Home > Banking Information & Regulation > Public Meeting Transcripts > PMT - Agendas June 25-26, 1998
Public Meeting Transcripts
Public Meeting Regarding Citicorp and Travelers Group
Thursday, June 25, 1998
Transcript of Panel Fourteen
372 10 MR. LONEY: Thank you very much, 11 Mr. Daniel. 12 Are there any questions? If not, I 13 will thank you very much for coming. 14 We have worked Panel Fourteen just a 15 bit to accommodate some people who were 16 originally scheduled to speak tomorrow and for 17 other purposes. 18 As presently constituted, Panel 19 Fourteen will be Jane Perkinson, David Wolin, 20 Vicki Wacksman, Roslyn Goldmacher, Naomi Brown 21 and Monique Spike. 22 Thank you all. Can we begin with 23 Ms. Perkinson, please. 24 MS. PERKINSON: Good afternoon. My 25 name is Jane Perkinson. I am chair of . 373 1 2 Permanent Housing for SHORE, Inc., an interface 3 nonprofit housing organization in the White 4 Plains, Central Westchester area, with its 5 membership based in more than 40 local churches 6 and temples, as well as business in civic 7 groups and individual members. The purpose of 8 our organization is to help people in the 9 community with housing needs. 10 SHORE started in 1985 as a 11 spontaneous effort among several downtown White 12 Plains churches and temples to provide 13 short-term overnight shelter to homeless men. 14 This has developed into a 24-hour-a-day 15 fully-staffed men's shelter that provides 16 counseling for substance abuse, mental health, 17 assistance in finding housing, jobs, and job 18 training, and has helped more than 500 men 19 return to normal, productive life in the 20 community. 21 Since 1990, SHORE has turned its 22 resources to developing apartment units as 23 permanent affordable housing for families who 24 need homes. Using New York State grants and 25 privately-raised funds and volunteer labor and . 374 1 2 furniture donations, we have acquired and 3 renovated two vacant two-family houses creating 4 rental apartments for deserving families who 5 until that point had been homeless. 6 These families, as paying tenants, 7 have now stabilized their lives and those of 8 their children, and the renovated housing has 9 also enhanced two downtown neighborhoods of 10 White Plains. 11 We will shortly begin construction on 12 fourteen units of affordable mixed home 13 ownership and rental housing on two sites in 14 White Plains; one of those sites currently 15 owned by the city. 16 Seven two-family townhomes will be 17 marketed at affordable prices to qualified 18 first-time homeowners of modest income. Each 19 of these homeowners will live in one of the 20 units and rent the other to a selected family 21 coming from emergency housing. Buyers will be 22 given mortgage counseling and assistance in 23 obtaining favorable terms. Income from the 24 rental unit will help them meet the carrying 25 costs of home ownership. . 375 1 2 We believe the community will benefit 3 through the improvement of two marginal 4 neighborhoods, with a restored tax base on two 5 presently very deteriorated properties and 6 through an increase in the amount of badly 7 needed affordable rental and home ownership 8 housing available for its citizens. 9 This development is supported by a 10 composite of funding sources, including two New 11 York State agencies, a HUD grant administered 12 through Westchester County, the Federal Home 13 Loan Bank, and also a package of low- or 14 no-interest bridge loans from SHORE member 15 houses of worship and other nonprofit lenders. 16 Citibank, as a local bank in the 17 community, has shown us its recognition that it 18 has a critically important role to play in the 19 success of this housing development. The 20 first-time home buyers will be in need of 21 mortgages and Citibank will make end loans 22 available to them so that they can take 23 advantage of this rare opportunity to become 24 property owners. 25 A Citibank officer from one of the . 376 1 2 local branch banks serves on SHORE's board of 3 directors. She is rooted in the community 4 herself and she works actively to be the 5 all-important link between the needs SHORE 6 seeks to fulfill and the resources that 7 Citibank can provide. Citibank has also made 8 several grants to SHORE in the amount of $1,000 9 to $2,000 which enable us to underwrite ongoing 10 operations in our fund-raising and community 11 outreach efforts. 