Public Meeting Regarding Citicorp and Travelers Group
Thursday, June 25, 1998
Transcript of Opening Remarks
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2 (8:00 a.m.)
3 MR. MC DONOUGH: Good morning, ladies
4 and gentlemen. I'm Bill McDonough, president
5 of the Federal Reserve Bank of New York.
6 Welcome to this very important meeting
7 regarding the proposed merger between Travelers
8 and Citicorp.
9 We are very interested in hearing
10 public views on this subject, and we are going
11 to have a very long day today, and very likely
12 a very long day tomorrow. The proceeding is
13 being chaired not by the Federal Reserve Bank
14 of New York, we are your hosts, but rather by
15 Glenn Loney of the staff of the Board of
16 Governors of the Federal Reserve system from
17 Washington, and I will turn the floor over to
18 Glenn.
19 MR. LONEY: Thank you, Mr. McDonough.
20 Let me also welcome you to this important
21 public meeting on the application of Travelers
22 to acquire Citicorp.
23 First, let me introduce myself. I am
24 Glenn Loney, deputy director of the division of
25 consumer and community affairs, Federal Reserve
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2 Board in Washington and I'm presiding officer
3 for this public meeting.
4 The other panelists here are Scott
5 Alvarez to my immediate left who is associate
6 general counsel from the board's legal
7 division. Jim Hodgetts Sr. Vice-President from
8 the Federal Reserve Bank of New York, and
9 Elizabeth McCall Acting Superintendent of Banks
10 of the State of New York Banking Department and
11 we're pleased to have the State of New York
12 with us today.
13 We're here today because Travelers
14 Group of New York applied for approval to
15 acquire Citicorp also of New York, New York.
16 When the federal reserve system considers one
17 of these applications we look at a number of
18 factors under the Bank Holding Company Act.
19 These include financial issues, managerial
20 issues, competitive issues and the convenience
21 and needs issues of the communities affected.
22 In doing so we will particularly look
23 at the record of the performance of the parties
24 under the Community Reinvestment Act. The
25 Community Reinvestment Act requires the board
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2 to take an institution's record of meeting the
3 present needs of its entire community into
4 account. In addition, the transaction also
5 involves the proposed acquisition or retention
6 of nonbanking companies engaged in activities
7 permissible for bank holding companies as well
8 as the proposal to divest or otherwise conform
9 a number of other activities that are not
10 permissible for bank holding companies under
11 current law.
12 With respect to the proposal to
13 conduct permissible nonbanking activities, the
14 board also must determine whether conducting
15 the proposed nonbanking activities can
16 reasonably be expected to produce benefits to
17 the public that outweigh possible adverse
18 effects, such as undue concentration of
19 resources, decreased unfair competition,
20 conflicts of interest or unsound banking
21 practice.
22 The purpose of today's meeting is to
23 receive information regarding these factors.
24 We will be seeking to elicit this information
25 and declare issues relating to the application.
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2 We're very pleased that so many have been
3 willing to come and testify in your public
4 meeting. We will have over 120 groups and
5 individuals represented during this two-day
6 meeting:
7 Let me make a few remarks about the
8 procedures. This is what is called an informal
9 public meeting. Members of the panel may ask
10 those who are testifying about their testimony.
11 This is not a formal administrative hearing, so
12 we are not bound by rulings regarding evidence,
13 cross-examination and some of the formal
14 transaction of that kind of a proceeding. We
15 will be here for a full day and a half.
16 As you can see from the agenda we
17 need to stick to that schedule very carefully
18 in order to give everyone a chance to say what
19 they would like to say. We're going to ask the
20 witnesses today to help us stay on schedule.
21 The panel will be expected to keep within their
22 allotted time, so please be mindful of the
23 needs of others.
24 We have, what I've been told, is a
25 very dramatic signal system with regard to
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2 timing. The time keeper is sitting here with
3 the signs that she's holding up right here in
4 the middle of the front row. The time keeper
5 will give you a signal when you have two
6 minutes left to speak, and another signal when
7 your time is up.
