carries this race, economic racism, and this

  23     racism within their companies travelling the

  24     world.

  25               I'm looking to make this a better



.
                                                                532
   1

   2     world.  I am not looking to make it the kind of

   3     world that I have grown up in and that I know

   4     of.  So, therefore, I would say I have spoken

   5     quite differently, but I am speaking this way

   6     because many of my colleagues here have really

   7     expressed my feeling.

   8               I just want to thank you that I could

   9     be here.  I will put this -- I can send it in.

  10     Again, I will say I am very glad to be here.  I

  11     am 79.  I haven't changed my opinion on the

  12     banks and the redlining and Travelers, which

  13     never dealt with our black community.  So I

  14     again am supporting some of the other speakers

  15     that this merger -- because mergers don't help

  16     community people, poor people, because they are

  17     always looking to make the executives and make

  18     themselves a trillion dollar bankroll, that

  19     they can go off and live better than anyone

  20     else.

  21               Thank you, and I am a little angry.

  22               MR. LONEY:  Thank you, Ms. Rice.  You

  23     don't look angry.

  24               I have a couple of questions.

  25               Mr. Sheeran, could you describe for



.
                                                                533
   1

   2     me -- and you probably did and I may have just

   3     didn't quite understand it -- the demographics

   4     of Yonkers.  I am not familiar with Yonkers.

   5     Is it a low-income community largely?

   6               MR. SHEERAN:  We have, the southwest

   7     part of Yonkers is the low income.  There are,

   8     I think, six census tracts that are poverty

   9     level.  The city of is made up of about 40

  10     percent African-Americans, 45 percent white,

  11     and the rest others.

  12               MR. LONEY:  Are there any middle,

  13     upper-income neighborhoods?

  14               MR. SHEERAN:  Yes, there are.  In the

  15     northeast part of Yonkers, yes.

  16               MR. LONEY:  Did I understand you to

  17     say there are no Citicorp branches.

  18               MR. SHEERAN:  No Citicorp branches.

  19     The only manned branch that they had they

  20     closed last year and there is an automatic

  21     teller machine in its place.  We don't regard

  22     that as a facility that they can transact their

  23     business.

  24               MR. ALVAREZ:  You mentioned that when

  25     City closed the branch in Yonkers it said it



.
                                                                534
   1

   2     would replace it with technology; is that the

   3     ATM?

   4               MR. SHEERAN:  That is correct.

   5               MR. ALVAREZ:  It is a single ATM, no

   6     other ATMs in Yonkers?

   7               MR. SHEERAN:  They have no other ATMs

   8     in the community, right.  As I pointed out, all

   9     the areas in Westchester County are all upscale

  10     areas, Bronxville, Rye, all upscale areas.

  11               MR. LONEY:  Apparently in Yonkers

  12     there are some upscale areas as well.

  13               MR. SHEERAN:  Yes, but they are not

  14     as upscale as the Bronxvilles of the world.

  15               MR. ALVAREZ:  When City proposed to

  16     close the branch, did you talk with them about

  17     why they were closing?

  18               MR. SHEERAN:  I was not in this

  19     position at that time, so I am not quite sure.

  20               MR. LONEY:  So upscale is in the eye

  21     of the beholder.

  22               MR. SHEERAN:  Maybe.

  23               MR. LONEY:  That is interesting.

  24               Ms. Hurewitz, I know you wanted to

  25     talk about your views on the illegality of this



.
                                                                535
   1

   2     merger.  Do you want to expound on that?

   3               MS. HUREWITZ:  I'm concerned because

   4     currently there is a bill going through

   5     Congress, as we all know, the HR10, the

   6     financial modernization bill, which would allow

   7     this merger.  Under the current law, my

   8     understanding is that if Travelers and Citicorp

   9     were to merge, one of the other would have

  10     to -- Travelers would have to divest itself of

  11     its nonbanking activities within two to five

  12     years, or Citicorp would have to give up its

  13     banking charter and become part of Travelers

  14     Savings & Loan.

  15               My concern is that if the merger goes

  16     through that the waiver will be given, the

  17     five-year waiver will be given, and in the

  18     interim Citicorp and Travelers will continue to

  19     lobby Congress to pass HR10, because it is not

  20     quite clear whether the bill will go through

  21     now.  There is a lot of controversy about it.

  22               So currently these two entities as

  23     they sit are not legally allowed to merge as

  24     they both are.  One or both of them have to

  25     make changes.  That is my concern.



.
                                                                536
   1

   2               MR. LONEY:  Thank you.

   3               Ms. Tyler, I am sorry, I am not that

   4     good with the geography here.  You explained

   5     that there were, I think the implication of

   6     what you said was there were two branches, was

   7     that in Harlem, on the edge of Harlem?  I

   8     wasn't quite clear on that.

   9               MS. TYLER:  Depending on who you

  10     speak with, the boundaries of Harlem are

  11     different.  Some people would say that it

  12     starts at 110th Street, and if you look at

  13     documents from way past, it did.  Currently,

  14     it's always been considered historically the

  15     African-American community in the north of

  16     Manhattan.  The majority of the

  17     African-Americans, and at this point

  18     increasingly the Latino population, are north

  19     of 125th Street.  South of 125th Street you

  20     have to include Columbia University, where even

  21     though it is in the -- a community district

  22     which includes Harlem, it is higher income and

  23     the population is white, primarily.  North of

  24     125th Street, the majority of the population is

  25     African-American and Latino.



.
                                                                537
   1

   2               MR. LONEY:  And the branches are?

   3               MS. TYLER:  The branches are all

   4     south of 115th Street.  If you travel further

   5     north, you will find another branch at, I

   6     think, 169th Street, right by Columbia

   7     Presbyterian Hospital.  So the population, the

   8     Latino and African-American population has been

   9     skipped over in both instances.

  10               MR. LONEY:  So the 169th Street, is

  11     that still Harlem?

  12               MS. TYLER:  No.  That is considered

  13     Washington Heights.

  14               MR. ALVAREZ:  Ms. Tyler, you

  15     mentioned that there were, I think you said

  16     $233 million worth of deposits.

  17               MS. TYLER:  Right.

  18               MR. ALVAREZ:  I didn't quite catch,

  19     are those -- who are those deposits from; where

  20     are those deposits?

  21               MS. TYLER:  We don't have access to

  22     the zip code information, so we can't tell

  23     where the deposits originate from.  In those

  24     two branches, the Data Book, which is published

  25     by the Federal Deposit Insurance Corporation,



.
                                                                538
   1

   2     gives you the figures branch by branch of the

   3     deposits.  But we all know that when people

   4     don't have the convenience of a branch in their

   5     neighborhood, they usually bank where they

   6     work.

   7               Even though these are inconvenient

   8     branches, there are $233 million in deposits.

   9     A portion of that, we suspect, is from

  10     residents of the Harlem community.  And if you

  11     look at the branches in midtown Manhattan or

  12     downtown, I would be willing to bet if we got a

  13     zip-coded analysis that a portion, maybe a

  14     large portion, would be from the 25, 27, 35, 39

  15     zip codes that comprise Harlem.

  16               MR. LONEY:  Do we have any other

  17     questions of the panel?  If not, I will thank

  18     you very much for coming in and talking to us.

  19               Mark Winston Griffith, who was

  20     scheduled to testify in Panel Twenty-two, is

  21     now here.

  22               Do you want to come up, Mr. Griffith.

  23               (Continued on next page)

  24

  25



.
                                                                539
   1

   2               MR. LONEY:  Mr. Griffith, please

   3     proceed.

   4               MR. GRIFFITH:  Good morning.  Sorry

   5     for being late.

   6               MR. LONEY:  You'll stay after school.

   7               MR. GRIFFITH:  Okay.  I get all the

   8     special attention.  I appreciate that.

   9               Good morning.  My name is Mark

  10     Winston Griffith, and I'm the founding

  11     executive director of the Central Brooklyn

  12     Partnership and was the founding chairman of

  13     the Board of the Central Brooklyn Federal

  14     Credit Union.

  15               The Partnership serves the

  16     neighborhoods of Ft. Greene, Clinton Hill,

  17     Bedford Stuyvesant, Crown Heights, Brownsville,

  18     Prospect Heights, East Flatbush and Flatbush.

  19               I have a confession to make.  When I

  20     first learned of these hearings I was planning

  21     to be out of town, out of reach, or just plain

  22     out.  As I saw it, I would have to be out of my

  23     mind to show up today and testify.  No matter

  24     what stance I take on what is probably the most

  25     important merger prospect within the financial



.
                                                                540
   1

   2     industry since CRA was enacted me and my

   3     organization are sure to be dragged through the

   4     mud one way or the other as a result of this

   5     testimony.

   6               To go on record against this proposed

   7     merger would be perceived as dismissing and

   8     betraying the efforts of one of the strongest

   9     supporters of my organization, and of the

  10     community development credit union industry

  11     which of course is Citibank.

  12               To advocate for the merger could risk

  13     ignoring some glaring threats to consumer

  14     interests, and more specifically to my

  15     community, an area that has endured its own

  16     history of betrayal and dismissal.

  17               But, ultimately, staying home while

  18     the future of financial services as we know it

  19     is to be discussed would be a disservice to my

  20     colleagues at Citibank and the people of

  21     Central Brooklyn.

  22               Simply put, too much is at stake and

  23     as one of the few organizations in Central

  24     Brooklyn that has and explicit mandate to serve

  25     as community reinvestment advocate and watch



.
                                                                541
   1

   2     dog, staying home, no matter how convenient,

   3     would be irresponsible and ultimately

   4     unconscionable.

   5               I'm sure I don't have to tell you

   6     that Central Brooklyn has been a long-standing

   7     victim of bank redlining, discrimination and

   8     disregard.

   9               In the nation's largest black

  10     community in the last ten years alone we have

  11     seen twice as many bank branches close as we

  12     have seen open.  Nationally there is one bank

  13     branch for every five thousand people.  In

  14     Central Brooklyn there is one bank branch for

  15     every 23,000 people.

  16               A now somewhat outdated study of bank

  17     lending showed that for every dollar deposited

  18     in local banks, less than one penny was

  19     reinvested back into the community.

  20               Check cashing operations inevitably

  21     step in.  And in Central Brooklyn there are

  22     twice as many cash checking operations as there

  23     are bank branches.

  24               Into this environment came the

  25     Central Brooklyn Partner in 1991.  The



.
                                                                542
   1

   2     Partnership provides education and training on

   3     financial literacy issues and organizers and

   4     advocates around community reinvestment issues.

   5     The Partnership runs the youth empowerment

   6     program, a leadership development and financial

   7     education program for young people, the Sisters

   8     Lending Circle, a financial self-sufficiency

   9     support group for people who receive public

  10     assistance, and an economic justice program

  11     which conducts research on local financial

  12     patterns, and, as I mentioned earlier, serves

  13     as a CRA watch dog.

  14               In 1993 the Partnership created the

  15     Central Brooklyn Federal Credit Union a

  16     financial cooperative that serves more than

  17     five thousand people who live, work, worship

  18     and do business in Central Brooklyn has almost

  19     five million in assets and has made millions of

  20     dollars of loans over the past five years.

  21               And yet the credit union, while one

  22     of the largest community development financial

  23     institutions in all of New York City struggles

  24     on many levels to remain healthy and robust in

  25     a credit parched area.



.
                                                                543
   1

   2               Since the beginning, Citibank has

   3     been there for us.  As one of our first

   4     nonmember investors, Citibank helped capitalize

   5     the credit union and enabled us to make low

   6     interest personal and small business loans to

   7     our membership almost immediately upon the

   8     credit unions opening with a zero interest

   9     deposit of $100,000 dollars.

  10               Eager to support us in our early

  11     growth period, Citibank made a grant of

  12     $10,000.

  13               Over the years we have also received

  14     several grants for our youth program,

  15     participated in a Citibank technical assistance

  16     program for not-for-profit community developers

  17     and have turned to people like Janet Thompson

  18     for advice.

  19               As you know from the testimony of the

  20     National Federation of Community Development

  21     Credit Unions, Citibank has made a sizable

  22     development in community development credit

  23     unions nationwide and Central Brooklyn is

  24     scheduled to soon receive a $55,000 equity

  25     grant through Federation.



.
                                                                544
   1

   2               Depending upon how Citibank responds

   3     to the rest of my testimony, I plan to make

   4     additional requests for grants for the

   5     Partnership and deposits for the credit union.

   6               Unequivocally, Citibank has been a

   7     full partner in our organizational efforts to

   8     rebuild the economy of Central Brooklyn, but

   9     although my organization quickly turned

  10     Citibank investments into the Partnership into

  11     an instrument that vastly improved the quality

  12     of peoples' lives, it would be arrogant and

  13     narrow minded to conclude that meeting

  14     organizational needs fulfills a financial

  15     institutions obligation to the people of low

  16     and moderate income neighborhoods.

  17               Let's be real.  Community

  18     reinvestment and the consideration of mergers

  19     are not just about measuring a bank's support

  20     of neighborhood-based community efforts, no

  21     matter how impressive.

  22               It's also more importantly about the

  23     quality accessibility and affordability of a

  24     bank's financial product and what the sum of

  25     this proposed mergers parts mean for the future



.
                                                                545
   1

   2     survivability of my community.

   3               On that count I have deep-seated

   4     fears and reservations.  I am concerned that

   5     Citibank's record of mortgage lending, once the

   6     best in Central Brooklyn, has fallen

   7     precipitously over the last ten years.  I am

   8     concerned with Citibank's growing complacency

   9     in my neighborhood and its most recent failure

  10     to participate in a fund raising consortium to

  11     support the credit union, because it's based

  12     more value on it's rivalry with Chase then the

  13     future of my institution and the people we

  14     serve.

  15               I am concerned with Citibank's

  16     prohibitively high fees for its consumer retail

  17     services such as checking, where there is no

  18     low to mid range pricing between life-line and

  19     ridiculously expensive no-fee checking.

  20               I am concerned that Citibank's

  21     increasing global banking strategy is coming at

  22     the expense of communities like Central

  23     Brooklyn and that this merger will make them

  24     even less focused on our needs.

