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


  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


   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


   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.


   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


   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


   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


   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


   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


   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


   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


   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


   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


   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


   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.


   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


   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


   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.


   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


   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


   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


   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


   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.


   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


   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


   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


   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.


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