Public Meeting Regarding Citicorp and Travelers Group
Thursday, June 25, 1998
Transcript of Panel Ten
297 22 MR. LONEY: We will begin with the 23 panel that was scheduled for 2:35, Panel Ten. 24 Everybody is here. 25 Mr. Schallau, is that how you say . 298 1 2 your name? 3 MR. SCHALLAU: Very well done. Thank 4 you. My name is Doug Schallau. I am president 5 of Junior Achievement of New York City. We are 6 a franchise of Junior Achievement Inc., which 7 has 163 domestic franchises in the United 8 States and it has programming in over 100 9 foreign countries. 10 This year in New York City we will 11 reach 150,000 students with our programs, all 12 taught by volunteer role models from companies 13 like we are here to talk about today. And 14 specifically I'd like to just spend a moment 15 talking about our experience with Citibank, 16 which has been absolutely tremendous and 17 positive and, therefore, I am here to speak 18 very much in favor of the consolidation. 19 Over the past ten years, Citibank has 20 contributed funds to Junior Achievement of New 21 York in excess of half a million dollars, which 22 has allowed us to bring our programs to young 23 people that are very much in need of these. In 24 addition to that, they have provided their 25 employees, approximately 350 of those over the . 299 1 2 last ten years, to go into the classrooms with 3 our programs to teach kids about free 4 enterprise and economics. In fact, our purpose 5 is to educate and inspire young people to value 6 free enterprise business and economics in order 7 to improve the quality of their lives. 8 I think this is where the similarity 9 exists with, for example, Citibank, that we 10 have a great experience with, and our 11 organization. We are both trying to improve 12 the quality of lives for the kids we reach, and 13 for Citibank the people in the locations where 14 they exist. 15 In addition to all that, they have 16 been very generous. Their employees have been 17 very generous with their time in teaching in 18 the classroom, as I mentioned, and also helping 19 in our special event fund-raising. They have 20 raised probably another half a million dollars 21 over the last ten years through our special 22 events and, primarily, through our Bowl-A-Thon. 23 That involves their employees helping raise 24 money and then participating in the event. 25 I'd also like to specifically talk . 300 1 2 about the leadership role that Citibank has 3 played with us and other organizations like 4 ours, particularly our focus, which is the 5 education system. Without question, they have 6 taken a leadership role in a number of areas, 7 some of which -- as an example, in education 8 technology Paul Ostergard, who heads the 9 foundation, has been a pioneer and a driving 10 force in involving technology in education. He 11 has also been very supportive with Junior 12 Achievements International operations and is in 13 Citibank involved in a number of foreign 14 locations, has been very innovative in 15 connecting the people that they are lending 16 money to in their microlending program, 17 involved in their Junior Achievement program, 18 to help those people understand business and 19 free enterprise and responsibilities that go 20 with it. 21 So I just would like to summarize by 22 saying that I believe that this can only be an 23 expansion of this leadership role to help 24 improve the quality of lives in everyplace that 25 this organization is located, and we certainly . 301 1 2 appreciate it not only here in New York City 3 but all the locations where they are involved 4 with us. And they are truly a leader, 5 enlightened philanthropy not only in the United 6 States but globally, and we appreciate it very 7 much. 8 Thank you. 9 MR. LONEY: Thank you. 10 Mr. Porter. 11 MR. PORTER: Good afternoon. My name 12 is Ralph Porter. I represent Mid-Bronx 13 Desperados Community Development Housing 14 Corporation. So on behalf of the board, staff 15 and its residents, it a pleasure to come speak 16 before you today. 17 I am especially going to speak about 18 our involvement with Citibank over the past ten 19 or more years. One, when we first started 20 sponsoring a community development credit 21 union, Citibank came to our aid in terms of 22 giving us a grant for operations over a two- to 23 three-year period. As time went on, we also 24 received grants for general operating. 25 The last two specific grants that we . 302 1 2 received, which we were in dire need of, was 3 one for our job resource center, which was a 4 job training program basically geared to deal 5 with welfare recipients and our residents to 6 take them off of the welfare rolls. 7 Another grant -- we were approved 8 last year -- was the grant where we were 9 dealing with economic development, and this 10 grant went to maintaining a director of 11 development, which presently we are in the 12 process of developing a 136,000 square foot 13 shopping center, which that money was given 14 directed toward the salary for that particular 15 person who had been on that project for some 16 years, and also consulting fees. 17 Citibank has also made it available 18 for free training for some of our development 19 staff to come to many courses and to increase 20 their knowledge and talents so that they can 21 come back into our community and be put to use 22 in development in our community. 