  25               I am deeply suspicious of any



.
                                                                546
   1

   2     community reinvestment pledge, 115 billion, or

   3     otherwise made while a merger is being

   4     considered and I am disgusted at the way this

   5     proposed merger, which at this moment in time

   6     is illegal, has been treated as a foregone

   7     conclusion probably turning the hearing into a

   8     cynical exercise, yet again watching the

   9     restless natives jump up and down and shout

  10     ugga-bugga.

  11               I think that ACORN had the right idea

  12     yesterday when they came in here, shut the

  13     place down for a moment, and made us consider

  14     whether we even have the slightest bit of power

  15     to direct the effects of this monumental

  16     decision.

  17               I for one am not going to go home and

  18     passively sit by to a deal cut in the corporate

  19     hallway.

  20               I again acknowledge Citibank's

  21     financial support of Central Brooklyn through

  22     my two organizations, one of which makes loans

  23     to people that every other lender has now

  24     abandoned.  This is a testament to Citibank's

  25     reinvestment record and I'm here to bear



.
                                                                547
   1

   2     witness to that.

   3               God knows I hope the support

   4     continues, and that Citibank approves the

   5     deposit request that I plan to submit next

   6     week.

   7               (Laughter)

   8               But at the risk of sounding

   9     ungrateful, that is simply not enough.  My

  10     recommendations are simple and broad.

  11               I challenge Citibank to either be a

  12     more aggressive supporter of community

  13     development, make more mortgage and small

  14     business loans in my neighborhood, and provide

  15     products that can be more widely used by people

  16     of low and moderate income or give up its

  17     merger plan.

  18               I know you have the power, Citibank,

  19     and resources.  Use them.  I challenge the

  20     Federal Reserve to enforce this, set higher

  21     standards for the consummation of this merger

  22     proposal and not be seduced or rolled over by

  23     the seeming inevitability of this deal.  Don't

  24     sacrifice my neighborhood for the sake of

  25     making financial history.



.
                                                                548
   1

   2               Thank you.

   3               MR. LONEY:  Thank you, Mr. Griffith.

   4     Any questions from the panel?

   5               MR. ALVAREZ:  I have a question,

   6     Mr. Griffith, do you think that the Citi is

   7     learning at all from its Partnership with you

   8     about how better to meet the needs of Brooklyn

   9     directly?

  10               MR. GRIFFITH:  I think so.  I mean

  11     one of the advantages to working with us is

  12     that we sort of cover all bases.  Not only do

  13     we do financial literacy and advocacy, but we

  14     also include a financial organization itself,

  15     so we are in the business of making loans and

  16     provide financial services, and so not only are

  17     powerless but there are ways in which we can

  18     empathize with each other, and ways in which

  19     they can learn and we can learn from them.

  20               So I think that the relationship has

  21     been very beneficial.  I think the relationship

  22     that they have established with the National

  23     Federation of Community Development Credit

  24     Unions has been very helpful as well.

  25               Again, my fear is that they have



.
                                                                549
   1

   2     rested on that, and they, I think, recently

   3     over the past few years, have not really gone

   4     beyond that and, again, I don't want to dismiss

   5     or discount those efforts, because it's a lot

   6     more than what most banks are doing to be quite

   7     frank, but, again, to work through

   8     intermediaries and organizations like ours,

   9     it's just, it's not enough.

  10               It's easy to say that you're doing

  11     things when you have middle class people who

  12     run these organizations coming up here and

  13     testifying and saying thank you for those

  14     contributions, but it does not necessarily,

  15     does not necessarily mean that those services

  16     are being translated into better product and

  17     community investment efforts for the people

  18     who, the low and moderate income people, who

  19     live and work there.

  20               MR. LONEY:  Any other questions?

  21               MR. ALVAREZ:  Thank you very much.

  22               MR. LONEY:  I will wish you luck on

  23     your grant request.

  24               MR. GRIFFITH:  Thank you.

  25               (Laughter)



.
                                                                550
   1

   2               MR. LONEY:  I'd like to call panel

   3     23, Carlisle Towery, Anne C. Robinson, Rhonda

   4     Kotelchuck, Samuel C. Hamilton, Steven

   5     Alexander, Audi Abernathy and Rev. Floyd Flake.

   6               Rev. Flake, you were scheduled

   7     earlier today so we will begin with you, and I

   8     can claim the prerogative of the chair, I will

   9     tell you that the one time I had the, shall we

  10     say, pleasure of testifying in Congress, you

  11     were on this side of the gavel and I was on

  12     that side of the gavel.

  13               REV. FLAKE:  I hope I treated you

  14     fairly.

  15               (Laughter)

  16               MR. LONEY:  It was more bloody in the

  17     contemplation than in the doing, I will tell

  18     you.

  19               REV. FLAKE:  I thank you very much.

  20               MR. LONEY:  I appreciate you coming

  21     and if you will begin the panel, I appreciate

  22     it.

  23               REV. FLAKE:  Thank you very much, and

  24     thank you for allowing this privilege to speak

  25     first.  Obviously, my schedule has gotten



.
                                                                551
   1

   2     backed up, since I'm doing a group of seminars

   3     up at Harvard for ministers from around the

   4     country and I flew in to do this hearing,

   5     because I think it is so critical.

   6               In 1986 I was elected to the US House

   7     of Representatives and assigned to the House

   8     Banking Committee.  During the first few years

   9     of my tenure there I was assigned to a task

  10     force headed by Doug Maynard from Georgia with

  11     the responsibility of trying to determine how

  12     we might best inform the financial service

  13     industry.

  14               One of the discoveries we made was

  15     that America at that time did not have a single

  16     bank in the top 25 in the world, and,

  17     therefore, part of our challenge was trying to

  18     repeal Glass-Stegall in a way that would allow

  19     for modernization process that would open doors

  20     for banks and other industries like them to be

  21     able to work together in trying to give the

  22     best service to the American citizenry, and to

  23     the citizenry of the world, realizing that the

  24     world now has become much smaller, particularly

  25     in relationship to how we do our financial



.
                                                                552
   1

   2     business.

   3               Today as we come, having served as

   4     Chairman of the Committee on Oversight

   5     Investigation for one term, and recently

   6     retired in December as the ranking member of

   7     the Committee on Domestic and International

   8     Monetary Policy, I realize that we are still

   9     facing a major crisis as it relates to the

  10     place of the American banking community in the

  11     world at large.

  12               Other systems have seen fit to open

  13     doors of possibility so that other industries

  14     could function in ways that would allow for the

  15     best means of delivering services to the

  16     majority of people.

  17               As we have it currently in America,

  18     one has to make decisions about where to invest

  19     their money, to another place to decide where

  20     to buy their insurance, another place to be

  21     able to make other decisions relative to their

  22     financial well being.  It is my contention

  23     after years of looking at this problem that it

  24     is in the best interests of this nation to

  25     create the best mechanism possible for these



.
                                                                553
   1

   2     entities to be able to work together.

   3               I realize that the Congress has been

   4     slow in making a decision in relationship to

   5     bank modernization, but I don't think we can

   6     afford to wait for the Congress.

   7               As you know, the Congress moves based

   8     on political will.  The political will has not

   9     been there to make the decision that I think is

  10     appropriate for the banking industry.

  11     Therefore, Citi and Travelers have made the

  12     decision that I think must be honored.  It must

  13     be honored because it represents to us a major

  14     step in trying to move forward at a process

  15     that has for years lied dormant.

  16               The reality is our practices relative

  17     particularly to the Glass-Stegal Act have been

  18     those that were put in place over 50 years ago.

  19     They are not the most modern as it relates to

  20     our ability to function in a competitive

  21     environment and therefore are critical to the

  22     survival of the industry.

  23               Someone argued that the problem is

  24     that bigger is not always better.  I would

  25     suggest that that may well be true, but the



.
                                                                554
   1

   2     alternative is even worse.  Those banks that

   3     could not compete in this environment would

   4     generally not be able to provide the level of

   5     services that we can anticipate from banks that

   6     have the capability of delivering a wide range

   7     of services that constituents feel a necessity

   8     of going to.

   9               Our challenge becomes to understand

  10     not only the industry, but to understand the

  11     fullness of this responsibility, and a part of

  12     that responsibility is obviously to ensure that

  13     there are fair practices on the part of the

  14     bank.

  15               HMDA data clearly indicates and has

  16     indicated over the last twenty or thirty years

  17     that the Boston Study, particularly since the

  18     Boston Study of 1987 negates that there have

  19     been some practices on the part of the banking

  20     community in general in relationship to

  21     redlining and other practices that have

  22     mitigated against the possibility of the

  23     development of many communities in this nation,

  24     particularly urban communities where there is a

  25     need for access to capital for the rebuilding



.
                                                                555
   1

   2     of commercial strips that have deteriorated,

   3     the building of homes so that people can begin

   4     the process of building the necessary equity to

   5     become a full participant in American society;

   6     beyond that to share in the American dream,

   7     which is everyone's desire.

   8               It is my hope that as this merger

   9     moves forward there will be some prophecy by

  10     which Citi will evaluate it's overall role in

  11     community development, it's role in allowing

  12     institutions in those communities that have

  13     been underserved and overlooked to become full

  14     partners in the process of development.

  15               Clearly, the weak link has been

  16     capital.  I must say Citibank in participating

  17     in a 15 million dollar loan to my church

  18     recently in the recent development of our

  19     church with another seven banks joining with

  20     them, show the model that could be emulated

  21     throughout this nation, a model whereby banks

  22     who do not want to take the major risk of

  23     putting their capital on the line for an

  24     institution, may do so through participation

  25     with other banks.



.
                                                                556
   1

   2               Citi has also demonstrated some

   3     capability in its funding of many of the

   4     financial institutions in urban communities

   5     that would have otherwise gone out of business

   6     by now.  I would urge them to continue in that

   7     participation.

   8               I would ask the Fed that you be

   9     vigilant in your pursuit of insuring that the

  10     mandates are fully met, but I do believe that

  11     you have the capability to do it.  I know you

  12     have the capability of doing it.  Mr. Greenspan

  13     has testified numerous times before committees

  14     that I have sat on, and I believe that it is

  15     the will of the Fed to participate in the

  16     process of building a great and stronger

  17     nation.

  18               Indeed, I've worked with many of the

  19     members of the Governors, traveled with the

  20     Governors several years ago when we were

  21     looking at how the Fed might become more

  22     involved in our community development

  23     processes, and believe that at the heart of the

  24     Fed there are those that have an interest in

  25     trying to assure this development take place



.
                                                                557
   1

   2     because they realize it is in the long term

   3     interests of America.

   4               So I conclude by merely suggesting

   5     that this body would move forward in voting in

   6     support of the merger of Travelers and

   7     Citicorp.

   8               I believe that these two entities

   9     together represents for us a very strong

  10     financial institution.  Its reach will not only

  11     be limited to the borders of this nation, but

  12     indeed, place this bank and this insurance

  13     group in a category where they will be able to

  14     participate with the largest banks in the

  15     world.

  16               We cannot do any less if we expect to

  17     remain competitive.  We must do this in order

  18     to assure that not only does Citi continue to

  19     grow in its ability and it's reach, but also to

  20     assure that this merger demonstrates to the

  21     Congress that it is time for them to not

  22     continue to allow politics to dictate the

  23     direction of this nation as it relates to

  24     financial policy, but, indeed, to move forward

  25     with bank modernization, which I think is



.
                                                                558
   1

   2     critical for our overall and long-term

   3     survival.

   4               To that end, I yield the balance of

   5     my time.  Oh, I'm not in the House any more.

   6               (Laughter)

   7               I yield my time, which the young lady

   8     says has expired anyway.

   9               (Laughter)

  10               MR. LONEY:  Thank you very much.

  11     Mr. Towery.

  12               MR. TOWERY:  Thank you.  I'm from

  13     Greater Jamaica Development Corporation which

  14     is a private not-for-profit local development

  15     organization whose mission is to encourage and

  16     facilitate the economic recovery and

  17     revitalization of downtown Jamaica and it's

  18     environs.

  19               We're formed in 1967 by business,

  20     civic and community leaders, including

  21     commercial banks, and have worked since that

  22     time in close partnership with all sectors to

  23     carry out the plan to transfer Jamaica's older

  24     downtown into a modern center of business,

  25     commercial and industrial employment, higher



.
                                                                559
   1

   2     education, the arts, transportation and housing

   3     improvement.

   4               This plan was prepared by Regional

   5     Plan associates, city government and local

   6     leaders to service to some half million

   7     residents who live in twenty-one neighborhoods

   8     around this downtown.

   9               We appreciate this opportunity.  We

  10     are after all end-users of financial

  11     institution products and our communities are

  12     the beneficiaries when those products are

  13     shaped and tailored and prioritized to enable

  14     community development and to capacitate its

  15     practitioners.

  16               My comments are emphasizing the

  17     involvement and support we have received from

  18     Citibank over the thirty-one years of our

  19     economic development and community reinvestment

  20     work in Jamaica.

  21               This community, working to recover

  22     from a ten-year period, 1975 to 1985 of severe

  23     economic trauma, uncertainty and a general loss

  24     of public confidence, has benefited

  25     significantly from Citibank good works.  It's



.
                                                                560
   1

   2     not an overstatement to characterize the good

   3     works of this good corporate citizen as

   4     exemplary.

   5               Jamaica has progressed from a

   6     characterization at least as a low and moderate

   7     income community to what is now clearly a

   8     moderate to middle income emerging area.

   9               Citibank aggressive proactive lending

  10     programs in that area account I believe for

  11     increased home ownership, business growth, and

  12     other economic activities.

  13               They have a very active branch in

  14     Jamaica center, and their headquarter units and

  15     the community development units are very

  16     responsive to us.  They have provided strong

  17     and ongoing leadership for Greater Jamaica

  18     Development Corporation's efforts, serving

  19     consistently on our board with able senior

  20     representation which has been exceptionally

  21     active and involved.

