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Public Meeting Regarding Citicorp and Travelers Group
Thursday, June 25, 1998
Transcript of Panel Ten


  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


   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


   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


   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


   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


   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,


   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


   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


   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


   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


   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


   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


   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.


   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,


   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.


   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


   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


   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


   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


   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


   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


   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.


   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


   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


   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,

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