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Public Meeting Regarding Citicorp and Travelers Group
Friday, June 26, 1998
Transcript of Panel Twenty-One


  20               MR. LONEY:  Any other questions?  If

  21     not, I thank you, our panel, very much.

  22               We are going to combine Panel

  23     Twenty-one and Twenty-two.  Could I ask Edward

  24     Sheeran, Vicki Hurewitz, April Tyler, Greg Todd

  25     and Florence Rice to come up, please.


   2               Mr. Sheeran, will you begin for us,

   3     please.

   4               MR. SHEERAN:  Thank you.  Good

   5     morning.  I am Edward Sheeran.  I am special

   6     assistant to the Mayor of the City of Yonkers,

   7     Westchester County.  I am also the executive

   8     director of the Yonkers Industrial Development

   9     Agency.

  10               The City of Yonkers is the largest

  11     city in Westchester County and the fourth

  12     largest in the State of New York with

  13     approximately 190,000 residents.  Yonkers has

  14     the largest number of high poverty level census

  15     tracts in the County of Westchester.  For over

  16     a decade the New York State Financial Control

  17     Board has been overseeing the city's financial

  18     activities.

  19               Citibank, one of the nation's largest

  20     banking institutions, serves the residents of

  21     the County of Westchester with 18 full service

  22     branch banking facilities.  The areas Citibank

  23     has elected to service within Westchester

  24     County are affluent upscale areas.  These areas

  25     are as follows:


   2               Armonk, Bedford, Bronxville,

   3     Chappaqua, Eastchester, Harrison, Hastings,

   4     Larchmont, Mamaroneck, Mount Kisco, New

   5     Rochelle, Ossining, Pelham Manor, Rye,

   6     Scarsdale, Somers and two branches in White

   7     Plains.

   8               Last year Citibank opted to close its

   9     only manned branch in the City of Yonkers.

  10     Accordingly, Citibank has no manned facilities

  11     to provide day-to-day banking services to the

  12     190,000 residents of the largest city in the

  13     County of Westchester.

  14               Recently I spoke with Citibank's

  15     Westchester County senior management regarding

  16     Citibank's redlining of the City of Yonkers.  I

  17     was advised that it was Citibank's strategy to

  18     provide banking services to its customers

  19     through technology rather than bricks and

  20     mortar and that Citibank would not be adding

  21     additional branch facilities to its network.

  22               This statement was contradicted

  23     following a Craines June 15, 1998 publication

  24     when it reported that Citibank had branches

  25     under construction in the State of New Jersey


   2     and, in particular, in Fort Lee and Englewood.

   3               Clearly, Citibank's strategy is to

   4     provide day-to-day personal banking services to

   5     affluent upscale communities and to ignore the

   6     day-to-day banking needs of the less affluent

   7     communities.  We believe its Westchester

   8     network of branches is an orchestrated example

   9     of this and proves that the 190,000 residents

  10     of the City of Yonkers are not being given the

  11     same banking convenience that are provided by

  12     Citibank to towns, villages, and hamlets within

  13     the County of Westchester.

  14               We, in the City of Yonkers believe in

  15     addition to providing day-to-day banking

  16     services, large financial institutions such as

  17     Travelers Group and Citicorp should be obliged

  18     as good citizens to participate in the economic

  19     revitalization of cities, such as the City of

  20     Yonkers.  We believe they should utilize their

  21     vast resources, both financial and otherwise,

  22     to promote, encourage and finance economic

  23     development.  By doing this, they will be

  24     contributing to the creation of jobs and

  25     increasing the quality of life for all our


   2     citizens.

   3               Citibank's activities to date have

   4     been to the contrary.  The future must be based

   5     on past performance.  Frankly, we are not

   6     satisfied with the manner in which our city has

   7     been ignored and our citizens treated by the

   8     powerful Citibank.

   9               Should the acquisition be approved,

  10     Citibank will be the largest and most powerful

  11     institution in the country.  This may be very

  12     good for the affluent upscale areas, but if

  13     Citibank's past is any indication of the

  14     future, then our 190,000 residents in the

  15     largest city of Westchester County can expect

  16     more of the same from the nation's most

  17     powerful financial institution.

  18               I am here today on behalf of the

  19     citizens of Yonkers to request that the

  20     approval of the acquisition of Citicorp by

  21     Travelers Group be denied until such time as

  22     Citibank institutes and delivers programs that

  23     provide services to the citizens of the City of

  24     Yonkers equal to the services they provide to

  25     the citizens of the 18 affluent upscale


   2     communities in the County of Westchester.