8 There may have been some individuals
9 who simply haven't had the chance to sign up in
10 advance. To the extent possible we want to
11 give them a chance to speak as well. At the
12 end of the meeting, both tonight and again at
13 the meeting tomorrow, we will throw the
14 microphone open to anybody who would like to
15 make a presentation, time permitting.
16 Witnesses may submit a written
17 supplement to your oral testimony by July 2,
18 and then the record will be closed. Any
19 written supplements must be received by the
20 close of business 5 p.m. on July 2, and
21 directed to Jennifer J. Johnson secretary of
22 the board, Board of Governors of the Federal
23 Reserve System Washington, D.C. 20551. You may
24 fax your submission to 202-455-3462.
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 into the record
4 please leave them with the Federal Reserve
5 staff at the registration table outside.
6 It is important that we get this
7 material for the record. A transcript of the
8 meeting will be available by June 30th for the
9 June 25th meeting, and by July 1st for the June
10 26th portion of the meeting at the Federal
11 Reserve Bank of New York.
12 In addition, the official transcript
13 will be available by close of business on June
14 29 for the June 25th meeting, and by the close
15 of business by June 30 for the June 26 meeting
16 on the board's public website on www.bog.frb.
17 fed.us.
18 (Laughter)
19 I love talking like that.
20 With that, I would like to turn the
21 mic over to Elizabeth McCall for a few remarks
22 before we hear from our first panelist.
23 Ms. McCall.
24 MS. MC CALL: Thank you. It is a
25 pleasure for me to be here today and to have
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2 this opportunity to speak briefly with all of
3 you. It seems as if almost everyday we hear
4 about another proposed merger between banking.
5 However, the proposed merger between Citicorp
6 and Travelers Group Inc., is unique in that it
7 will be a merger between a bank holding company
8 and a holding company that is a parent of firms
9 that underwrite insurance as well as provide
10 numerous securities and other financial
11 services.
12 The New York State Banking Department
13 regulates ten entities that are involved in
14 this application, including Citibank, New York
15 State, Smith Barney Private Trust Company,
16 Commercial Credit Company, and Primerica and
17 encompasses two banks, two mortgage bankers,
18 two money transmitters, two sales finance
19 companies, and one mortgage broker.
20 The Citicorp and Travelers activities
21 regulated by the New York City Banking
22 Department represent a broad array of services
23 that include local banking mortgage, consumer
24 credit, corporate trust activities and the
25 worldwide issuance of redemption of Travelers
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2 checks and money orders. The banking board of
3 the New York State Banking Department must
4 approve the application by Travelers to become
5 a bank holding company under New York State
6 banking law.
7 After the confirmation of this
8 application, Travelers will own three banks
9 that are headquarted in New York State. These
10 are Citibank, New York State, Smith Barney
11 Trust Company and Citibank N A.
12 In addition, as superintendent, I
13 must approve five different chains of control
14 applications pertaining to one of the mortgage
15 bankers, both sales finance companies, and both
16 money transmitters that are currently part of
17 the Citicorp holding company.
18 Today we are here to listen carefully
19 to each of you, to learn from you. The banking
20 board and I will seriously consider your
21 comments before deciding on the merits of any
22 of the applications that come before us.
23 We recognize the importance that
24 banks play in neighborhoods, both in terms of
25 maintaining the existing quality of
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2 neighborhoods, and in helping those
3 neighborhoods that require revitalization. In
4 this regard, we consider CRA and fair rent an
5 extremely important aspect of our supervision
6 of banks and other license centers that come
7 under the jurisdiction of the Banking
8 Department.
9 As such, one of our primary purposes
10 in being here today is to gain a thorough
11 understanding of how the proposed merger will
12 affect CRA, fair lending in communities.
13 I regret that I will not be able to
14 stay for the entire day as I am leaving for a
15 meeting with a bank CEO in Harlem in hopes of
16 encouraging the branch there. However, Barbara
17 Kent, the acting duty superintendent of
18 consumer affairs division will be here to
19 participate on behalf of the Banking
20 Department.
21 I'm looking forward to a very
22 productive day. Thank you.