12 We are hopeful that all future 13 developments of Citibank will enhance its 14 ability to be present in the community, to know 15 the community and be responsive to its needs, 16 and we hope that it plays this important role 17 not only with SHORE but with other partners, 18 other organizations, in collaborative projects 19 that can give all of us a stake in a better 20 life for the community as a whole. 21 I thank you. 22 MR. LONEY: Thank you. 23 Mr. Wolin. 24 MR. WOLIN: Good afternoon, ladies 25 and gentlemen. My name is David Wolin. I am a . 377 1 2 partner in the law firm of Willkie Farr & 3 Gallagher. I am testifying today on behalf of 4 our client Habitat for Humanity International, 5 which we represent on a pro bono basis. 6 My purpose in testifying today is to 7 describe Citibank's involvement in Habitat's 8 innovative securitization program which raises 9 millions of dollars to build low-income houses, 10 and to describe the Travelers Group program for 11 providing low-cost homeowner's income to 12 Habitat families. 13 I will give a very brief background 14 of the program first and of Habitat. 15 Habitat was founded in 1976 to build 16 and sell simple, decent homes at no profit to 17 low-income families who are not eligible for 18 conventional financing. 19 In the United States, Habitat is run 20 by over 1,400 not-for-profit affiliates in 21 local communities. In 1997, Habitat affiliates 22 built, repaired and renovated over 3,700 23 houses. Typically family income for a Habitat 24 family of four ranges from just under $11,000 25 to under $22,000. Those families finance their . 378 1 2 homes with a no-interest mortgage to Habitat. 3 The typical mortgage is for 20 years and the 4 average combined monthly payment, including 5 taxes and insurance, is $290. 6 However, although the homes are 7 generally built by volunteers, the affiliates 8 are limited by a lack of funds in the number of 9 homes they can build. 10 Citicorp has invested in Habitat's 11 securitization program in providing volunteers 12 to work on houses. Habitat's securitization 13 program converts Habitat's portfolio of 14 mortgages into cash to finance additional 15 housing. Its affiliates hold millions of 16 dollars in zero interest mortgages which 17 previously were illiquid assets. With 18 approximately 18,000 mortgages held in the 19 United States, the total potential pool of 20 Habitat mortgages is approximately $500 21 million. 22 Habitat's goal is to raise $100 23 million for its affiliates through this program 24 over the next five years. To date, 25 25 affiliates have raised approximately $5 million . 379 1 2 to build new homes. Habitat is expecting to 3 make its next offering of bonds in the fourth 4 quarter of this year. The bonds pay interest 5 at a below market rate to its investors of 6 between 1 and 5 percent. 7 In the past year, Citibank has 8 invested $400,000 in low-interest bonds that 9 were secured by mortgages issued by the 10 Rochester, New York and Washington, D.C. 11 affiliates. By providing the necessary 12 liquidity for these affiliates, Citibank has 13 allowed their programs to expand. 14 For example, for years the Rochester 15 affiliate had been trying to establish a 16 program to rehabilitate homes in its 17 communities, in addition to its program of 18 building new homes. However, it has been 19 unable to raise funds for this rehabilitation 20 program. Using Citibank's investment in the 21 Habitat bonds, the Rochester affiliate has been 22 able to institute its long-awaited 23 rehabilitation program. In addition, Citibank 24 has provided direct grants to the Rochester 25 affiliate and also permits its employees to . 380 1 2 take time off from work to work on Habitat 3 homes. 4 Citibank has committed to Habitat 5 that it will continue to invest in the bonds 6 which are secured by mortgages held by 7 affiliates in Citibank's service areas. 8 Through Citibank's commitment to the 9 securitization program, affiliates in Citibank 10 service areas have the needed liquidity which 11 allow them to build more homes with their 12 low-income families. 13 In addition, Habitat has worked with 14 Travelers since 1993 to provide low-cost 15 homeowner's insurance to its families. 