  22               Citibank's contributions to our

  23     board's activities have included a high level

  24     of intelligence and interest in our general

  25     governance, sponsorship of retreats, meetings



.
                                                                561
   1

   2     and special events, chairs of committees,

   3     provision of in-kind services, including a

   4     loaned executive for two years who helped us

   5     establish a special revolving loan fund,

   6     advocacy with government, and financial

   7     contributions at leadership levels toward our

   8     general operations and for special projects.

   9               Citibank has participated in the

  10     provision of local small business loans through

  11     our revolving loan plan which is capitalized by

  12     the US Economic Development Administration, New

  13     York State Empire State Development and the

  14     City of New York Department of Business

  15     Services using CDBG funds, federal community

  16     block grants funds.

  17               Citibank provided us with a mortgage

  18     loan for improving and refinancing our

  19     headquarter office building, provided operating

  20     support along with board and other leadership

  21     for three of our associated and affiliated

  22     organizations, Jamaica Arts Center, King Manor

  23     Museum and Jamaica Business Resource Center,

  24     that we helped establish back in the '70s,

  25     which Congressman Flake helped us with the SBA



.
                                                                562
   1

   2     loan and now is an independent and wonderful

   3     entity.

   4               Through Citibank pioneering Culture

   5     Builds Community Program and participation in

   6     something called the Arts Forward Fund,

   7     Citibank helped launch an arts initiative in

   8     Jamaica called Culture Collaboration Jamaica

   9     and continues to support it.  Their leadership

  10     and support for York College, another key

  11     project in Jamaica for which we were somewhat

  12     instrumental.

  13               Working with Citibank people is

  14     inevitably a productive process for us.  They

  15     are thorough and eager to facilitate results to

  16     get things done.

  17               Their corporate and personal

  18     involvement in Jamaica I believe has been

  19     material in the success of this community

  20     revitalization.

  21               As a long-term practitioner of local

  22     economic development working in the trenches

  23     and on the front line, if you will, let me

  24     respectfully raise some matters for the new

  25     Citigroup's consideration.



.
                                                                563
   1

   2               In our three decades of work in

   3     Jamaica very challenging endeavors which are

   4     high in public purpose, only modest involvement

   5     have come from insurance companies and the

   6     investment banking community to date.  We

   7     enjoyed the services of a loan executive from

   8     Met Life for a key project.  Equitable has

   9     provided us with two mortgages that were key

  10     projects.  Merrill Lynch Foundation has enabled

  11     the startup and investor retention effort over

  12     that thirty years, but our experience suggests

  13     that the interest of the investment banking and

  14     insurance communities typically appear to be

  15     elsewhere, only slightly related to urban

  16     economic or community development.

  17               Thus, we're keen to know whether this

  18     acquisition will unleash the skills, the no how

  19     and the resources of Travelers and Salomon and

  20     Smith Barney in community development, and, if

  21     so, how?

  22               One, will any of the products of the

  23     Travelers Group be tailored and focused on

  24     community development objectives?  For example,

  25     we'd welcome a long view of insurers in



.
                                                                564
   1

   2     financing small real estate projects that are

   3     admittedly small for them, and it would be very

   4     helpful for Jamaica's local economy if our

   5     community small contractors were enabled to

   6     participate in the major construction projects

   7     under way in Jamaica through a prequalification

   8     and special bonding method so that they can

   9     compete.

  10               Two.  Will Salomon Smith Barney

  11     devote its entrepreneurial know-how to places

  12     like Jamaica bringing its professional skills

  13     to bear on the community development?

  14               Many of our companies, perhaps most

  15     of our companies are simply outside corporate

  16     America's mainstream, often small and not well

  17     capitalized minority and women-owned, but they

  18     are often energetic and with significant

  19     potential.

  20               We welcome a partnership with an

  21     investment bank to identify and nurture the

  22     special opportunities in Jamaica, and

  23     opportunities are being missed, we believe, to

  24     create markets there, literally creates markets

  25     there and the products to serve them.



.
                                                                565
   1

   2               There should be ways and means to

   3     make these companies eligible for the capital

   4     markets.

   5               For us, these are intriguing and

   6     proper questions for the new Citigroup given

   7     the special capacities it will have from

   8     combined commercial banking, insurance and

   9     investment banking and we support this

  10     acquisition with some enthusiasm.

  11               Thank you.

  12               MR. LONEY:  Thank you Mr. Towery.

  13               Ms. Robinson.

  14               MS. ROBINSON:  Good morning.  I am

  15     executive director of both Bridgeport

  16     Neighborhood Fund and Bridgeport Neighborhood

  17     Trust, which are located in Bridgeport,

  18     Connecticut.  For those of you not familiar

  19     with Bridgeport, it's located in Fairfield

  20     county in Connecticut, one of the nation's most

  21     affluent counties.  Bridgeport unfortunately

  22     hasn't shared in that affluence very much.  It

  23     not only is Fairfield County's poorest city,

  24     it's one of the two poorest cities in

  25     Connecticut, and would be a poor city I think



.
                                                                566
   1

   2     in any state.

   3               That said, Bridgeport Neighborhood

   4     Fund's mission is as a community developing

   5     bank to make loans to rehabilitate substandard

   6     rental housing.  We get funds from six

   7     participating banks, Citibank being one of

   8     those banks, which lends funds to us, so that

   9     we can relend them for our rehab activities.

  10               My other organization, Bridgeport

  11     Neighborhood Trust, is a community organization

  12     which tries to support the efforts of residents

  13     to improve the quality of their lives.  We have

  14     a number of programs, and Citibank has been a

  15     long-time supporter of those, both financial

  16     contributions and also people sitting on both

  17     my boards, both the fund and the trust boards.

  18               Interestingly, I can honestly say

  19     that Citibank CRA officer Ellen Power is the

  20     only CRA officer who ever calls me up and asked

  21     me what Citibank can do for us.  Usually I'm

  22     knocking on other people's doors asking them to

  23     do things for me.  Also Citibank is the only

  24     bank which has asked if they can lend us more

  25     money and, again, it's usually the reverse.



.
                                                                567
   1

   2               All of this has been done by Citibank

   3     despite the fact that they do not have a branch

   4     in Bridgeport.  The nearest branch is in the

   5     adjacent town of Fairfield, so I do believe

   6     that their commitment to our organizations and

   7     to Bridgeport is truly to improve the community

   8     as opposed to being really driven only by CRA

   9     concern, not taking deposits in Bridgeport.

  10               I am hopeful that the merger will be

  11     beneficial and I am here to support it.

  12               Travelers in the past has been

  13     contributor to another neighborhood

  14     organization in Bridgeport, Neighborhood

  15     Housing Services.  Right now it's actually

  16     easier in Bridgeport to get a loan than it is

  17     insurance, so, I can say that Travelers is a

  18     company which writes a fair amount of insurance

  19     in Bridgeport, but I'm hoping that the merger

  20     will result in more business being done in

  21     Bridgeport, certainly if they pick up

  22     Citibank's philanthropic bent I think that will

  23     be the case.

  24               Salomon Smith Barney obviously

  25     doesn't have much of a presence in the city but



.
                                                                568
   1

   2     I'm encouraged by seeing the types of programs

   3     that they are starting to enact in other area

   4     of the country, and I'm hopeful that that, too,

   5     will have a beneficial effect in Bridgeport.

   6               So on the whole I'm hopeful about the

   7     merger, and I think that it should have good

   8     impact on the city life of Bridgeport because

   9     it should bring more resources into the

  10     community such as ours.  Thank you.

  11               MR. LONEY:  Thank you.  Ms.

  12     Kotelchuck.

  13               MS. KOTELCHUCK:  Thank you.  My name

  14     is Rhonda Kotelchuck.  I'm the executive

  15     director of the Primary Care Development

  16     Corporation.

  17               Thank you for this opportunity to

  18     testify with regard to the work that we have

  19     done over the last several years with the

  20     community development group at Citibank.

  21               The Primary Care Development

  22     Corporation is a not-for-profit corporation

  23     created to assure access to quality primary

  24     health care in medically underserved

  25     communities of New York City.  We do this by



.
                                                                569
   1

   2     providing financing and technical assistance to

   3     nonprofit community health centers, hospitals

   4     and primary care providers to build new or

   5     expanded facilities in these communities.

   6               Among our most important tools is a

   7     24 million dollar loan fund created for the

   8     financing of smaller facilities.  Citibank has

   9     not only been instrumental to the structuring

  10     of the loan fund, but has also committed five

  11     million dollars to the loan fund.  Citibank has

  12     also made it clear that it's interested in

  13     expanding its relationship with Primary Care

  14     Development Corporation and has offered

  15     financing as well as its time and best thinking

  16     to help us further our mission.

  17               In the course of the coming year we

  18     will work with Citibank in exploring several

  19     new arenas, including different sources of

  20     credit enhancement, the potential for creating

  21     a similar loan vehicle in underserved areas

  22     upstate and the expansion of our technical

  23     assistance programs for project sponsors in

  24     financial operations.

  25               To date we have financed 15



.
                                                                570
   1

   2     facilities that collectively will provide basic

   3     preventive and primary health care to some

   4     220,000 New Yorkers living in all five boroughs

   5     of New York City.  Ten of these facilities are

   6     now operating.  We also have an active pipeline

   7     of some dozen additional facilities in earlier

   8     stages of development.

   9               This record of achievement clearly

  10     would have been impossible without the active

  11     and creative involvement of the Citibank

  12     community development group.  We look forward

  13     to a continued partnership in meeting the

  14     health care needs of New York City's

  15     underserved community.

  16               Thank you.

  17               MR. LONEY:  Thank you, Ms.

  18     Kotelchuck.

  19               Mr. Hamilton.

  20               MR. HAMILTON:  Good morning.  I'm

  21     executive director of the Hartford Economic

  22     Development Corporation and the Greater

  23     Hartford Business Development Center of

  24     Hartford, Connecticut.

  25               These companies provide technical



.
                                                                571
   1

   2     assistance, loan packaging and subordinate debt

   3     financing for small and medium-sized businesses

   4     in Hartford and the surrounding region.

   5               Both organizations have provided loan

   6     assistance for business startup and expansion

   7     projects located in low and moderate-income

   8     neighborhoods.  Since 1983, we provided more

   9     than 19 and a half million dollars in loan

  10     assistance resulting in the retention of almost

  11     1700 jobs and the creation of another nine

  12     hundred new jobs in those areas.

  13               Since we are often considered a

  14     lender of last resort, these much-needed funds

  15     help to create jobs in companies and in

  16     communities that can provide goods and services

  17     that ordinarily would not be accessible to the

  18     residents of these communities.

  19               Of the four hundred fifty clients

  20     that we serve annually, more than 60 percent of

  21     our loans are given to minority and women-owned

  22     businesses.  The ability of the Economic

  23     Development Corporation in the business

  24     development center to provide services at no

  25     charge for more than twenty years is directly



.
                                                                572
   1

   2     related to the support of outstanding corporate

   3     citizens like the Travelers.

   4               In our early years Travelers donated

   5     management and technical resources to our firm.

   6     Travelers also provides a million dollars in

   7     funds and loan pool targeted for women and

   8     minority-owned businesses, certainly a group

   9     which has and continues to have in many cases

  10     access to capital.

  11               Travelers has consistently been

  12     represented on our board of directors and has

  13     helped share our growth in contributions to the

  14     community.  On January 1 of 1997, Travelers

  15     converted its original low interest loan of one

  16     million dollars to a grant.  This generosity

  17     will enable our organization to continue to

  18     resolve this loan pool for a considerable

  19     period of time.

  20               As you might expect, Travelers'

  21     involvement in our community has not been

  22     limited just to the companies I represent.  A

  23     $100,000 grant in 1986 to the Connecticut Small

  24     Business Development Center, and funding for

  25     the Womens Business Enterprise Specialist



.
                                                                573
   1

   2     Program have enabled these organizations to

   3     flourish and become the entrepreneurial center

   4     at the Hartford College for Women.

   5               This program has become a national

   6     model for helping women entrepreneurs gain

   7     self-sufficiency.  The center continues to be a

   8     collaborative effort between corporate, public

   9     and private entities.

  10               In 1997 the Travelers Foundation gave

  11     the Entrepreneurial Center a $75,000 grant to

  12     help provide small business loans for women.

  13               Lastly, as chairman of the board of

  14     the United Way of the Capital Area, I have seen

  15     firsthand Travelers' commitment to assuring

  16     that those with the greatest needs and the

  17     least resources are served by the United Way

  18     agencies in our community.

  19               In the last four years alone,

  20     Travelers' employees have contributed more than

  21     three million dollars to the community

  22     campaign.  As to the Travelers' corporate gift,

  23     that total ballooned to more than 4.2 million

  24     dollars.

  25               Travelers corporate concerns is



.
                                                                574
   1

   2     consistently positive in most, if not all,

   3     areas of concern in Hartford and the region.

   4     It is for these reasons and others too numerous

   5     to mention in the time allotted that I speak in

   6     favor of combining Citicorp and the Travelers.

   7     I am certain that the new entity will do even

   8     greater good than is being done in the

   9     communities they currently serve.

  10               Thank you.

  11               MR. LONEY:  Thank you, Mr. Hamilton.

  12     Ms. Abernathy.

  13               MS. ABERNATHY:  Good morning.  Thank

  14     you for this opportunity to speak on behalf of

  15     Elaine Edmond, executive director of the Harlem

  16     YMCA.

  17               I'd like to say that there is a new

  18     Citibank branch opening on 134th Street and

  19     Eighth Avenue in Harlem.

  20               Citibank has been and active

  21     supporter of the Harlem YMCA since the 1971

  22     inception of our National Salute to Black

  23     Achievers in Industry Awards Dinner.  They have

  24     been our leading sponsor, generally donating

  25     annually towards our various youth programs.



.
                                                                575
   1

   2               Recently as a corporate sponsor they

   3     contributed considerably in support of the

   4     Jackie Robinson Youth Center.  They stay in

   5     constant contact with us, seeking additional

   6     ways to collaborate with the Harlem YMCA, to

   7     continue to support our youth programs and the

   8     community.

   9               Citicorp Citibank and the Harlem YMCA

  10     have had and continue to have one of the most

  11     positive relationships in the Harlem community.