23 I do have -- I asked myself the 24 question that, what can this merger contribute 25 to especially a not-for-profit organization, . 303 1 2 and directly a community development 3 cooperation such as Mid-Bronx Desperados and 4 other community groups? 5 I view community development groups 6 as the glue for this society, to maintain what 7 has been invested in these communities in 8 affordable housing, economic development, etc. 9 They become a living organism and a hub for 10 being able to support the community in its 11 efforts. 12 It's important that private industry 13 gets involved, and especially in the banking 14 area I can say that I know you are in the 15 business of making money, but there is also the 16 business of social corporate responsibility. 17 And as I look at this merger and I see this 18 $115 billion over a ten-year period, I ask the 19 question, in terms of community development, 20 how much of those funds are going to be 21 contributed in grants for operation support for 22 buildings, for organizations, of 23 not-for-profit. It is extremely important that 24 we look at those dollars figures that they have 25 recommended, and they be increased in reference . 304 1 2 to insurance Travelers and what have you. 3 I would ask you to take a very hard 4 look at how can you reduce your rate for lower 5 income communities. 6 Thank you. 7 MR. LONEY: Thank you, Mr. Porter. 8 Mr. Morrow. 9 MR. MORROW: I am Phillip Morrow, 10 president of the South Bronx Overall Economic 11 Development Corporation. We are an economic 12 development corporation that covers the Bronx 13 south of Fordham Road, and I should say we were 14 organized in 1972. Citibank at that time was 15 one of a group of people who gathered together 16 with the Bronx borough president at the time, 17 Bob Abrams, in terms of creating an economic 18 development organization that would help 19 reverse the decline and deterioration of the 20 Bronx. Citibank was there at the beginning. 21 They are one of the founding banks, one of five 22 founding banks, that started the organization, 23 that financed it over the years. They have 24 provided us with continuous support over 26 25 years of operation, both for project staff and . 305 1 2 support of economic development projects. 3 Lately, in our more recent activity 4 there, Citibank has been involved in a project 5 called Credits, providing early funding, a 6 $100,000 revolving loan fund, and $10,000 a 7 year for five years to provide financing for 8 small businesses in the south Bronx. The money 9 they loan to us, which we loan to businesses 10 that otherwise would not qualify for credit. 11 Members of Citibank sit on the credit committee 12 and review those loans and work with us in that 13 fashion. 14 In addition to that, Mr. Hector 15 Ramirez is on our organization we call 16 Employers for Education, because in addition to 17 doing commercial revitalization and industrial 18 development, SOBRO is a major actor in the 19 world of training unemployed residents of that 20 neighborhood for jobs. So Hector is a founding 21 member of SOBRO's advisory group called the 22 Boarders of Education, with the specific 23 purpose of identifying ways in which we can 24 make end roads to find jobs for unemployed 25 people, for people on welfare, for youth in the . 306 1 2 south Bronx. 3 We are also a member of Citibank's 4 Partners for Progress, which is working on 5 commercial development and revitalization 6 projects with both grants and loans, and we are 7 looking forward to doing some financing of 8 those projects in an area of the south Bronx, 9 that up until now has been totally ignored by 10 the south Bronx, and revitalization of that 11 community. 12 We are working quite hard on 13 community development. As Ralph Porter was 14 talking, in commercial revitalization, economic 15 development, industrial development, and job 16 training, Citibank has been there as a partner. 17 That is why we enthusiastically support the 18 merger. 19 I think when I look at this -- and 20 there is also a branch on 149th Street in the 21 hub, in the middle of the south Bronx, a 22 Citibank-based branch, and we anticipate will 23 remain there, and they will have a fight with 24 us if they are going to move it since branch 25 backing is pretty important to our neighborhood . 307 1 2 and community. And we have been engaged by 3 them -- they happen to have stolen one of my 4 staff members, one of my best people, Paula 5 Espinosa. I had to say that because she's 6 sitting out there. And we have been engaged 7 with them in planning on how some of this 8 money, which is going to be available as a 9 result of the commitment, the $115 billion 10 commitment that's been made, would be 11 reinvested in the south Bronx. 