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