16 Travelers currently insures approximately 17 one-third of all Habitat homeowner's in the 18 United States. 19 Travelers' program has helped to 20 alleviate the difficult problem of Habitat 21 families obtaining homeowner's insurance. 22 Because Habitat homes are typically in 23 low-income neighborhoods and have low dollar 24 values, many insurance carriers will not insure 25 them. Some affiliates have in the past been . 381 1 2 unable to transfer ownership of homes because 3 the family could not obtain insurance. Even 4 when coverage was available, the policies only 5 provide limited coverage, and the family had to 6 pay substantially higher premiums than would be 7 paid by homeowner's in more affluent 8 communities. 9 Travelers' policies are issued to 10 homeowner's without any credit checks or 11 limitations on home value. Travelers' coverage 12 is even available to Habitat families in state 13 where because of weather-related problems, 14 insurance is difficult to obtain. Under its 15 program, Travelers charges Habitat homeowner's 16 its lowest rate for homes situated in the 17 community. 18 The policy that Travelers provides is 19 for full replacement costs for the home and 20 property, and $100,000 in liability coverage. 21 The typical homeowner pays between $150 and 22 $250 per year for this coverage. Because the 23 average Habitat homeowner earns between 25 24 percent and 50 percent of the area median 25 income, the low premium can be the difference . 382 1 2 between being able to afford a home and not. 3 In conclusion, I want to emphasize 4 that Habitat has been fortunate to be working 5 with Citibank and Travelers in the past and 6 looks forward to working with them in the 7 future. 8 Thank you. 9 MR. LONEY: Thank you, Mr. Wolin. 10 Ms. Goldmacher. 11 MS. GOLDMACHER: I am fine right now. 12 I apologize for the interruption. 13 Thank you and good afternoon, ladies 14 and gentlemen, and thank you for the 15 opportunity to testify before you today on the 16 proposed acquisition of Citicorp by the 17 Travelers Group, Inc. I have prepared a more 18 detailed written statement which I have 19 submitted for your consideration. 20 My name is Roslyn Goldmacher. I am 21 the executive director of the Long Island 22 Development Corporation, which is a 23 not-for-profit economic development membership 24 organization which provides loans and technical 25 assistance to small businesses in Nassau and . 383 1 2 Suffolk counties in New York. 3 Long Island Development Corporation 4 has made over 1,000 loans to small businesses 5 totalling more than $300 million and has 6 assisted over 1,800 very small Long Island 7 companies to obtain $180 million in Department 8 of Defense contracts. 9 LIDC is the U.S. Small Business 10 Administration's 504 Certified Development 11 Company for Long Island. It administers a 12 variety of other government-related finance 13 programs and it operates the Department of 14 Defense Procurement Technical Assistance Center 15 for Long Island. 16 Long Island Development has worked 17 extensively with Citibank. Citibank is a 18 member of our organization and is represented 19 on our board and committees. Citibank also 20 participated in the SBA 504 program as a first 21 mortgage lender. 22 Citibank provides a small grant to 23 Long Island Development Corporation to help 24 conduct its procurement technical assistance 25 program and it works with us in a local . 384 1 2 initiative which provides technical assistance 3 to community groups to help them redevelop 4 blighted areas. 5 Citibank participates in a regional 6 capital access loan fund operated by Long 7 Island Development, and I am thrilled to say 8 Citibank has recently committed to invest in 9 two new small business investment companies 10 providing debenture capital to small business 11 for economic development in Long Island, New 12 York, New Jersey, Puerto Rico and Nevada. 13 Long Island Development Corporation 14 supports the proposed acquisition. It will 15 increase the resources devoted by Citibank to 16 economic and community development on Long 17 Island. It will result in increased small 18 business lending under the SBA 504, SBA 7A and 19 conventional loan programs. 