  12     Citibank is one of the very few large

  13     institutions that has remained consistent in

  14     their support of our community needs.

  15               Their financial support has enabled

  16     the Harlem YMCA to offer, in addition to our

  17     youth programs, a wide variety of innovative

  18     programs for the YMCA families we assist.  We

  19     have been able to increase and expand our

  20     outreach services to a larger portion of our

  21     community.

  22               In recent years the population of

  23     Harlem has changed to a multicultural,

  24     multiracial diverse population with different

  25     challenges.  With Citibank as a staunch



.
                                                                576
   1

   2     supporter we are able to meet some of these

   3     challenges.  We provide full-day services to

   4     preschool children ranging in ages from 2.9 to

   5     5 years old.  Our after-school activities also

   6     assist parents who need child care until 7 p.m.

   7     for students ages 16 to 17 who require a safe,

   8     secure structured environment.

   9               Citibank recognized our increased

  10     need of services when welfare reform required

  11     custodial parents to join the work force.

  12     Citibank approached us with ideas and financial

  13     assistance to fulfill this new demand from our

  14     community.

  15               I came today to give testimony so

  16     people can be made aware of the vital

  17     assistance the Harlem YMCA receives from

  18     Citicorp Citibank.  The needs of the Harlem

  19     community continue to increase, and so does the

  20     need for financial support.

  21               It is comforting for us at the Harlem

  22     YMCA to know our collaboration with Citibank is

  23     still a supporting one.

  24               Thank you.

  25               MR. LONEY:  Thank you, Ms. Abernathy.



.
                                                                577
   1

   2               I have a couple of questions.  First

   3     of all, Mr. Towery, I'm not sure if I am clear

   4     totally.  I understand that you were testifying

   5     that there are a number of things that Citicorp

   6     has done for you, loan access programs and such

   7     as that, but either I missed it, or you didn't

   8     say whether they have actually made loans to

   9     your organization or through your organization.

  10               MR. TOWERY:  Yes, they have.  The

  11     mortgage on our building, our headquarter

  12     building is with Citibank, one million six I

  13     think it is.  They've made several small

  14     business loans through our revolving loan fund

  15     that we participate and usually fill gaps, the

  16     banks help the banks and with blended rates and

  17     participated in several of those, and then I

  18     think I mentioned that their expertise helped

  19     us actually start that revolving loan fund.

  20               MR. LONEY:  Okay, thank you.  Anybody

  21     have any questions of the panel?

  22               MS. KENT:  I have.  Ms. Abernathy, is

  23     that a full-service bank?

  24               MS. ABERNATHY:  Yes, the new one

  25     that's opening.  As a matter of fact,



.
                                                                578
   1

   2     ironically the vice-president and two of the

   3     managers came to visit me yesterday.  They came

   4     to look at the branch, the Harlem YMCA offices

   5     and their services there, because being that

   6     they were new in the community they wanted to

   7     familiarize themselves with us, and I had the

   8     opportunity of meeting them then.  They will be

   9     on the corner of 134th and Seventh Avenue in

  10     Harlem.  I didn't bring my notes from the

  11     meeting, but I believe they are opening in

  12     August.

  13               MS. KENT:  That's what I'm trying to

  14     ask, are they opening a full-service branch,

  15     not just a --

  16               MS. ABERNATHY:  No, it's a

  17     full-service bank in Harlem.

  18               MR. LONEY:  I have a question of

  19     Mr. Flake.

  20               Don't you miss Washington?

  21               (Laughter)

  22               That's not really my question, but I

  23     thought I'd ask it anyway.

  24               REV. FLAKE:  Actually, there is

  25     something wrong with me, I haven't even had



.
                                                                579
   1

   2     withdrawal from that.

   3               MR. LONEY:  One of the things that is

   4     interesting from your perspective, given your

   5     distinguished career in Congress, a number of

   6     folks have come in and argued the illegality of

   7     this transaction saying that the law as it

   8     presently stands is against this transaction

   9     being approved.

  10               One might anticipate that one with

  11     your perspective of having spent sometime in

  12     Congress might share that, and it's interesting

  13     to me that you don't seem to, and I wonder if

  14     you could talk to me about that a bit.

  15               REV. FLAKE:  Well, one of the things

  16     I learned in my 11 years in Congress is that

  17     the wheels of progress there generally turn

  18     relatively slow.

  19               Most progressive moves in this nation

  20     have been made outside of the political

  21     process, with the political process ultimately

  22     catching up and then jumping in front, and

  23     doing what is necessary to clear the way.

  24               I would argue that to wait, I'd

  25     rather see us move forward, and if there are



.
                                                                580
   1

   2     going to be legal challenges, allow those

   3     challenges to move through the Court process,

   4     even if it goes all the way to the Supreme

   5     Court, to make some determinations that I think

   6     are in the best long term interests, not only

   7     of the industry in general, but in the

   8     long-term interests of America.

   9               I don't think we can afford to

  10     continue in what I call the substandard state

  11     relative to other countries of the world

  12     waiting for Congress to act.  I think it is

  13     imperative that there can be a process that

  14     people can at least have an opportunity to

  15     evaluate, gather some data from, and I think

  16     this may wind up being the model for future

  17     mergers and will serve as a major impetus to

  18     put forward the process that I think is very

  19     archaic and outdated.

  20               So I think history of our nation has

  21     always been, regardless of what the law is in

  22     the pure sense of the word, there are other

  23     interpretations of the spirit of that law, as

  24     has been evidenced by other changes that have

  25     taken place in the financial services industry



.
                                                                581
   1

   2     and those changes have taken place in spite of

   3     the limitations of the Congress.

   4               MR. ALVAREZ:  We've been privileged

   5     with this panel and other panels in the last

   6     day and a half to hear from community groups,

   7     organizations that are doing real work in the

   8     trenches and helping a variety, a diverse

   9     variety of needs and one of the points that you

  10     made today, and others have made is that banks'

  11     support of your program is very important and

  12     allows you to do what you are doing.

  13               Others have suggested that there is

  14     room for banks to do, to support these groups

  15     and to direct activities themselves and perhaps

  16     banks are relying too much on organizations

  17     such as yours and funding organizations such as

  18     yours and retreating from doing direct

  19     activity, direct lending, direct investment

  20     which really competes with your organization,

  21     but would be other means to the community.

  22               My question is, do you have that

  23     sense?  Do you have the sense that banks are

  24     relying too much on other intermediaries or

  25     organizations that are in the trenches of the



.
                                                                582
   1

   2     community and are withdrawing their own direct

   3     involvement in the community?

   4               MS. ABERNATHY:  I would --

   5               MS. ROBINSON:  I'd like to address

   6     that, because Bridgeport Neighborhood Fund is a

   7     community development bank, and so we are

   8     making loans.

   9               What I find with the type of lending

  10     that we do, it's such a very peculiar niche and

  11     you have to have a great deal of knowledge, not

  12     only about the community, but also typically

  13     about the borrower.  Lots of times you're not

  14     just looking at financial information about

  15     that borrower, but you really need to know

  16     something about either the individual or the

  17     not-for-profit background and you're making a

  18     loan as much on that as you are on any

  19     financial information that you're getting.

  20               I think it would be very difficult

  21     for a conventional bank to have the type of

  22     knowledge that we have and that we need to make

  23     the kind of loans that we're making, and I

  24     think that's one of the reasons that the six

  25     banks support us because they recognize that we



.
                                                                583
   1

   2     are better capable of making those loans.

   3               Also, we make small loans.  Our

   4     typical loans are between $200,000, the

   5     transaction cost for any banks to try to handle

   6     a loan of that size would just be prohibitive,

   7     so either the borrower would be getting charged

   8     more fees or we'd really be costing the bank a

   9     lot of money to do those types of loans, and,

  10     actually, we'll do loans down to thirty

  11     thousand dollars, so I just don't think it

  12     would be make sense that a bank would put in

  13     resources and try to make the type of loans

  14     that we do.

  15               MR. LONEY:  Ms. Abernathy?

  16               MS. ABERNATHY:  Yes.  I think the

  17     fact that the familiarity of the population of

  18     our communities with us is easier for them to

  19     approach us than it would be directly going to

  20     the large institution.  I think being

  21     intermediaries your supportive of the community

  22     needs in that respect.

  23               MR. HAMILTON:  I would just like to

  24     add one point to that.  One of the things that

  25     we're seeing in our community, perhaps the



.
                                                                584
   1

   2     intermediaries, that the bank have used us

   3     somewhat as a research or laboratory in a sense

   4     and we're now seeing a tremendous amount of

   5     activity in marketing, if you will, to the

   6     small business segment by a number of the banks

   7     in our community.

   8               So I do believe that they have made

   9     an amazing discovery that you can lend in these

  10     markets to this type of business, and have it

  11     be profitable.  I think there will always be

  12     the niche that is spoken of here that you need

  13     some specialized type of expertise and time and

  14     effort with, but you do see more, at least in

  15     our marketplace, more involvement of the area

  16     banks as they get more into small business

  17     centers, small business lending, and marketing,

  18     specifically, the small minority-women-owned

  19     businesses as they continue to emerge as a

  20     major force in the economy.

  21               MR. TOWERY:  You may I say that I

  22     understand the appeal of wholesaling products

  23     and services that larger banks have, but my

  24     caveat would be that there is a risk of getting

  25     out of the retailing of their products if those



.
                                                                585
   1

   2     intermediaries are really large in terms of

   3     geographic interest.  Community intermediaries,

   4     our little resolving loan fund a big loan for

   5     us $150,000, but I do think community-scale

   6     intermediaries, national regional

   7     intermediaries, I'm sure there is a wonderful

   8     function for them and requirement there, but I

   9     think relying on just large scale

  10     intermediaries at the experience of retailing

  11     their products and dealing directly with local

  12     communities is not a very good idea.

  13               I haven't seen that huge trend in any

  14     way, but I do think it's a risk worth watching.

  15               REV. FLAKE:  As a community developer

  16     is what I do more so than what I was doing in

  17     politics, I think it is critical for us to

  18     understand that the actual loan of the bank

  19     requires that they have a system by which they

  20     can measure some standards and some

  21     accountability.

  22               I think the worst thing would be to

  23     listen to some of those who basically would

  24     draw us back into a process that would be

  25     nothing but a replication of what happened with



.
                                                                586
   1

   2     Model Cities and some of the other programs,

   3     and that is that there would be dumping of

   4     monies into communities through other kinds of

   5     intermediaries and those monies would not be

   6     accountable, and I don't think you would get a

   7     product.

   8               I think the way that the system works

   9     now is in the best interests of most

  10     communities in that the banks have identified

  11     the most accountable, most capable

  12     organizations for the delivery of their

  13     product, and I think it has worked extremely

  14     well, and to spread that out to interests that

  15     are not necessarily concerned about that kind

  16     of development, but are concerned about the

  17     ongoing survival of the organization, or

  18     concerned about having a voice, the reality is

  19     that is not the bank's function, and,

  20     therefore, we have to be very careful in making

  21     sure that we do not demand of a bank that which

  22     jeopardize its ability to be able to do what it

  23     is in fact certified and organized to do, and I

  24     would just urge that to have that caution as we

  25     move forward.



.
                                                                587
   1

   2

   3               MS. KOTELCHUCK:  Speaking from our

   4     perspective, this is the first time that we're

   5     aware of banks such as Citibank embracing

   6     primary care as and integral part of community

   7     development, which we believe it to be, and as

   8     such, primary care is really a developing area.

   9     It's a direction that the health system is

  10     moving in.

  11               It is a new area for lending and for

  12     development, and it's been our experience that

  13     an enormous amount of work is needed and an

  14     enormous amount of expertise is needed in terms

  15     of what will work in a particular community,

  16     what a group needs to be successful in this

  17     area, and Citibank has been quite supportive in

  18     terms of the development of that expertise on

  19     the part of our group, and I hope that this is

  20     useful to others in terms of breaking into the

  21     area of primary care from lending and other

  22     communities.

  23               MR. LONEY:  Thank you.  Any other

  24     questions of this panel?  If not, I thank you

  25     all very much.



.
                                                                588
   1

   2               MR. LONEY:  Let me call the last

   3     scheduled panel that we have, Panel

   4     Twenty-four.

   5               Nancy Roberts, Abdul Rahmaan

   6     Muhammad, Joanne Oplustil, Dennis Kremer,

   7     Robert Davenport and Jennifer Adolph Blum.

   8               Thank you all for coming.  We will

   9     start with you, Ms. Roberts.

  10               MS. ROBERTS:  Good morning.  I am

  11     Nancy Roberts, president of the Coordinating

  12     Council for Foundations, a regional association

  13     of more than 80 corporate foundations,

  14     corporate giving programs, independent

  15     foundations, community foundations and

  16     federated funds serving Connecticut.  The

  17     Council's mission is to promote and support

  18     effective philanthropy for the public good in

  19     Connecticut.

  20               As head of the organization that

  21     supports and provides data on and information

  22     about the organized grant-making community in

  23     Connecticut, I am in a position to observe and

  24     comment on the corporate social investment of

  25     Travelers as well as other corporate entities



.
                                                                589
   1

   2     in the state.

   3               Travelers has historically been an

   4     important contributor to organizations in the

   5     Hartford area that heal, educate, entertain and

   6     inspire -- and its support has been steadfast.

   7               The headquarters community usually

   8     receives the greatest corporate support.

   9     However, after the merger of Travelers and

  10     Primerica, greater Hartford was still the

  11     beneficiary of sizable support from Travelers.

  12               Most recently, within the past four

  13     years, Travelers has provided significant

  14     support through its foundation in the area of

  15     education, from early childhood through college

  16     years.

  17               Let me give you a few examples.

  18               Following the merger with Primerica,

  19     Travelers quickly brought to Hartford the

  20     academy program which had been successfully

  21     provided in other parts of the country.  The

  22     Academy of Finance at Weaver High School not

  23     only became a success story in its own right,

  24     but it provided the model and design that

  25     stimulated the development of other academy



.
                                                                590
   1

   2     programs supported by other corporations and

   3     the State of Connecticut in the two other high

   4     schools in the City of Hartford.