12 I wanted to also mention that I have 13 been in New York for 15 years, and before that 14 I was in Hartford, and I was very familiar with 15 Travelers Insurance Company as a partner and 16 supporter and a founder of an organization that 17 I used to run there. So I can speak positively 18 about my recollection of Travelers in the days 19 20 years ago I left Hartford. But at the time 20 we were -- they were a good corporate citizen. 21 To me, the key here is that you have 22 two companies that have a demonstrated history 23 of being a good citizen in their communities 24 where they work, providing support for these 25 efforts of making reinvestments and being in . 308 1 2 leadership, and none of that brings me pause 3 about these two giants coming together and 4 pooling the resources to try to make things 5 better in communities like the south Bronx. 6 Thank you. 7 MR. LONEY: Thank you, Mr. Morrow. 8 Ms. Gerrol. 9 MS. GERROL: My name is Lisa Gerrol. 10 I am the president of the Greater Connecticut 11 Chapter of the National Multiple Sclerosis 12 Society, and we are in the Hartford area, where 13 Mr. Morrow is from, and I can talk a little bit 14 about what has been happening in recent years 15 with the Travelers. 16 As in most communities, the 17 Connecticut area has thousands and thousands of 18 corporations and businesses. Among those 19 numbers, one local corporation, the Travelers 20 Group, has distinguished itself as the 21 corporation of the year of the National 22 Multiple Sclerosis Society. I would like to 23 take a few minutes to tell you why we selected 24 the Travelers Group as the corporation of the 25 year and how they have changed the lives of . 309 1 2 thousands of people with multiple sclerosis. 3 Multiple sclerosis is a chronic, 4 often disabling disease of the central nervous 5 system. Symptoms can be mild, like a tingling 6 sensation in your limbs, or they can be severe 7 and cause total disability, blindness, and 8 increasing towards serious further disability. 9 Most people with MS are diagnosed 10 between the ages of 20 and 40 years old, yet 11 the impact of MS lasts a lifetime. The 12 progress, severity, and specific symptoms of MS 13 can't be predicted. They are devastating, and 14 with MS someone can wake up in the morning and 15 not be able to see and not see for days on end 16 or weeks on end and be totally blind. They can 17 wake up several weeks later, be able to see, 18 but be in a wheelchair and completely unable to 19 walk. 20 The National Multiple Sclerosis 21 Society provides local services and research. 22 The services are to help end the devastating 23 effects of multiple sclerosis, and the research 24 is to find the cause, new treatments, and 25 eventually a cure for multiple sclerosis. . 310 1 2 Our history with the Travelers 3 Foundation began about ten years ago when a 4 small group of Travelers employees helped at 5 one of our programs called MS Vacation Week. 6 This is a program for people who are primarily 7 severely disabled with MS, although they are 8 young adults. 9 People with MS at Vacation Week can 10 enjoy an accessible environment where they are 11 accepted, understood, and they are able to 12 participate in programs that otherwise they are 13 not able to do. For example, they are able to 14 go boating, they are able to go fishing, they 15 are able to go swimming, they are entertained, 16 and they have the opportunity to learn about 17 treatment programs and ways of coping with 18 their disease. 19 The program also benefits caregivers, 20 because people who are day in, day out, caring 21 for someone who is severely disabled need a 22 break, and this gives those caregivers an 23 opportunity to have a break. 24 The Travelers Foundation, in the 25 early years when we first began Vacation Week, . 311 1 2 supported this program in a small way. Their 3 support increased during the last three years. 4 They have been the major sponsor of MS Vacation 5 Week allowing us to provide the program to far 6 more adults than we have ever been able to. In 7 addition to that we have been able to improve 8 and increase the quality of the programs that 9 we offer. 10 In addition, the Travelers 11 Foundation, the Travelers Group, allows their 12 employees to come help at Vacation Week, even 13 though it is a program that is held during the 14 week and they pay their employees to attend 15 Vacation Week for the entire week, which is a 16 wonderful benefit to our organization. 17 Another example of how the Travelers 18 has shown a commitment to giving back to our 19 community and in helping the MS Society is 20 through our walk. Eight years ago a small 21 group of Travelers employees participated in 22 the walk, and that group has grown to this year 23 250 employees participated in the MS walk on 24 their own, raising about $23,000 in Connecticut 25 alone. . 312 1 2 In addition, the Travelers in their 3 continuing efforts to support the MS Society 4 and encourage their employees to do so, allowed 5 them to publicize and promote the event 6 throughout the country, so that there are 7 hundreds of people in the communities 8 throughout the United States that are 9 participating in walks. 