   3               Thank you.

   4               MR. LONEY:  Thank you, Mr. Sheeran.

   5               Ms. Hurewitz.

   6               MS. HUREWITZ:  Good morning

   7     distinguished members of the Federal Reserve

   8     Board.  Thank you for giving me this

   9     opportunity to express my opinion about the

  10     Citicorp/Travelers merger.  My name is Vicki

  11     Hurewitz, and I am here representing the

  12     organization SENSES, which stands for the

  13     Statewide Emergency Network for Social and

  14     Economic Security.

  15               We work on a variety of public policy

  16     issues which affect low-income people here in

  17     New York State.  SENSES is a member of the

  18     National Community Reinvestment Coalition.

  19               As I thought and read about the

  20     Citicorp/Travelers merger and HR10, the

  21     financial modernization bill that would allow

  22     the merger if passed, I decided there were

  23     three questions I wanted to address in my

  24     testimony.

  25               First, if this were a standard


   2     mega-merger like so many we have seen lately,

   3     how are these two institutions doing in terms

   4     of their fair lending and community

   5     reinvestment obligations under current law?  A

   6     merger can be denied if either party has not

   7     met these obligations.

   8               Second, I am puzzled as to how this

   9     merger can occur since HR10, the financial

  10     modernization bill, is still making its way

  11     through Congress.

  12               Third, what are the most important

  13     issues around HR10 that should be addressed

  14     before the law passes?

  15               How are the institutions doing under

  16     the mortgage law?  The Home Mortgage Disclosure

  17     Act requires Citicorp and all its lending

  18     subsidiaries and affiliates to report out

  19     detailed information on every home purchase,

  20     home improvement, and refinance application

  21     taken.

  22               Using 1996 HMDA data, I performed a

  23     limited analysis on Citibank's lending in all

  24     the metropolitan areas of New York State.  I

  25     only examined those markets where an individual


   2     institution took more than 30 applications,

   3     statisticians considering this an ample sample

   4     size.

   5               I compared the market penetration of

   6     Citicorp entities among black borrowers to all

   7     categories of borrowers.  I also compared the

   8     bank's loan denial rate to black versus white

   9     applicants to the same rate for all lenders in

  10     the individual markets.  The reason I only

  11     looked at these particular indicators is that I

  12     am still in the process of database

  13     development.  In the future I will able to look

  14     at many more indicators of bank lending

  15     performance around the state.

  16               Three Citibank entities, Citibank New

  17     York State, Citibank Mortgage and Citibank NA

  18     accepted applications for home purchase loans

  19     in 1996.  Citibank NA is minimally active in

  20     two markets upstate, Buffalo and Rochester.

  21     The other two lenders are primarily downstate

  22     in the New York City and Long Island areas.

  23               With the exception of Citibank New

  24     York State in the two upstate markets, all the

  25     Citibank entities had a lower market share of


   2     black applications than of all applications.

   3     In all areas for all the Citibank entities, the

   4     loan denial rates to black versus white

   5     borrowers were higher than the rates for all

   6     lenders in the markets.  In Rochester, for

   7     example, blacks were denied at over nine times

   8     the rate of whites compared to 1.8 times as

   9     often for the aggregate lenders.

  10               These same patterns occurred in

  11     Citibank's Home Improvement and Refinance

  12     applications.  Again, with home improvement

  13     applications Citibank New York State was active

  14     upstate and Citibank NA downstate.  And in all

  15     cases market penetration was lower than among

  16     black borrowers than white.  With the exception

  17     of Citibank NA in the Long Island area, loans

  18     were denied to blacks at slightly higher rates

  19     than to whites, although the differences are

  20     not as marked as they were with home purchase

  21     loans.  The same thing was true with the

  22     refinance application.

  23               Travelers Insurance Company unlike

  24     Citibank is not required to report under HMDA

  25     nor is it covered by the Community Reinvestment


   2     Act.  It is, however, covered by the Fair

   3     Housing Act of 1968.

   4               Currently HUD is investigating a Fair

   5     Housing complaint brought by the Fair Housing

   6     Council of Washington D.C.  The complaint

   7     alleges that the company's policies have a

   8     discriminatory impact on African-American and

   9     Latino policy seekers and neighborhoods.  In

  10     the D.C. area, Travelers has a policy whereby

  11     the minimum house value that it will insure is

  12     $250,000.  This automatically excludes from

  13     coverage 90 percent of homes in

  14     African-American and Latino neighborhoods.

  15               Travelers also -- is my time up?

  16               Travelers also has a policy of

  17     limiting coverage to homes which are less than

  18     45 years old.  This has the impact of excluding

  19     almost twice as many homes in minority

  20     neighborhoods as in white neighborhoods.

