Home > Banking Information & Regulation > Public Meeting Transcripts > PMT - Agendas June 25-26, 1998
Public Meeting Transcripts
Public Meeting Regarding Citicorp and Travelers Group
Friday, June 26, 1998
Transcript of Panel Twenty-Four
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.
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