10 Two years ago, the Travelers became 11 the major sponsor of this particular event for 12 the greater Connecticut chapter. This is our 13 largest fund-raising event, and it helped us 14 raise about $400,000 this year with the MS 15 walk. This will help fund research to 16 determine new treatments for MS, and one of 17 those treatments has just been approved by the 18 FDA in recent months, as well as two others 19 that actually slow the progression of the 20 disease by about a third. 21 The Travelers has also been 22 instrumental in helping more than 10,000 people 23 in Connecticut and countless others throughout 24 the country in providing local services that 25 change the lives of people with multiple . 313 1 2 sclerosis. 3 The Travelers Group exemplifies how a 4 corporation can significantly impact the 5 welfare of our community and improve the lives 6 of its residents. The merger between Travelers 7 Group and Citicorp can only make them stronger 8 and more able to help all those we care so 9 deeply about at organizations like the National 10 Multiple Sclerosis Society. 11 MR. LONEY: Thank you. 12 On a personal note, I am rooting for 13 you, because a very good friend of ours in the 14 Federal Reserve system has been battling that 15 horrible disease for a number of years and a 16 breakthrough would be most welcome. 17 MS. GERROL: We agree, definitely. 18 MR. LONEY: Mr. Buerger. 19 MR. BUERGER: Thank you. I'm Ted 20 Buerger. I am external liaison for the 21 Coalition for Welfare to Work. 22 The Coalition was formed in 1997 by a 23 group of business, religious and volunteer 24 organizations who wished to bring the resources 25 of the corporate and the private sector to help . 314 1 2 people move from welfare to productive work. 3 We do this in conjunction with all of the 4 training programs and agencies in Westchester 5 County, simply trying to add supplemental 6 services and resources. 7 Examples of things that we do, 8 briefly, are that we provide 9 interview-appropriate clothing, we provide 10 practice interviews, and we provide mentors 11 after people actually get jobs, to help them 12 not only get jobs but then to keep jobs and 13 move on to better jobs down the road. We do 14 this throughout Westchester County, from Mount 15 Vernon and Yonkers to Peekskill, and everywhere 16 in between. 17 In doing this, we create a human 18 bridge between the world of welfare and the 19 world of work, which is important. As we think 20 of Citibank in a minute, because we are not 21 just providing services, we are providing an 22 open door that says to people we in the working 23 world want you in the world of welfare to join 24 us and work with us. 25 In every area that we have made . 315 1 2 efforts, Citibank has shared their professional 3 workforce development skills in great depth and 4 breath, as well as giving us numerous volunteer 5 hours. 6 One example, Citibank, in February of 7 this year, did a clothing drive with large 8 posters and racks in every Citibank in 9 Westchester County and they kept those racks 10 and posters up for months, and they put our 11 brochures out in every Citibank soliciting 12 volunteers for us. They have also had their 13 head of human resources provide professional 14 interview training to our volunteers for 15 interviewing. 16 Citibank employees have volunteered 17 to be mentors and to do practice interviews 18 themselves, including offering to have 19 candidates come into Citibank offices so they 20 could do the interviews in a corporate setting; 21 it would be realistic. They have also trained 22 our clients in personal budgeting and provided 23 tours of their office facilities so people 24 could experience or see the world of work. 25 It doesn't stop there. Citibank has . 316 1 2 referred us to other organizations in community 3 development and to potential sources of funds. 4 They have always moved to deepen our contacts 5 elsewhere in the Citicorp organization, and we 6 would hope in the future into the Travelers 7 Group organization. 8 They have given us friendly and good 9 advice about building and managing our young 10 organization over the last year. In all, the 11 Citibank community development team, led by 12 Peter Mosbacher, who I have to mention but 13 would also acknowledge that his group includes 14 six other people who meet with us every other 15 month and then again connect us into their 16 different branches to provide services, they 17 have been professional, focused, creative and 18 always helpful. 19 We are proud of what the Coalition 20 for Welfare to Work has accomplished in its 21 first year, but I will tell you, we would not 22 be where we are today without the many 23 Citibankers who have gone the extra mile to 24 help us. There is no corporation who has 25 helped us more and who has offered so many . 317 1 2 services to benefit our clients. 3 Thank you. 4 MR. LONEY: Thank you, Mr. Buerger. 5 Mr. Torres. 