   5               A three-year commitment to the

   6     Hartford public schools for instrument repair,

   7     replacement and music instruction provided much

   8     needed support to a neglected program for the

   9     cultural enrichment of children in Hartford.

  10               In January 1998, Travelers donated

  11     30,000 square feet of space in their Education

  12     Center to the University of Connecticut for

  13     three years to support business education.  In

  14     addition, they will provide a scholarship fund

  15     and paid internships for high school and

  16     college level students.  This effort

  17     exemplifies Travelers' efforts to link

  18     educational opportunities for students to job

  19     opportunities.

  20               In addition to the above-mentioned

  21     commitments to public education, the Travelers

  22     Foundation contributes to community-based

  23     tutoring, mentoring programs for children and

  24     youth, to cultural and arts programs, to health

  25     programs, totalling more than $1.4 million in



.
                                                                591
   1

   2     1997 going into the Hartford community.

   3               Matching gifts to educational

   4     institutions has been replaced with a program

   5     which both encourages and rewards employees who

   6     contribute volunteer time to their community.

   7     With all of the downsizing of the number of

   8     employees which has happened in the greater

   9     Hartford area, one of the least discussed but

  10     most strongly felt effects has been the loss of

  11     volunteers to both boards of directors and

  12     direct service in nonprofit organizations.  In

  13     many corporations, employees have not been

  14     encouraged to participate outside of their

  15     workplace.

  16               But Travelers Volunteer Incentive

  17     Program provides a strong message that it is

  18     not only OK to volunteer, but it is important

  19     to give back to the community.  Employees may

  20     request up to $1500 on behalf of the charitable

  21     organizations for which they volunteer, and the

  22     amount received further encourages

  23     participation since grants are based on the

  24     longevity with the organization as well as the

  25     hours of service.  In 1997 over 60 employees



.
                                                                592
   1

   2     took advantage of this program with an

   3     additional $30,000 contributed to charitable

   4     organizations.

   5               The nonprofit community has also

   6     benefitted from Travelers' generous in-kind

   7     support, including opening its space in the

   8     education center for conferences, programs and

   9     events of community organizations.  One recent

  10     event for which Travelers provided space and

  11     technical assistance and financial support was

  12     the Greater Hartford Area Child Care

  13     Collaborative's Quality Child Care Teacher

  14     Award, which recognized and rewarded the best

  15     early childhood teachers in greater Hartford.

  16               The final area I would like to touch

  17     on is Travelers' support for the civic

  18     infrastructure of the greater Hartford

  19     community.

  20               Travelers has been a founder and key

  21     player in important civic events, including the

  22     Capital Region Growth Council, which was

  23     developed to stimulate economic growth in the

  24     greater Hartford region, and Riverfront

  25     Recapture, an effort to reconnect the Hartford



.
                                                                593
   1

   2     area towns and cities to the Connecticut River.

   3     Along with the grants from its foundation, the

   4     in-kind and human resources and the civic

   5     efforts support to enhance the quality of life

   6     in the greater Hartford area.

   7               In closing, I would like to reiterate

   8     that in my opinion Travelers has exhibited

   9     ongoing strong commitment to greater Hartford,

  10     and I expect that commitment will continue.

  11               Thank you.

  12               MR. LONEY:  Thank you, Ms. Roberts.

  13               Mr. Muhammad.

  14               MR. MUHAMMAD:  Yes.  My name is Abdul

  15     Rahmaan Muhammad, and I am here in my role as

  16     the senior vice president for Community Support

  17     Services and diversity manager for the Village

  18     for Families and Children.

  19               I am pleased to have this opportunity

  20     to participate on this panel, to provide

  21     information relating to factors the Board is

  22     required to consider under the Bank Holding

  23     Company Act.

  24               I appear before you on behalf of the

  25     Village for Families and Children, Inc.,



.
                                                                594
   1

   2     located in Hartford, Connecticut, and its

   3     president Mr. William A. Baker.  I express my

   4     appreciation for this opportunity to present

   5     testimony pertaining to the convenience and

   6     needs of the communities to be served.  I will

   7     also briefly address our long and beneficial

   8     relationship with the Travelers.

   9               As one of the oldest human service

  10     agencies in the country, the Village for

  11     Families and Children has been at the forefront

  12     of the development and provision of quality

  13     social and human services.  The Village has

  14     been a key leader in the process of meeting

  15     human needs for more than 185 years.

  16               With a cadre of trained, experienced

  17     and diversity qualified professional and

  18     para-professionals, the Village has been

  19     influential in research, training and service

  20     provision.

  21               Our services range from programs for

  22     infants to the elderly.  We provide outpatient

  23     behavioral and mental health counseling,

  24     special needs adoption services, specialized

  25     foster care services, extended day treatment



.
                                                                595
   1

   2     and family preservation programs, family

   3     reunification and residential teen transition

   4     programs, teen pregnancy and family housing

   5     alternative services, and advocacy on behalf of

   6     those most needy in our community.

   7               Within the past five years, we have

   8     become increasingly family centered and child

   9     focused.  Working in collaboration with other

  10     affiliations in the community, we have

  11     successfully implemented several school-based

  12     family resource centers.

  13               These programs have become one-stop

  14     shopping centers for comprehensively meeting

  15     family needs and improving the quality of life

  16     by developing community-based resources.

  17               Our services and programs have

  18     positively impacted the lives of thousands of

  19     clients, consumers and customers statewide.

  20     Such cost-effective programs have been made

  21     possible in part due to partnership and support

  22     from the private industry in general and the

  23     Travelers Group in specific.

  24               The Travelers involvement and support

  25     to the Village has been long-standing and



.
                                                                596
   1

   2     consistent.  For many years they have made the

   3     financial difference in our summer enrichment

   4     programs, as a part of our extended day

   5     treatment program.  This program has provided

   6     services to many children.

   7               In the more recent involvement for

   8     them, the Travelers has funded several projects

   9     in our family resource centers.  Such projects

  10     include, but are not limited to, our computer

  11     lab in the North Hartford Family Resource

  12     Center, parent educator and parent specialist

  13     services and recreational and other services

  14     for children.

  15               With support from Travelers, both

  16     financial and human, we have been able to meet

  17     the needs of children needing tutoring in the

  18     sciences, teens needing mentors, mothers

  19     needing supplies and living space, seniors

  20     needing transportation to services, and

  21     families needing food and gifts for their

  22     children during special observances and holiday

  23     seasons.

  24               Volunteers from the Travelers have

  25     been crucial in improving and enhancing the



.
                                                                597
   1

   2     program sites for many of our community-based

   3     services.  Not only has the Travelers provided

   4     services at our program sites, they have made

   5     available space at their local offices for

   6     training and community-based programs.  During

   7     a recent annual United Way-sponsored volunteer

   8     program called A Day of Caring, several of the

   9     Travelers volunteers provided a full day of

  10     services to the human service organizations in

  11     the community.

  12               The past long-term partnership

  13     between the Village for Families and Children

  14     and the Travelers, which includes hundreds of

  15     thousands of dollars and staff involvement,

  16     lead us to believe that a bigger and better

  17     Travelers would continue this high quality of

  18     service and support that have been products and

  19     outcomes of the previous years.

  20               Therefore, the Village for Families

  21     and Children would like to go on record as

  22     positively supporting the merger with Citicorp,

  23     possibly leading to the potential for greater

  24     contributions of resources, both financial and

  25     human.  In our estimation, such a situation



.
                                                                598
   1

   2     would only lead to the potential enhancement of

   3     the human conditions throughout the greater

   4     Hartford area, would lead to volunteer support,

   5     quality service provision and continued

   6     financial support.

   7               Should you have questions, I would be

   8     pleased to address them when they are

   9     appropriately asked.  On the other hand, we

  10     thank you for this opportunity and we express

  11     our appreciation to be here.

  12               MR. LONEY:  Thank you, Mr. Muhammad.

  13               Ms. Oplustil.

  14               MS. OPLUSTIL:  My name is Joanne

  15     Oplustil.  I am the executive director of

  16     CAMBA, a nonprofit agency in the Flatbush

  17     section of Brooklyn, New York.

  18               In 1985 when I took over the agency,

  19     I was the sole employee.  Today we have over

  20     350 employees and we service over 14,000

  21     individuals a year.  The programs that we run

  22     are employment programs, health and aids, youth

  23     business development, microloans, civic

  24     services, homeless and education programs.

  25     We're opening a primary health care center in



.
                                                                599
   1

   2     1999, day care center in 1999, and we are in

   3     the process of developing housing for special

   4     needs populations, specifically people who are

   5     HIV positive.

   6               Through those years when I started

   7     out, Citibank was always there; and, quite

   8     frankly, if they weren't with me -- certainly I

   9     was by myself for a while -- encouraging and

  10     also giving grants to the agency, we would not

  11     be where we are today.

  12               I think that the merger between

  13     Travelers and Citibank will only benefit

  14     communities such as ours.  In addition to

  15     banking services and assistance that we get --

  16     for instance, we work with many people who are

  17     either on public assistance or who are

  18     immigrant refugees who are not always familiar

  19     with the banking systems.  They don't have

  20     accounts.  They want to cash some checks.  They

  21     don't have the fees.  They are not able to pay

  22     the fees that the banks charge.  We've worked

  23     out with Citibank where many of our low-income

  24     clients are able to open banks or cash checks,

  25     and fees had been either reduced or eliminated.



.
                                                                600
   1

   2     And we plan to continue to work with Citibank

   3     in this effort, particularly with New York

   4     City's very strong push to get people from

   5     welfare to work.

   6               People who are now going to be

   7     working are going to ultimately need to open

   8     bank accounts.  We are going to need

   9     consumer-friendly bankers who are going to work

  10     with marginal population or low-income who may

  11     not have the resources to pay all the fees

  12     immediately, to assist them with opening

  13     accounts.  That is good business, because

  14     ultimately people who open a small account will

  15     ultimately have larger accounts.

  16               With regard to Travelers, we view

  17     that as positive, because insurance is a very

  18     important component, certainly in the Federal

  19     Reserve.  But in nonprofit agencies you

  20     breathe.  You have a new program, you need new

  21     insurance.  We hope that this merger will

  22     assist us in our insurance needs, educating us

  23     not only nonprofits, but also educating

  24     community members on the needs of insurance,

  25     what insurance is, what it is all about and how



.
                                                                601
   1

   2     to access insurance, reduced fee insurance.

   3               Our microloans -- you had asked

   4     another question to the other panel about

   5     having intermediaries.  We do microloans.  We

   6     give out up to $5,000 loans.  Banks can't

   7     afford to give out $5,000 loans.  We have been

   8     very successful with working with populations

   9     in giving $5,000 loans, combining them with

  10     other intermediaries to make them either

  11     $10,000 or $15,000 loans, where the businesses

  12     have been turned down, and ultimately will then

  13     go to a Citibank for a larger loan.

  14               So other entities providing loans are

  15     very important, because we are the ones that

  16     will walk them through and ultimately they will

  17     be able to access larger loans from Citibank,

  18     and we have Citibank supporting our microloan

  19     program and all of our other programs.

  20               Thank you.

  21               MR. LONEY:  Thank you.

  22               Mr. Davenport.

  23               MR. DAVENPORT:  Thank you for the

  24     opportunity to speak.  Like Mark Winston

  25     Griffith earlier, I sort of looked at this



.
                                                                602
   1

   2     opportunity as a no-win situation because our

   3     constituency includes many of the

   4     community-based organizations that have spoken

   5     over the last two days, and some of our

   6     constituency, some of the community-based

   7     organizations have spoken in opposition to the

   8     merger and some of them have spoken in favor of

   9     it.  So whatever I say I am going to make some

  10     enemies as a result of it.

  11               I, like Mark Winston Griffith,

  12     thought it was a marvelous week to take a

  13     vacation.  But in spite of that, I want to

  14     speak in favor of the proposed merger for two

  15     reasons, and I will explain those in a second.

  16               First of all, just a word about NDC,

  17     our organization.  We are one of the nation's

  18     oldest not-for-profit organizations engaged in

  19     community development and housing development.

  20     We started in 1968.  Our founder had worked for

  21     Bobby Kennedy, and when Bobby was shot, he

  22     organized the National Development Council,

  23     founded with a Ford Foundation grant.

  24               In a nutshell, we are finance people.

  25     Our role is to channel capital into low-income



.
                                                                603
   1

   2     areas in productive ways.  In any given year,

   3     we are working with 100 to 125 community-based

   4     organizations, partnering with them to create

   5     jobs and to stimulate investment, private

   6     sector investment into the low-income

   7     communities.

   8               We own 2,000 units of low-income

   9     housing nationwide.  We have $250 million worth

  10     of direct development experience.  We're the

  11     only nonprofit with what's called a small

  12     business lending license from the SBA, which

  13     entitles us to make SBA-guaranteed loans to

  14     small businesses who invest into low- and

  15     moderate-income areas.

  16               As I said, I want to speak in favor

  17     of the merger for two reasons, and they relate

  18     very much to our experiences with Citibank, and

  19     the first is really what I call attitude.

  20               For 30 years our organization has

  21     known that a major obstacle to the flow of

  22     capital into low-income communities is not the

  23     lack of investment opportunities but the

  24     perception that there is a lack of investment

  25     opportunities.  Our experience has always been



.
                                                                604
   1

   2     that there are a lot of good business

   3     investment opportunities in low-income

   4     neighborhoods and all we have to do is uncover

   5     them and work to structure the deals.

   6               No bank is perfect.  Citibank is not

   7     perfect.  But our experience with them has been

   8     that they do view their CRA responsibility and

   9     investing in the low- and moderate-income

  10     communities as an opportunity.  It is good

  11     business.  It is an opportunity to employ

  12     capital in a neighborhood.  They are

  13     sophisticated enough to know that it takes hard

  14     underwriting and careful structuring of these

  15     deals, but they don't view it as some burden or

  16     some guilt money.  They have the attitude this

  17     is "can do," and with a little bit of hard work

  18     we can make it work.