20 The acquisition will also bring 21 additional and innovative finance products to 22 the table for small business. The resources of 23 the Travelers Group will bring needed insurance 24 products to the small business community, 25 including bonding, which is much needed for our . 385 1 2 small businesses seeking government and other 3 contracts. 4 The investment banking and other 5 finance divisions of Travelers will provide the 6 knowledge to create innovative financing 7 alternatives for small business such as 8 securitization of small business loans. The 9 acquisition will provide increased 10 accessibility for small business customers on 11 Long Island because they will be able to access 12 Citicorp services through their Travelers 13 insurance agents. 14 Finally, LIDC supports the proposal 15 because Citicorp is committed to creating an 16 Office of Financial Literacy as a result. This 17 office will increase small business awareness 18 of financing programs and resources such as 19 those offered by Long Island Development 20 Corporation. 21 For these reasons, Long Island 22 Development Corporation supports the proposed 23 acquisition of Citicorp by Travelers Group, 24 Inc. 25 Thank you for this opportunity. . 386 1 2 MR. LONEY: Thank you. 3 Ms. Wacksman. 4 MS. WACKSMAN: Thank you. My name is 5 M. Vicki Wacksman. I am the president and CEO 6 of the New York State Association of Black 7 Women Owned Enterprises, Inc. The Association 8 is known publicly as BWE. I will refer to our 9 organization during this testimony as BWE. 10 I am here this afternoon on behalf of 11 the board of directors and our 625 members to 12 share some of the experiences our organization 13 has had with Citibank over the years. It is 14 our hope that these experiences will assist 15 your deliberations related to the proposed 16 Travelers Group, Inc. acquisition of Citicorp. 17 Black Women Enterprises is a 18 nonprofit, statewide, 501(c)3 organization, 19 established in 1993 under the charity law of 20 New York State. We are based in Hempstead, 21 Long Island. 22 The 1991 Croson Report was the 23 catalyst for the founding of the organization. 24 The report studied the awarding of contracts to 25 women and minorities by New York State . 387 1 2 agencies. The report revealed that the 3 greatest disparity fell upon black women-owned 4 firms. To reverse this trend, a group of 5 progressive black women business owners 6 established BWE. 7 The mission of our organization is 8 simply to remove barriers that impede the 9 success of black women who desire to start or 10 expand a business. Our mission is achieved 11 through the delivery of a comprehensive Monday 12 to Friday, 10 to 6 p.m. counseling, technical 13 assistance and training service to BWE members. 14 The organization started in November 1993 with 15 25 members. Today, four-and-one-half years 16 later, we have 625 members. 17 We remain the only organization in 18 New York State to specifically target the 19 disparity issues affecting black women-owned 20 firms and black minority women-owned firms; the 21 state's largest group of minority women-owned 22 enterprises. 23 The chart below presents data 24 provided by the 1998 report by the National 25 Foundation of Women Business Owners. It . 388 1 2 describes the enormous gap that exists between 3 black women-owned enterprises and enterprises 4 owned by Caucasian, Hispanic and Asian 5 women-owned businesses. 6 I would like to note that all women 7 and minority enterprises fall at the bottom 8 rung in overall sales in our great state. 9 However, it is important to our mission to show 10 that the targeting of black women-owned firms 11 in economic development are not race-based but 12 need driven. Black women-owned firms average 13 $63,000 annually in sales, while the Hispanic, 14 Asian and Caucasian counterparts average from 15 $155,000 to $439,000 annually per business. 16 Since opening our doors for services 17 in January 1994, BWE has sponsored 84 workshops 18 in small business planning and management, 19 provided over 2,000 hours of individualized 20 technical assistance and business development 21 coaching, and in 1997 piloted a Corporate 22 Procurement and Technical Assistance Program. 23 This program makes a frontal attack 24 on the disparities we talked about earlier by 25 helping our members win corporate contracts. . 