6 MR. TORRES: My name is Edwin Torres, 7 and thank you very much for the opportunity to 8 present Bill Aguado's views on the proposal by 9 the Travelers Group, Inc. to acquire Citicorp. 10 Bill Aguado is the executive director of the 11 Bronx Council on the Arts. 12 Citicorp has been a long time 13 supporter of the Bronx Council on the Arts and 14 in recent years has had a significant impact on 15 the Bronx Council on the Arts' community 16 development initiatives as well as its basic 17 operations. 18 Because of its relationship with 19 Citicorp, the Bronx Council on the Arts has 20 been able to expand its focus of the cultural 21 development of the Bronx to include a new 22 corporation, the BCA Development Corporation. 23 Citicorp, specifically their community 24 development department, recognized the value of 25 our efforts and those of other like-minded arts . 318 1 2 organizations to begin exploring the role that 3 we as arts organizations can play in the 4 revitalization of our inner city communities. 5 To that end, Citicorp designed and 6 implemented a special initiative entitled 7 "Cultural Builds Community." The premise is a 8 relatively simple one; that is, by creating 9 partnerships between arts organizations and 10 community development corporations a new and 11 meaningful paradigm of service can be created. 12 Culture Builds Community included a 13 special training initiative for the proposed 14 partnerships to enable them to effectively work 15 together, to overcome and identify whatever 16 management obstacles would emerge, and to 17 assist the participants in program development. 18 BCA and another technical assistance 19 provider, Brooklyn In Touch, were contacted to 20 conduct this important training. The 21 importance of this initiative cannot be 22 stressed enough. The recognition that the arts 23 can enhance community development efforts is 24 what distinguishes Citicorp from other 25 financial institutions. . 319 1 2 Over 30 organizations were served by 3 Culture Builds Community. The concept and the 4 experience was such a positive one that BCA 5 created its own version, entitled Community 6 Cultural Partnerships. The concept has had 7 also a positive impact on our Bronx 8 organizations. 9 To be sure, the arts are more than 10 performances and exhibitions. The arts reflect 11 culture which in turn reaffirm the value system 12 of the individuals comprised in that culture. 13 Within the context of the community, the arts 14 have the potential of bringing residents 15 together in a proactive fashion. The arts can 16 and have effectively complemented the efforts 17 of other traditional revitalization entities. 18 Given the economic impact the arts 19 have on the economy of New York City -- $9.3 20 billion -- the arts is an area with tremendous 21 potential for job and business development in 22 our undeserved communities. 23 Citicorp has indeed recognized that 24 potential by being the first to support our new 25 development corporation and one of its major . 320 1 2 initiatives, our Arthandlers Job Training 3 Program, of which I am assistant director and a 4 case manager. 5 Specifically, the Arthandlers Job 6 Training component is a first of its kind 7 program which is designed to prepare the 8 unemployed for careers as arthandlers. 9 Arthandlers are individuals who work behind the 10 scenes at museums, galleries, auction houses 11 and corporate collections and help to maintain 12 art collections, install exhibitions, frame 13 artworks, pack and crate, and provide risk 14 management, to name a few tasks. 15 The salaries at the entry level can 16 range from $10 to $30 per hour. Many with 17 experience can have a very lucrative career and 18 in turn support their families and contribute 19 to their community's economies. 20 We are now completing the training 21 and the trainees will be placed in internships 22 during July. By the fall, we expect to place 23 them in permanent positions. Also, many 24 opportunities are now presenting themselves in 25 the form of new services and for profit . 321 1 2 business opportunities which would employ 3 additional personnel from our communities. 4 Lastly, Citicorp has allowed us to 5 sustain our efforts during our difficult cash 6 flow times by extending to us an important 7 credit line. Given the uncertainty of 8 contracts for nonprofits, you can imagine the 9 value of the credit line. Moreover, there is a 10 ripple effect one must consider; that is, the 11 credit line allows us to sustain the integrity 12 of our commitment while fulfilling our mandate 13 of service during difficult times. 14 Citicorp is owed a debt of gratitude 15 for the forward thinking, and we have been 16 assured that their commitment to our 17 communities will continue after the acquisition 18 of Citicorp by the Travelers Group. 19 MR. LONEY: Thank you, Mr. Torres. 20 Do we have any questions for the 21 group? If not, I will thank you. You are a 22 very impressive group of folks doing some 23 really nice things. So thank you very much for 24 coming to testify. 25 Panel Eleven is Claudino Otenez,