  21               Interestingly, Washington D.C. is one

  22     of the four cities that has been in Travelers

  23     Urban Availability of Insurance program, a

  24     program which was founded 1994 to improve the

  25     availability of insurance in urban areas.  I


   2     wonder what the company's policy would be in

   3     Washington D.C. without this program.

   4               Given that Travelers has this suit

   5     pending against it and given my HMDA findings

   6     on Citibank, I am convinced that even if this

   7     were a standard mega-merger, it should not be

   8     allowed until these fair lending issues are

   9     addressed.

  10               Regarding Citibank, I am well aware

  11     that the Community Reinvestment Act is mostly

  12     about making credit available in low- and

  13     moderate-income areas.  However, it is stated

  14     in the legislation that "in arriving at an

  15     institution's (CRA) rating, the agencies

  16     consider whether there is evidence of

  17     discrimination in violation of the Fair Housing

  18     Act or the Equal Credit Opportunity Act or

  19     evidence of other illegal credit activities."

  20               I am also aware that HMDA has never

  21     been used to prove discrimination; however, as

  22     my analysis shows, the data can point to

  23     patterns that need further investigation.

  24               Before going on with this merger, I

  25     request that HUD investigate Travelers'


   2     underwriting criteria in other urban areas

   3     where it writes policies to determine if there

   4     are possible hidden discriminatory patterns

   5     that prevent protected classes from getting

   6     property insurance.  I also request that the

   7     Federal Reserve look at Citicorp entities

   8     underwriting criteria for the three HMDA

   9     reportable loan types to see what is

  10     responsible for the bank's poor showing among

  11     black borrowers across New York State.

  12               How could this merger occur -- time

  13     is up.

  14               MR. LONEY:  If you want to wrap up.

  15               MS. HUREWITZ:  I will continue.

  16               I just want to say, I am opposed to

  17     the merger for three reasons:  The fair lending

  18     records of the two applicants, the illegality

  19     of the merger, and the potential power of HR10

  20     to destabilize the American economy.

  21               Thank you very much.

  22               MR. LONEY:  Thank you.

  23               If you want to put your full

  24     statement in, it will get into the record if

  25     you will leave a copy with the registration


   2     desk up front.

   3               MS. HUREWITZ:  Thank you.

   4               MR. LONEY:  Ms. Tyler.

   5               MS. TYLER:  Good morning.  My name is

   6     April Tyler and I am a democratic leader in the

   7     West Harlem community.  On behalf of myself, my

   8     coleader Joseph Aplin and the residents of

   9     Harlem's 70th Assembly District, I thank you

  10     for the opportunity to testify and present

  11     information on Citibank's record in the Harlem

  12     community and to register my objection to this

  13     proposed merger.

  14               I will focus on the core lending

  15     record in Harlem, but I'd like to reiterate a

  16     few points that have been covered in prior

  17     testimony by many of my colleagues and many of

  18     Citicorp Travelers Watch.

  19               This transaction is illegal, as the

  20     prior testifier just stated.  The public's

  21     privacy rights may be trampled on.  Both

  22     institutions have not been forthcoming with

  23     information that's been requested numerous

  24     times, and we feel the danger of creating such

  25     a large international financial entity, a


   2     portion of which is protected by U.S.

   3     taxpayers' dollars, may be deemed too big to

   4     fail.

   5               The companies' individual records

   6     with regard to inner city neighborhoods leaves

   7     much to be desired.  Travelers has virtually no

   8     brokers in low- and moderate-income

   9     neighborhoods, and Citicorp has few branches

  10     and does almost no lending.  This hardly bodes

  11     well to a more promising future with the

  12     proposed new entity.

  13               On the prior panel, one of the

  14     panelists stated that we must look to the

  15     future, but we must also not ignore the

  16     history.  So let's take a look at Citibank's

  17     history in the Harlem community and other

  18     communities of color.

  19               The loan rejection rates are more

  20     than doubled that of whites given comparable

  21     circumstances.  In the Harlem community, which

  22     is Community Boards 9 and 10, which are bounded

  23     by 110th Street, 155th Street from Riverside

  24     Drive to Fifth Avenue, there are only two

  25     branches.  One branch is on 111th Street and


   2     Broadway and another branch is on 152nd Street

   3     and Amsterdam Avenue.  No branches are north of

   4     125th Street where the majority of the

   5     African-American and Latino population lives.

   6               One might think that this area was

   7     excluded from Citibank's service area, but it

   8     is not.  In the two branches, that are

   9     inconveniently placed for the majority of the

  10     populations in these two community boards,

  11     there are $233 million on deposit; there is no

  12     direct lending for multifamily housing at all

  13     by Citibank; and, as we all know, the majority

  14     of New York City's housing stock is that type.