  19               That makes them an excellent partner

  20     for our type of development.  They view low-

  21     and moderate-income neighborhoods as equal

  22     partners in the development process.  Because

  23     of this attitude, what they have done with us

  24     is they have become the largest sponsor of our

  25     nationally recognized training for



.
                                                                605
   1

   2     community-based organizations, teaching them,

   3     bringing the hard development and the hard

   4     financial skills to the community-based

   5     organizations so they have the capacity to do,

   6     to catalyze, their own investments in their own

   7     communities.

   8               We are also funded by HUD and other

   9     large state governments to do this, but

  10     Citibank is the only bank and the largest bank

  11     to support our training activities.  In New

  12     York City Citibank has underwritten directly

  13     100 percent of the cost of bringing this

  14     training to 200 neighborhood-based nonprofits.

  15               Citibank has also engaged us to

  16     survey the neighborhood organizations to

  17     identify new investment opportunities for them,

  18     and they booked a lot of new business as a

  19     result of that.

  20               They have been a major investor in

  21     our $35 million low-income housing tax credit

  22     fund that will, in fact, create $100 million

  23     worth of new low-income housing.

  24               They are the only bank that has

  25     directed us to work with the low-income



.
                                                                606
   1

   2     populations in Puerto Rico, which is one of the

   3     neediest, and that really is the first reason

   4     why we are in favor of it.

   5               Second reason is we all know, as

   6     Joanne has mentioned before, that while the

   7     financial problems of low-income neighborhoods

   8     goes far beyond the problems of commercial

   9     banks and thrift institutions, it rests to

  10     great degree also with insurance, the ability

  11     to get insurance.  It also rests with the

  12     access to equity capital, which is almost

  13     impossible in a low-income area.

  14               We feel confident that a merged

  15     Citicorp/Travelers will, in fact, create a new

  16     generation of investment vehicles for community

  17     development.  For that reason, we are very much

  18     in favor of the merger.

  19               Thank you.

  20               MR. LONEY:  Thank you, Mr. Davenport.

  21               Ms. Blum.

  22               MS. BLUM:  Good morning.  I am the

  23     director of government relations and

  24     communications at the Brooklyn Chamber of

  25     Commerce.  On behalf of the Brooklyn Chamber of



.
                                                                607
   1

   2     Commerce, I am pleased to offer this testimony

   3     in support of Citibank and their pending merger

   4     with Travelers.

   5               The Brooklyn Chamber is a nonprofit

   6     membership organization founded in 1918.  This

   7     is our 80th anniversary.  Our mission is to

   8     assist Brooklyn businesses in ways that promote

   9     commerce, stimulate economic growth and improve

  10     the quality of life throughout Brooklyn.  We

  11     serve a diverse borough-wide membership uniting

  12     small and large businesses located throughout

  13     Brooklyn and beyond, and we advocate on behalf

  14     of Brooklyn's 35,000 businesses.

  15               Citibank has been an active Chamber

  16     member for almost half a century.  Currently

  17     two Citibank executives, Jill Kelly and Natalie

  18     Abatemarco, are very active members of our

  19     board of directors.  In fact, almost ten years

  20     ago Jill Kelly was the first woman elected to

  21     our executive committee.

  22               In our view, Brooklyn, New York City

  23     and New York State would be hard-pressed to

  24     find a more community-minded financial

  25     institution.  Citibank has an exemplary record



.
                                                                608
   1

   2     of community outreach, customer service and

   3     economic and small business development.  The

   4     bank, in our view, is a proven leader in

   5     commercial revitalization and a respected

   6     provider of technical assistance to small

   7     businesses.

   8               Citibank has funded several specific

   9     innovative initiatives at the Brooklyn Chamber.

  10     The bank was an active early and generous

  11     supporter of a program that we called Good

  12     Help.  It is a free employment service created

  13     to fill the needs of small businesses seeking

  14     to hire and retain qualified employees.  At the

  15     same time, unemployed and underemployed

  16     individuals are assisted in finding quality

  17     employment which contributes to the overall

  18     economic growth of Brooklyn.  Good Help works

  19     in conjunction with a citywide network of

  20     nonprofit training and placement agencies to

  21     produce a large pool of job-ready applicants.

  22     We are not aware of any other employment

  23     service or similar program in the city which

  24     focuses on finding employees for small

  25     businesses.



.
                                                                609
   1

   2               Citibank has also created an exciting

   3     new program run by the Chamber for the

   4     commercial revitalization of failing retail

   5     corridors.  The approach of the Retail Strip

   6     Revitalization initiative combines marketing

   7     assistance, physical improvements and market

   8     analysis to address the decline of traditional

   9     shopping areas whose stores cater to the needs

  10     of nearby residents.

  11               Their decline disrupts the vitality

  12     of otherwise stable and thriving neighborhoods.

  13     Citibank recognizes that retail strips which

  14     lack strong merchant associations, business

  15     improvement districts, local development

  16     corporations, organizations like CAMBA to

  17     advocate on their behalf, coupled with

  18     increased vacancy and increased foot traffic

  19     need target development assistance.  The

  20     commercial industry of Nostrand Avenue between

  21     Avenue W and Avenue Y in Sheepshead Bay is

  22     serving as the pilot project for this

  23     initiative.

  24               Finally, Citibank is a strong

  25     supporter of Brooklyn Goes Global, the



.
                                                                610
   1

   2     Chamber's international trade service.  The

   3     program's mission is to help businesses create

   4     jobs by increasing overseas sales of

   5     Brooklyn-manufactured goods.  The program helps

   6     more than 90 Brooklyn manufacturers every month

   7     to increase their capacity to export by

   8     providing technical assistance, market research

   9     and aggressive sales generation.

  10               Overseas sales for Brooklyn

  11     manufacturers result in increased product

  12     demand, ensure more stable business growth and

  13     add more needed blue-collar jobs to Brooklyn's

  14     economy.  Brooklyn Goes Global is considered a

  15     model program across the country.

  16               The Brooklyn Chamber supports

  17     Citibank and the merger with Travelers.  We

  18     think the bank has an exemplary record as a

  19     good corporate citizen and an unparalleled

  20     commitment to community development.  We

  21     believe this commitment will continue and grow

  22     if the proposed merger is finalized.

  23               Thank you for your time.

  24               MR. LONEY:  Thank you, Ms. Blum.

  25               Any questions of this group?



.
                                                                611
   1

   2               MR. ALVAREZ:  I have one question.

   3               Ms. Blum, you mentioned the corridor

   4     revitalization program and you said City was a

   5     strong supporter.  I assume you mean a strong

   6     lender in the revitalization, they lend to

   7     small businesses that are moving into the

   8     corridor.

   9               MS. BLUM:  No.  This is a program

  10     that is just getting underway.  They have

  11     funded us, in conjunction with some government

  12     funding, to hire a consultant to provide

  13     targeted redevelopment assistance to -- we are

  14     starting with one pilot project.  It is not a

  15     lending program.  We have actually hired a

  16     consultant who is going to go in and provide a

  17     well-rounded approach to revitalizing one

  18     certain retail corridor, with hopes that that

  19     approach can be then replicated in other parts

  20     of Brooklyn.

  21               We target areas that don't have

  22     existing merchant associations, businesses, at

  23     least, or other groups to do that type of work.

  24               MR. ALVAREZ:  Thank you.

  25               MR. LONEY:  Barbara.



.
                                                                612
   1

   2               MS. KENT:  Did you choose that

   3     Sheepshead Bay/Nostrand Avenue area or the bank

   4     chose it?

   5               MS. BLUM:  It was really a joint

   6     decision between the Brooklyn Chamber, Citibank

   7     and the office of the Brooklyn Borough

   8     President.  We thought it provided a perfect

   9     example of the kind of area we wanted to help,

  10     that is, a corridor that was suffering from

  11     increased vacancies, decreased foot traffic,

  12     but yet was a vital shopping district for a

  13     relatively large community of residents.

  14               MR. LONEY:  Well, thank you very much

  15     for coming in.

  16               We are going to take a ten-minute

  17     break before we start the open session.  Come

  18     back at 10 after 12, please.

  19               (Recess)

  20               MR. LONEY:  Before we start the open

  21     session, I would like to again claim the

  22     prerogative of the chair for just a brief

  23     moment, and I would like to thank personally,

  24     and I think on behalf of the panel, the folks

  25     from the Federal Reserve Bank of New York who



.
                                                                613
   1

   2     have made this two days, day and a half, such a

   3     seemless effort.

   4               When something goes off as well as

   5     this, you know there has been a lot of hard

   6     work put in and good work put in.  As the lady

   7     said before, it's good to be able to sleep.

   8     Well, this has been a great aid to us and helps

   9     me relax an awful lot over the last day and a

  10     half of the work that's been done here and the

  11     results of that work.  So for those of you out

  12     there and back here, thank you very much.

  13               We have some people who have asked to

  14     speak on the open mike.  We have a panel of six

  15     that we have put together; actually, one person

  16     is here that was scheduled from an earlier

  17     session and we have just added him to the

  18     panel.

  19               The people are Gerry Vazquez, Amos

  20     Brown, Charles Siegel, Pam Martens, Galen

  21     Sherwin and Carol Lin.

  22               Since Ms. Martens, Ms. Sherwin and

  23     Ms. Lin want to go together, why don't we start

  24     with the other three, and you folks can have

  25     the final three places, if that is OK.



.
                                                                614
   1

   2               I will start with Mr. Vazquez.

   3               MR. VAZQUEZ:  Thank you.  My name is

   4     Gerry Vazquez and I am executive president of

   5     New Visions for Public Schools.  New Visions

   6     appreciates the opportunity to state our

   7     support for the proposed merger of Citibank and

   8     the Travelers Group and, more specifically, can

   9     inform you of the generous support both

  10     corporations have provided to New Visions.

  11               Citibank and the Travelers Group have

  12     demonstrated sustained commitment to community

  13     and educational initiatives.  A merger of these

  14     institutions will only fortify our capacity to

  15     effect change.

  16               Founded in 1989, New Visions for

  17     Public Schools is a not-for-profit organization

  18     that works with the New York City public school

  19     system, the private sector and the community to

  20     mobilize resources and develop programs and

  21     policies that lead to significant, lasting

  22     improvements in the achievement of all

  23     children.

  24               Since 1990, Citibank has contributed

  25     a total of $214,000 to New Visions, supporting



.
                                                                615
   1

   2     our efforts in a number of ways.

   3               The Citibank Success Fund Awards

   4     program recognized exemplary teachers and

   5     principals with monetary awards for the winners

   6     and the winners' schools.  The Citibank Success

   7     Fund Awards were presented in an impressive

   8     award ceremony attended by invited guests that

   9     included an array of major community and

  10     education leaders.  The awards consistently

  11     received favorable and extensive press coverage

  12     and brought to these educators an all-too-rare

  13     public acknowledgement and appreciation of

  14     their gifts and dedication.

  15               Citibank helped to start a Tech Corps

  16     of students who learned how to repair

  17     technology and did so in schools as part of

  18     their community service project.  Currently,

  19     Citibank is sponsoring the Citibank College

  20     Bound Program, which provides a comprehensive

  21     array of supports to disadvantaged city

  22     students who want to go to college.  These

  23     students are often the first in their families

  24     to finish high school.

  25               Citibank's money enables students to



.
                                                                616
   1

   2     learn about college appropriate to their career

   3     plans and to visit them, to receive preparation

   4     for the SATs and to get help with college

   5     applications.  This assistance is often what

   6     makes a difference in the students' ability to

   7     navigate the complex process of college

   8     selection and admissions successfully and to

   9     achieve access to higher education.

  10               The Travelers Group has provided

  11     $115,000 in major support for New Visions'

  12     Early Childhood Initiative, a program that

  13     combines in the same classroom children of all

  14     abilities, including those with disabilities.

  15     Operating in a range of city public schools

  16     representing different family incomes and

  17     backgrounds, this initiative is demonstrating

  18     its viability as a model for diverse urban

  19     communities by making it possible for students

  20     of all abilities to successfully learn and

  21     excel together.

  22               The Travelers Group is to be

  23     commended for its readiness to invest in the

  24     Early Childhood Initiative.  This highly

  25     innovative program breaks new ground in



.
                                                                617
   1

   2     bringing together diverse groups of children,

   3     maximizing their strengths and unique

   4     contributions and achieving great benefits for

   5     each child.

   6               Our relationships with Citibank and

   7     the Travelers Group have been truly excellent.

   8     They support public education in our work and

   9     we believe this support will continue in the

  10     years ahead.  They have demonstrated that

  11     excellence in public schools is a priority

  12     among the city's private sector leaders.

  13               In summary, we are strongly in favor

  14     of the merger based on our own involvement with

  15     Citibank and the Travelers Group and their

  16     clear concern for serving the needs of our

  17     communities, our children and our city's

  18     future.

  19               Thank you.

  20               MR. LONEY:  Thank you, Mr. Vazquez.

  21               Perhaps I should repeat for those of

  22     you who are here, and may not have been here

  23     when I said it earlier in the day, the way we

  24     are conducting this meeting is that each person

  25     will be given five minutes to speak.  The



.
                                                                618
   1

   2     timekeeper is sitting in the front row in the

   3     middle.  We will give you a two-minute warning

   4     and then we will indicate that the time is up.

   5               If you have written material, for

   6     example, whether or not you get to finish it,

   7     if in fact you don't get to finish what you

   8     brought to say, we would appreciate it if you

   9     would give us a copy of your written material.

  10     Leave it with the registration desk folks out

  11     front and the entire thing will be put into the

  12     record.

  13               The transcripts will be available in

  14     a few days from the Federal Reserve Bank of New

  15     York and also the transcripts will be on the

  16     Board's Internet web site.

  17               With that, let me turn to Mr. Brown.

  18               MR. BROWN:  Thank you, Mr. Chair,

  19     members of the panel.  I am Amos Brown, pastor

  20     of the Third Baptist Church of San Francisco

  21     and also member of the board of supervisors.

  22               I have come all the way across the

  23     country today representing the National

  24     Association for the Advancement for Colored

  25     People of San Francisco and also for a



.
                                                                619
   1

   2     resolution, because the board of supervisors of

   3     San Francisco is expressing its concern, over

   4     one particular piece of real estate that

   5     Citicorp now has the mortgage for in San

   6     Francisco that is now up for bidding and

   7     ultimately for sale.