389 1 2 Our goal for Phase I of the program was 3 $700,000 in contract awards, and we achieved 4 $1,619,000. 5 We are finally getting a handle on 6 how to help small microbusinesses compete 7 effectively, and we hope to double and triple 8 these achievements in the coming year. The 9 goal is 2 million for 1998. 10 BWE's achievements would be far less 11 without the help and support from Citibank. In 12 establishing the organization, we broadly 13 reached out to government and the corporate 14 community to assist the funding and 15 implementation of our mission. 16 Citibank was among the first to 17 respond. To assist our outreach and start up 18 service delivery, Citibank donated $20,000. 19 I would like to add that when BWE 20 started this organization, New York State 21 listed 67 black women-owned firms. As far as 22 agencies were concerned, they said that we 23 could not be found. 24 Citibank also invited us to attend 25 some of the community development and . 390 1 2 revitalization training that Citibank offers 3 which broaden our perception, skills and 4 knowledge about economic development and 5 revitalization issues. 6 We needed to get our mission before 7 legislators, especially those serving minority 8 communities. Citibank assisted this need by 9 sponsoring our BWE Legislative Reception that 10 is held in Albany each year during the black 11 and Puerto Rican Caucus Weekend. 12 We cannot achieve our mission without 13 advice and guidance in identifying easy-to-use 14 resources from the private sector. We formed a 15 corporate advisory board for this purpose. 16 Citibank accepted our invitation to join and 17 actively assists the planning and 18 implementation now of all BWE programs, 19 including the Corporate Procurement and 20 Technical Assistance Program. Citibank also 21 provides $5,000 annually to assist the cash 22 match requirement of the grant that we 23 generally receive. 24 We have attached a newsletter, 25 brochure and a calendar of events to illustrate . 391 1 2 how we have leveraged this important help into 3 a comprehensive service delivery. 4 Thus, Citibank has truly been an 5 excellent partner for BWE. It provides us 6 invaluable assistance. From the very beginning 7 of our relationship, Michelle DiBenedetto, 8 Citibank's vice president for government and 9 community relations provides advice on a 10 regular basis. She has encouraged us also to 11 reach out to other lending institutions for 12 support and assistance. As illustrated in our 13 newsletter, this outreach has fostered a 14 variety of helping relationships with other 15 banks. 16 We feel certain that the 17 Citibank/Travelers acquisition will result in 18 greater opportunities for the entire community 19 and especially for small minority and 20 women-owned businesses. Our members say that 21 Citibank listens and provides real guidance in 22 business finance. We know firsthand that 23 Citibank knows how to help people who need help 24 the most and have the capacity to do so while 25 maintaining the integrity of a helping . 392 1 2 relationship. 3 I would also like to add that BWE 4 works very closely with the Long Island 5 Development Corporation, and those figures that 6 Roslyn Goldmacher mentioned, you can count on 7 lots and lots of BWE members in those figures. 8 We certainly hope that this testimony 9 will provide decision makers a clearer insight 10 to the people behind the name Citibank and ask 11 that the proposed acquisition request be 12 granted. We feel confident that the combined 13 strength of Travelers and Citicorp will enhance 14 their capacity to support and assist women and 15 minorities in their quest to participate more 16 fully in economic development. 17 Thank you for the opportunity to 18 share our views. Respectively submitted, the 19 BWE board of directors and founding officers, 20 Phyllis Hill Slater, Chair; Vera Moore, Vice 21 Chair; and Secretary/Treasurer, Viola Newton; 22 and M. Vicki Wacksman, President and CEO. 23 MR. LONEY: Thank you. 24 Ms. Spike. 25 MS. SPIKE: Good afternoon. My name . 393 1 2 is Monique Spike, and I am 16 years old, and I 3 attend Hartford Public High School in Hartford, 4 Connecticut. 