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Public Meeting Transcripts

Public Meeting Regarding Citicorp and Travelers Group

Friday, June 26, 1998

Transcript of Panel Twenty-Five

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  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



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   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.



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   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



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   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



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   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



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   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



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   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



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   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,



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   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



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   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



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   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



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                                                                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



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                                                                624
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   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



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   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



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                                                                626
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   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.



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                                                                627
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   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



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                                                                628
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   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



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                                                                629
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   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



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                                                                630
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   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



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                                                                631
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   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



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                                                                632
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   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)

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  25



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                                                                633
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   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



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                                                                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



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                                                                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



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                                                                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



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                                                                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



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                                                                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.



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                                                                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)

Last update: December 3, 2010