   8               I come today to share a profound

   9     reality of half of the American community in

  10     San Francisco and a great measure of the

  11     African-American community in this nation.  I

  12     would like to couch my statement in a vignette

  13     from the life of the late Dr. Vernon Johns, the

  14     predecessor of Martin Luther King, Jr., at

  15     Dexter Church in Montgomery.  He said one day

  16     that if you want to see a real case of

  17     perpetual motion, sell a Cadillac car to a

  18     Negro and tell him to park it somewhere.

  19               Real estate is something that we have

  20     not been able to come by as a people,

  21     particularly in San Francisco and in general in

  22     this nation.  And it is our considered judgment

  23     that in great measure, though Citicorp has done

  24     much good in terms of supporting educational

  25     enterprises and other social action projects,



.
                                                                620
   1

   2     but in terms of making loans available to

   3     African-Americans to purchase a home, to do a

   4     development in the city and county of San

   5     Francisco, Citicorp has not given a mortgage to

   6     one African-American development.

   7               The development now under question,

   8     the Fillmore Center that is up for bidding, for

   9     sale.  The previous owner was not

  10     African-American.  However, a minority group

  11     representing an Asian and African-American

  12     sought to get involved in the bidding process,

  13     and the record reveals that the process was

  14     problematic.  It was not fair, in their

  15     estimation, and these minorities were not given

  16     an opportunity to get involved in the bidding

  17     process, even though they had the money, they

  18     had the financing, they had the sensible

  19     support to consummate this purchase.

  20               I feel that, though I repeat Citicorp

  21     has done a lot of good, but in terms of making

  22     loans available to black people so that they

  23     may get out of this posture of perpetual motion

  24     of buying a car and not having to park

  25     anywhere, Citicorp has not contributed to our



.
                                                                621
   1

   2     having a place to park and to lay our heads in

   3     the city and county of San Francisco.

   4               For that reason, we have great

   5     reservations about this merger, for we do not

   6     see the kind of track record in the city and

   7     county of San Francisco that would suggest that

   8     this bank is friendly toward African-Americans

   9     and other minorities in the acquisition of

  10     property through mortgages coming through the

  11     bank.

  12               Thank you very much.

  13               MR. LONEY:  Thank you, Mr. Brown.

  14               Mr. Siegel.

  15               MR. SIEGEL:  I'm testifying on a

  16     power of attorney for Mahesh Shah.  I will

  17     submit the original power of attorney when I

  18     submit the papers inside.  It is only eleven

  19     lines, but I'd like you to listen carefully to

  20     it because it is something that has been an

  21     ongoing problem for a couple of years.

  22               The letter is addressed to you,

  23     Mr. Loney, concerning this meeting, and here

  24     Mr. Shah has a question:

  25               Will the proposed acquisition cause



.
                                                                622
   1

   2     the managerial resources of Travelers to reform

   3     and correct what appears to be Citibank's

   4     obstruction of justice by failing from December

   5     1995 through June 25, 1998, almost two and one

   6     half years since my attorney -- speaking for

   7     Mr. Shah -- and the attorneys for Citibank

   8     North America, Zeichner Ellman & Krause, signed

   9     on November 16, 1995 a contractual stipulation

  10     settlement agreement to provide in lieu of the

  11     information subpoena and to discontinue the

  12     contempt of court action against a vice

  13     president of Citibank, certain information.

  14     Attached herewith is a copy of my attorney's

  15     letter of May 28, 1996 and an updated copy of

  16     same dated June 25, 1998 showing their failure

  17     to furnish the contractually agreed information

  18     despite the fact that subpoena duces tecums

  19     were properly served in the courts with the

  20     aforementioned agreement.

  21               I have been unable to proceed to

  22     collect my judgment of January 20, 1995 in the

  23     amount of $11,241 because I have effectively

  24     been denied the opportunity to recover my loss

  25     because of Citibank's failure.  Respectfully



.
                                                                623
   1

   2     submitted, Mahesh Shah.

   3               Thank you.

   4               MR. LONEY:  Thank you.

   5               Ms. Martens.

   6               MS. MARTENS:  I'm Pamela Martens.  I

   7     am the lead plaintiff in the infamous "Boom

   8     Boom Room" suit against Smith Barney.

   9               It is amazing how soon we forget.  It

  10     was just 60 years ago that 4,835 of America's

  11     banks went broke and closed their doors,

  12     leaving shareholders and depositors destitute.

  13     The underlying reason that this happened was

  14     the lack of moral courage by our regulators and

  15     elected representatives to just say no to

  16     powerful money interests.  Instead of just

  17     saying no, Washington handed the banks the

  18     equivalent of an ATM card to the Feds discount

  19     window to speculate in stocks.  At a time when

  20     Japan, the second largest industrialized

  21     nation, is reliving the 1930s in America,

  22     complete with banking insolvency, it is amazing

  23     and preposterous that we should be discussing

  24     rolling back Glass-Steagll.

  25               We also want to remember that the



.
                                                                624
   1

   2     political dynamics that created the backdrop

   3     for the banking meltdown in the '30s grew from

   4     a corrupt cozy culture between Wall Street and

   5     Washington.  U.S. Supreme Court Justice William

   6     O. Douglas, who knew a thing or two about the

   7     matter, having just served as chairman of the

   8     young, new SEC, before he went to the Supreme

   9     Court, he called it what it was, chicanery and

  10     corruption.

  11               Frank Vanderlip, coincidentally, an

  12     actual former president of National Citibank,

  13     wrote in the Saturday Evening Post at the time

  14     that lack separation of banking and securities

  15     contributed to the stock market losing 90

  16     percent -- I'd like to repeat that, 90

  17     percent -- of its value from 1929 to 1933.

  18               The public was so sickened by the

  19     hubris and corruption that an entire generation

  20     stayed away from the stock market.  It was not

  21     until 1954, 25 years later, that Wall Street

  22     once again reached the level it had set in

  23     1929.

  24               There is a compelling body of

  25     evidence that suggests a corrupt cozy culture



.
                                                                625
   1

   2     has once again enveloped the brains of

   3     Washington.  We can hardly look to the

   4     safekeepers of the public trust when they are

   5     falling over themselves to reap campaign

   6     windfalls from Wall Street.

   7               Washington and regulators are quick

   8     to criticize moral hazard when it is on foreign

   9     shores.  Let's look at the moral hazard

  10     incubating at Travelers and Smith Barney.

  11               In 1996, when the SEC and the Justice

  12     Department found that Smith Barney was one of

  13     24 firms fleecing their own customers through

  14     six or more years of price fixing, no one went

  15     to jail.  Within the last two years when a

  16     special prosecutor found that Smith Barney had

  17     bribed the former U.S. agricultural secretary,

  18     again, no one went to jail.

  19               The firm is currently under

  20     investigation by various municipalities for the

  21     fraudulent markup of treasury securities, and

  22     that, in fact, is enough to hold up this

  23     merger, since a criminal charge against a

  24     primary dealer of treasury securities would

  25     lend its taint to one of America's major money



.
                                                                626
   1

   2     center banks.

   3               Finally, as an eleven-year employee

   4     of Smith Barney and the lead plaintiff in the

   5     "Boom Boom" lawsuit, I can personally attest

   6     that the model espoused by Sanford Weill and

   7     James Diamond is nothing we would want to

   8     replicate at a money center bank or at a firm

   9     employing 160,000 people.

  10               As our suit lays out, women at Smith

  11     Barney were called witches and whores; were

  12     sexually and physically assaulted during the

  13     workday on the premises of Smith Barney; we

  14     were subjected to vulgar, bigoted and racist

  15     language.  These charges have come from

  16     branches coast to coast.

  17               Smith Barney's answer to this suit,

  18     just as it answered the charges of price fixing

  19     and bribing and yield burning is deny, deny,

  20     and spend more money on political campaigns,

  21     charitable contributions and TV ads to do spin

  22     control.

  23               Thank you.

  24               MR. LONEY:  Thank you.

  25               Ms. Sherwin.



.
                                                                627
   1

   2               MS. SHERWIN:  Thank you.  My name is

   3     Galen Sherwin.  I am the president of the New

   4     York City Chapter of the National Organization

   5     for Women.

   6               Two years ago the National

   7     Organization for Women named Smith Barney a

   8     merchant of shame for its disgraceful

   9     employment practices in hiring and promoting

  10     women and minorities in disparate pay between

  11     men and women employees and in its nonexistent

  12     response to the hostile work environment and

  13     retribution faced by those who brought sexual

  14     harassment complaints.

  15               The sexual harassment case Martens v. 

  16     Smith Barney gave notoriety for its "Boom Boom

  17     Room," which you just heard some of the detail

  18     from Pamela Martens.  These were egregious

  19     cases of sexual harassment, horrible conditions

  20     across the country that employees of Smith

  21     Barney were forced to work under.  It has

  22     grown, as she mentioned, to include plaintiffs

  23     from eleven states across the country.

  24               Now, you may say what does it matter,

  25     all corporations face litigation during their



.
                                                                628
   1

   2     regular business.  I'm here to say that Martens 

   3     v. Smith Barney does matter.  It matters

   4     because it goes to the heart of our civil

   5     rights under the Civil Rights Act, particularly

   6     Title VII and the Equal Pay Act, it also goes

   7     to the heart of the potential for growth and

   8     success of women and minorities in the

   9     workplace.

  10               Now I'm speaking particularly about

  11     an employment practice that is widespread in

  12     the industry, mandatory arbitration.  Mandatory

  13     arbitration, as you probably knows, removes

  14     from employees the possibility of going to the

  15     courts and forces them instead, in employment

  16     disputes or sexual harassment or discrimination

  17     complaints, to go to an industry-wide

  18     arbitration panel.

  19               NOW believes that arbitration works

  20     to the particular detriment of women and

  21     minorities in the workplace, and we have taken

  22     a very strong position, passing national

  23     resolutions calling for an end to mandatory

  24     arbitration and alternate dispute resolution

  25     processes.  We believe not only does it deprive



.
                                                                629
   1

   2     women and minorities of the rights and

   3     protections that they would enjoy under Title

   4     VII of the Civil Rights Act and in our court

   5     system, it also is a private system of justice

   6     that is stacked in favor of the employer and

   7     against the employer plaintiff.

   8               Many of the members of these

   9     panels -- most of the members of the panels are

  10     picked from the industry itself.  They are

  11     people with long, established careers in the

  12     industry, which means that they are necessarily

  13     more often successful white men and none of

  14     them have any particular expertise in hearing

  15     Title VII claims or Equal Pay Act claims.  They

  16     are just not qualified to be deciding sexual

  17     harassment and discrimination complaints.

  18               These private systems of justice must

  19     be abolished.  It is a widespread practice, but

  20     it is actually an evolving area of law and

  21     policy right now.  It is under statutory

  22     reinterpretation by the courts across the

  23     country, and it is leading to a significant

  24     change in policies, in part because of outcry

  25     from members of civil rights groups and



.
                                                                630
   1

   2     feminist groups across the country.

   3               Now this is evidenced by the SEC's

   4     recent decision this week to approve the NASD

   5     recommendation, which is supported by the EEOC,

   6     that arbitration is not an appropriate forum

   7     for resolution of sexual harassment and

   8     discrimination cases, for the reasons I

   9     mentioned before.

  10               Now this is also a moment of

  11     particular opportunity for us because of the

  12     recent decision yesterday by Justice Constance

  13     Baker Motley, who was presiding over the case

  14     Martens v. Smith Barney.  She has rejected the

  15     settlement that was negotiated between class

  16     counsel and the attorneys for Smith Barney and

  17     she has raised concerns, some of which I

  18     mentioned, about arbitration being the sole

  19     remedy for plaintiffs and claimants in that

  20     case.  She's also raised serious concerns about

  21     the diversity program, the effectiveness of the

  22     diversity program that has been proposed by

  23     Smith Barney.

  24               Now this rejection of the settlement

  25     gives us an opportunity to make some serious



.
                                                                631
   1

   2     improvements, if there is going to be a

   3     settlement in this case.  I would like to read

   4     those for the record.  The recommendations that

   5     NOW New York City is making are the following:

   6     That Smith Barney/Travelers remove the

   7     requirement that its employees take

   8     discrimination and harassment complaints to

   9     industry-wide arbitration; that no new

  10     settlement be approved unless there is clear

  11     provision that all claimants have a right to go

  12     to the court or through arbitration; that there

  13     be clear provision that all decisions rendered

  14     through arbitration have the right to an appeal

  15     in court; and that the court maintain

  16     jurisdiction over any consent decree; that the

  17     diversity program in question be improved and

  18     expanded to include meaningful and ongoing new

  19     initiatives without a time limit or cap; and

  20     that funding be substantially increased to meet

  21     the needs of such a large firm; and that

  22     diversity training extend to include issues of

  23     racisms impact on financing practices that act

  24     to the detriment of African-Americans and other

  25     minority groups; that procedural hurdles within



.
                                                                632
   1

   2     any designated dispute resolution process, such

   3     as limitations on powers of deposition or

   4     subpoena, be removed and all due process

   5     protections for complainants that would apply

   6     in Title VII suits be respected; and, finally,

   7     that the current structure of legal fees and

   8     awards be reexamined to ensure both vigorous

   9     prosecution and increased equity in

  10     remuneration between attorneys and plaintiffs.

  11     According to the standards accepted in the

  12     industry, attorneys' fees should be capped at

  13     no more than 33.3 percent of the total award.

  14               (Continued on next page)

  15

  16

  17

  18

  19

  20

  21

  22

  23

  24

  25



.
                                                                633
   1

   2               Now from what I've heard about

   3     Citicorp's practices, the merger between Smith

   4     Barney, Travelers and Citicorp would amount to

   5     a marriage of two isms, racism and sexism.

   6               At a time of such opportunity and

   7     change do we want a company that has reaffirmed

   8     its commitment to mandatory arbitration for all

   9     employees, and that invests on doing business

  10     the old fashioned way, to begin and even, to

  11     gain even more control over the direction of

  12     employment policies and practices?