5 I am here to talk about the Travelers 6 support of a program called Postponing Sexual 7 Involvement which I studied in Hartford to 8 decrease the teen pregnancy rate, because 9 Hartford has one of the highest numbers for 10 teen pregnancy, one of the worst numbers for 11 teen pregnancy in the country. Travelers has 12 provided current funding for 60 of Hartford's 13 high school students, funds for the fifth grade 14 classes of Hartford to be put into the 15 curriculum. 16 The curriculum consists of ways that 17 the fifth graders can learn how to use sexual 18 pressures and techniques -- to say no to sexual 19 pressures, how to handle their curiosity about 20 sex without having sex and how to deal with 21 their peers. Along with the benefits the 22 program gives the fifth graders, such as the 23 tools to resist peer pressure, and confidence, 24 the program also benefits the teenagers 25 themselves. . 394 1 2 As teen leaders, we are given tools, 3 such as communication skills, that assist us in 4 our everyday lives. We also get extensive 5 training in the PSI curriculum and have 6 experience, improved grades and improved 7 attendance at school. 8 Teen leaders have shown a great 9 responsibility to their community and to 10 themselves and have served as role models to 11 the fifth graders. Teen leaders show great 12 enthusiasm going to the fifth grade classrooms 13 and I always look forward to the five weekly 14 sessions that we do with the children. As a 15 teen leader myself, I believe that the program 16 is very beneficial and I regret that is not 17 offered to other cities in the country. 18 Thank you. 19 MR. LONEY: Thank you, Ms. Spike. I 20 have to say you are a credit to teenagerhood. 21 Ms. Brown. 22 MS. BROWN: Good afternoon, ladies 23 and gentlemen. My name is Naomi Brown, and I 24 am also a 16-year-old teenager, and I am 25 entering the 12th grade at Hartford Public High . 395 1 2 School in Hartford. I was asked here to 3 testify about the Postponing Sexual Involvement 4 program and how it benefits the fifth graders. 5 This past year was my first in PSI 6 and I had the privilege of teaching at three 7 schools and assisting at one. When I go in 8 there to teach the curriculum to the fifth 9 graders, their faces light up. They are 10 absolutely willing and waiting to learn. They 11 are excited when we go in there, and the whole 12 week before they ask their teacher when is PSI 13 coming in, when are they coming in? They love 14 to see us. 15 We teach them skills that will help 16 them in today's rapidly changing world. We 17 teach them assertiveness techniques so they can 18 resist different kinds of pressure. The first 19 technique we teach them is to say no in a 20 clear, firm voice and keep repeating it. The 21 second technique we teach them is to ask the 22 person why are you pressuring me or to tell the 23 person how the pressure is making them feel. 24 The third technique we teach them is to refuse 25 to discuss the matter further or just walk . 396 1 2 away. 3 With these techniques in mind, the 4 students have the knowledge that they know how 5 to say no and that they will mean it when they 6 say no. They also come away with the belief 7 that they will be listened to and that they can 8 make a difference not only in their own lives 9 but in other people's lives. 10 I believe that PSI helps students 11 greatly because the relationship that the fifth 12 graders form with the teen leaders helps them 13 with their confidence and to help them come 14 away with the belief that they mean something 15 to someone and that someone wants them to 16 succeed. 17 I personally think that the students 18 who go through PSI will be the future business 19 leaders of today because they will have 20 confidence and they will have respect, they 21 will be able to do well in the workplace and 22 they will be able to live a quality life 23 themselves, a life through PSI that is 24 hopefully drug free, that is 25 sexually-transmitted disease free. It will . 397 1 2 also be free of unwanted early pregnancies. 3 And I feel that this program is a great asset 4 and I would like to thank the Travelers company 5 for providing the funding to help us with this. 6 Thank you. 7 MR. LONEY: Thank you. You two young 8 ladies did a fine job. 9 MS. BROWN: Thank you. 10 MR. LONEY: Do we have any questions 11 of this group? If not, I will thank you all 12 very much for coming.
Last update: December 3, 2010