  13               Do we want to allow a merchant of

  14     shame to grow into a bloated corporate tyrant?

  15     The answer is no.

  16               This merger cannot be considered

  17     until Smith Barney removes mandatory

  18     arbitration requirements and resolves issues of

  19     diversity, employment policies and work

  20     environment satisfactorily.  I strongly urge

  21     you to reject this merger.  To do any less,

  22     would amount to and admission on the part of

  23     the Federal Reserve Bank that it does not care

  24     about the advancement of women and minorities

  25     in the work place or the protections offered by



.
                                                                634
   1

   2     our courts, and that the profit of corporate

   3     giants outweighs civil rights.  Thank you.

   4               MR. LONEY:  Thank you, Ms. Lin.

   5               MS. LIN:  Good afternoon.  My name is

   6     Karen Lin I'm here to represent State Senator

   7     Catherine Abate who represents the 27th

   8     District in New York which covers midtown

   9     Manhattan, and most of lower Manhattan as well.

  10               She has prepared a release which I

  11     would like to read to you now briefly if I may.

  12               In the wake of the federal judge's

  13     decision to reject the settlement of Smith

  14     Barney's sexual harassment suit, Senator Abate

  15     joined with advocates to underscore the need to

  16     ban mandatory predispute arbitration clauses in

  17     employment contracts as a condition to

  18     employment.

  19               "All parties should use this

  20     opportunity to create a dispute resolution

  21     system that is fair for workers.  Any system

  22     that requires employees to give up their right

  23     to a day in court as a condition of employment

  24     is ultimately unfair and unconstitutional."

  25               Senator Abate has found that the



.
                                                                635
   1

   2     American Arbitration Association, the nation's

   3     largest arbitration trade association, says

   4     that companies they provide arbitration for

   5     encompasses nearly four million employees.

   6               About 40 percent of companies who use

   7     arbitration force their employees to sign

   8     mandatory arbitration contracts.  This is

   9     according to the federal General Accounting

  10     Office.  Also, according to the federal GAO,

  11     more than half of all employees may be bound by

  12     mandatory arbitration contracts by 2001.

  13               Having saturated the securities

  14     industry, mandatory arbitration is now

  15     spreading rapidly into almost all other

  16     occupations.

  17               Senator Abate has introduced

  18     legislation that will ban mandatory arbitration

  19     in employment contracts as a condition to

  20     employment.

  21               "No New Yorker should have to check

  22     his or her civil rights at the door in order to

  23     get a job."  This legislation, The Employee

  24     Civil Rights Protection Act will end this

  25     discriminatory practice and start to level the



.
                                                                636
   1

   2     playing field between employer and employee.

   3               Thank you.

   4               MR. LONEY:  Thank you.  Do we have

   5     any questions of this panel?

   6               MR. ALVAREZ:  Yes, I have a couple of

   7     questions.

   8               Mr. Brown, you made a couple of

   9     statements that I'd like to ask you some

  10     questions about.

  11               One is you said Citi has not given

  12     any mortgages to any housing development

  13     programs in San Francisco.  Did I understand

  14     that correctly?

  15               MR. BROWN:  No, I said black and/or

  16     minority.

  17               MR. ALVAREZ:  Was that statement

  18     about single-family lending or multifamilly

  19     lending?  I wasn't sure what you meant by

  20     housing.

  21               MR. BROWN:  Well, the record in

  22     single-family dwellings is much to be desired,

  23     but in terms of multifamily-dwellings the

  24     record is zero.

  25               MR. ALVAREZ:  You mentioned that you



.
                                                                637
   1

   2     were talking about property that Citicorp has

   3     that apparently --

   4               MR. BROWN:  Citicorp was one of the

   5     original banks that financed this development,

   6     about 1100 units, town houses and towers.  The

   7     bonds were sold by the city to help this

   8     development in 1980 when it was begun, but when

   9     it had gone through two owners and it was put

  10     on the market, the minority groups got together

  11     with all of the needed financing to purchase,

  12     and the bidding process was very unfair.

  13               MR. ALVAREZ:  It was unfair in what

  14     respect?

  15               MR. BROWN:  In terms of number one,

  16     they did not receive notice regarding the

  17     process; number two, there was a lot of basic

  18     information that they did not get, and number

  19     three, is just the basic concern of the

  20     community and in terms of the Community

  21     Reinvestment Act, Citicorp should have had

  22     serious conversations with this black minority

  23     developer to purchase this property that's

  24     right in the redevelopment area.

  25               Also, the minority group has made the



.
                                                                638
   1

   2     commitment to rent control, something that is

   3     desperately needed in San Francisco, and you

   4     look at the number of African-Americans who

   5     lodge in that city is unconscionable.  In 1970s

   6     we lost over twenty thousand African-Americans

   7     in the City of San Francisco.  1970, the

   8     population was 30 percent and knocked down to

   9     17 percent and this has happened principally

  10     because of gentrification, blacks or

  11     African-Americans have not been able to get

  12     mortgages and they have not been able to do

  13     developments to the needs of that community.

  14     And that's where we are coming from.

  15

  16               Morally, if the bank is concerned

  17     about helping communities, this is a golden

  18     opportunity for it to help a minority

  19     community, and while we appreciate free

  20     enterprise system and we know that all

  21     financial deals must be sound, but something is

  22     wrong in Denmark when blacks and other

  23     minorities step to the plate and they are not

  24     given the opportunity to fulfill their dream

  25     and their hopes of owning real estate.



.
                                                                639
   1

   2               MR. ALVAREZ:  Thank you very much.

   3     Ms. Martens or Ms. Lin or Ms. Sherwin, any of

   4     you, you've spoken about mandatory arbitration.

   5     I'm not sure I understand the facts.  Most

   6     folks that have a sexual harassment or other

   7     kind of claim can go to the EEOC and the courts

   8     and have that claim heard.

   9               You say that at Smith Barney and

  10     other places there is a requirement as

  11     precondition to employment that you waive the

  12     right to go to court and that all things be

  13     settled in arbitration?

  14               MS. SHERWIN:  That's correct.

  15               MR. ALVAREZ:  Then no appeal to the

  16     Court after arbitration?

  17               MS. SHERWIN:  Yes, it's the sole

  18     remedy.  According to industry regulations many

  19     people are forced to sign a form B4.  It is

  20     also industry-wide.  There's also requirements

  21     in individual corporations that are internal

  22     documents, agreements that are signed as a

  23     precondition of employment, and that is so at

  24     Smith Barney, and Smith Barney even in light of

  25     the recent developments of this case, this



.
                                                                640
   1

   2     sexual harassment case, recently reaffirmed its

   3     policy of having all employees sign an internal

   4     document signing away their right to go to

   5     court and making arbitration their sole remedy.

   6               MR. LONEY:  Do you know if that goes

   7     beyond Smith Barney within the Travelers Group?

   8               MS. MARTENS:  Precisely.  Travelers

   9     had the identical policy and I just want to

  10     comment on that we're not talking about a

  11     mutual forum.  We're not talking about a fair

  12     forum.  One of the cornerstones of this would

  13     be one of the scariest things I'd ever want to

  14     imagine in America is that as the money and

  15     power has grown at Smith Barney and Travelers,

  16     Sanford Weil and James Diamond truly believe

  17     they are above the law, and they have passed

  18     down this attitude to their teams of corporate

  19     attorneys.

  20               For example, recently in one of the

  21     arbitrations it was Mendez v. Shearson, but it

  22     was tried by Smith Barney's attorneys.  The

  23     appellate court in Texas overturned the

  24     arbitration decision because they quoted from

  25     Smith Barney's attorneys closing arguments.  It



.
                                                                641
   1

   2     was a wage discrimination -- I'm sorry -- a

   3     failure to pay overtime case, and the attorney

   4     told the arbitrators, "we are telling you that

   5     this is a bad law and you are to ignore this

   6     law."

   7               Now, as outrageous as this sounds, I

   8     beg you to get a copy of that appellate

   9     decision and read the outrageous demands that

  10     Smith Barney's attorneys were giving to the

  11     arbitrators.  Even more shocking, the

  12     arbitrators followed the demand from Smith

  13     Barney necessitating that this go to an

  14     appellate court.

  15               This type of language has actually

  16     now been put into the mandatory arbitration

  17     agreement that they have forced their employees

  18     to sign, and sign a receipt that they

  19     understood that they were waiving their Title

  20     VII, their harassment, discrimination, wage,

  21     ERISA, race claims, and that arbitrators would

  22     not be allowed to follow other law, but would

  23     be required to follow "Smith Barney's lawful

  24     business judgment."  Apparently, Smith Barney's

  25     lawful business judgment is that it is above



.
                                                                642
   1

   2     the laws of America.

   3               MR. LONEY:  Thank you.  Any other

   4     questions?  If not, I will thank the panel for

   5     coming.

   6               We have one other person who was

   7     scheduled to testify earlier who has requested

   8     time in the open microphone session, Lloyd

   9     Williams.

  10               MR. WILLIAMS:  Thank you very much,

  11     Mr. Chairman.  My name is Lloyd Williams.  I

  12     serve as the President of the Greater Harlem

  13     Chamber of Commerce, a business, civic and

  14     trade organization celebrating its 102d year of

  15     existence in the City of New York.

  16               I just wanted to make brief comments.

  17     One, listening to the comments of the National

  18     Organization of Women as it relates to the

  19     Martin v.  Smith Barney matter, I want to go on

  20     record as being very much in support of the

  21     position of NOW, and other interested parties

  22     in condemning the charges against Smith Barney,

  23     and further, that we believe that too many of

  24     the charges are in fact with substance.

  25               Moving to the next point, the



.
                                                                643
   1

   2     relationship of the merger proposed between

   3     Travelers and Citicorp, the Greater Harlem

   4     Chamber of Commerce wishes to go on record as

   5     being supportive of that merger.  It is our

   6     view that Citicorp, particularly over the past

   7     five years, has become more in tune certainly

   8     in New York City with the needs of the sectors

   9     of New York that are too frequently called the

  10     outer boroughs, the four boroughs outside of

  11     Manhattan and certainly sections in Manhattan

  12     that are not in the midtown area, including the

  13     Greater Harlem area.

  14               Over the past five years Citibank

  15     which had not been a leader in development in

  16     that area, has stepped to the plate, and has

  17     been in the forefront of student loans,

  18     mortgage loans, business loans.

  19               I should also note that Citibank is

  20     opening in the central Harlem area on the

  21     Frederick Douglas Boulevard between West 134th

  22     and West 135th Street, the first Citibank loan

  23     office that will open in August of this year,

  24     that will provide specific loan information,

  25     technical assistance and, in fact, direct loans



.
                                                                644
   1

   2     to medium and small business sectors as well as

   3     to homeowners.

   4               We're very pleased that this is

   5     taking place.  It is going to be a model

   6     project that we hope will be emulated

   7     throughout not only the city, but far beyond.

   8               In addition, I wanted to further make

   9     particular note that there are some

  10     distinguished persons at Citibank that I would

  11     like to have their names recorded because of

  12     their leadership.  Mr. Hector Ramirez, and

  13     Mr. Capocasanda, Ms. Bonnie Walsh, Mr. Allen

  14     Stevens, and Mr. Darryl Dodson.  It's a group

  15     of women and men, different ethnic backgrounds,

  16     different nationalities, that have come

  17     together to serve the interest of our community

  18     and in my view of the city.

  19               The goals and objectives of our

  20     service area which includes investments,

  21     development, loans, Citibank has been

  22     supportive of, and we would hope that by this

  23     merger Travelers will join with the leadership

  24     that is coming out of Citibank.

  25               So without delaying your time



.
                                                                645
   1

   2     further, we wanted to make sure that we did go

   3     on record in supporting this merger,

   4     encouraging you to give it all due

   5     consideration, and, lastly, to commend Citibank

   6     for the leadership it has provided in the past

   7     years, and to encourage Citibank and Travelers

   8     that through this merger hopefully they will be

   9     able to provide more for those who have, as

  10     well as for those who do not.  I'd like to

  11     thank you.

  12               MR. LONEY:  Thank you, Mr. Williams.

  13               MR. ALVAREZ:  Sir, Mr. Williams,

  14     could I ask you a question?

  15               MR. WILLIAMS:  You absolutely can.

  16               MR. ALVAREZ:  You mentioned a loan

  17     office would be opening.  Could you state again

  18     the location of that?

  19               MR. WILLIAMS:  Yes, it's on Frederick

  20     Douglas Boulevard which is Eighth Avenue.  It's

  21     between 134th Street and 135th Street in the

  22     Central Harlem area by City College.

  23               MR. ALVAREZ:  Someone had testified

  24     earlier about that being a full-service branch.

  25     Do you know for --



.
                                                                646
   1

   2               MR. WILLIAMS:  No, there are two

   3     things that are happening.  That is not a

   4     full-service bank, I know that absolutely for

   5     sure, but in addition to that, directly across

   6     the street there is a construction of a 170

   7     unit condominium project 14 stories high with

   8     48,000 square feet of commercial space and

   9     underground parking for 140 automobiles.

  10               Citibank is putting in a full-service

  11     unit in that location across the street that

  12     will be a combination of high tech as well as

  13     persons directly servicing the interests of

  14     that area, and, in addition, Citibank is the

  15     lead financial bank for the construction of the

  16     project.

  17               MR. HODGETTS:  Two separate

  18     facilities across the street from each other?

  19               MR. WILLIAMS:  Right.  And the new

  20     construction would begin, I would believe,

  21     September or October, and will take

  22     approximately 18 to 20 months to finish, but

  23     rather than wait for that to happen, Citibank

  24     has opened this loan store across the street

  25     and they will be in operation by August of this



.
                                                                647
   1

   2     year.

   3               MR. HODGETTS:  Thank you.

   4               MR. WILLIAMS:  Thank you.

   5               MR. LONEY:  Did we have any more

   6     people who have registered to testify?  No

   7     more.  Does anybody else in the audience wish

   8     to?

   9               If not, we will adjourn these

  10     proceedings.

  11               Thank you very much.

  12               (Adjourned)

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Last update: December 3, 2010