  15               But what lending do they do?  One- to

  16     four-family mortgages, co-op and condo loans.

  17     In Community Board 9, which is Central Harlem,

  18     there were only three loans originated in 1996.

  19     Community Board 9 did a little better:  27

  20     loans were originated.  That sounds really

  21     good, but the majority of those loans were

  22     originated in the area south of 125th Street,

  23     right around Columbia University where the

  24     majority of the population is white.  Only six

  25     loans of the 27 were to African-Americans or


   2     Latinos; one was to a Latino.  So so much for

   3     the prior panelist's statement about empowering

   4     Latinos.

   5               The banks that exist have high-fee

   6     structures for banking services.  The brochures

   7     say that you can experience less expensive and

   8     more convenient banking.  Not so if you live in

   9     the Harlem community.  Given this record, it is

  10     amazing that Citibank has received an

  11     outstanding CRA rating.

  12               The proposed new entity made a

  13     commitment of $115 billion, but not to improve

  14     in the areas stated above.  There is no

  15     guarantee that any of the money will be

  16     targeted and invested in New York City or in

  17     low-income neighborhoods.

  18               More than half of that $115 billion

  19     commitment is for consumer loans, student

  20     loans, credit cards and such.  The portion for

  21     small business lending isn't targeted to

  22     low-income areas.

  23               We urge you to reject this

  24     application and demand immediate improvement in

  25     their performance right now, not some nebulous


   2     promise for the future.

   3               Thank you.

   4               MR. LONEY:  Thank you, Ms. Tyler.

   5               Mr. Todd.

   6               MR. TODD:  Good morning.  My name is

   7     Greg Todd.  I am the marketing director with

   8     BEC New Communities.  I would like to thank the

   9     Federal Reserve Bank of New York for sponsoring

  10     this hearing today.  I very much appreciate the

  11     opportunity to speak on behalf of BEC New

  12     Communities.

  13               BEC is a 14-year-old community-based

  14     nonprofit housing group.  To date we have

  15     developed about 900 units of housing from

  16     city-owned properties.  In so doing, we have

  17     invested almost $100 million in the communities

  18     of Bedford Stuyvesant, Crown Heights and Sunset

  19     Park.  In addition, we have sold over 200 units

  20     of ownership housing, including both

  21     condominiums and two- and three-family homes.

  22     BEC also sponsors a community-based credit

  23     union with over 2,000 members and $2.2 million

  24     in assets.

  25               Our organization grew out of an


   2     interdenominational organizing effort.  BEC

   3     stands for "Brooklyn Ecumenical Cooperatives."

   4               I personally came to Brooklyn about

   5     20 years ago from Michigan.  Before coming

   6     here, I completed a masters in business

   7     administration degree and worked briefly in a

   8     bank.  I had heard much of Citibank.  I knew it

   9     to be a leader in the area of consumer banking,

  10     having been one of the first banks in the

  11     nation to issue credit cards and one of the

  12     first to make extensive use of automatic teller

  13     machines.

  14               I, in fact, had such faith in

  15     Citibank that it is where I opened my checking

  16     and savings account and where I currently have

  17     a home mortgage.

  18               Unfortunately, in recent years I feel

  19     Citibank's vision has become less focused on

  20     its home here in New York and more directed to

  21     a national and international audience.  For

  22     example, the branch I used to keep my accounts

  23     at on 13th Street and Fifth Avenue near Sunset

  24     Park was sold to Home Savings Bank -- now a

  25     part of Greenpoint Bank -- about 15 years ago.


   2               Shortly thereafter, Citibank expanded

   3     the number of ATMs at its branch in Park Slope,

   4     a more affluent area.  This pattern appears

   5     typical of what it is doing throughout the City

   6     of New York.

   7               Citibank maintained in 1996 20

   8     branches in Brooklyn.  That number,

   9     incidentally, is now down to 15, of which only

  10     12 are full service.  The total amount of

  11     deposits on these branches in 1996 was $2.1

  12     billion.

  13               According to the Home Mortgage

  14     Disclosure Act provided by the RTK Foundation,

  15     during 1996 Citibank received 1,228

  16     applications from Brooklyn residents.  Of

  17     these, they actually approved 547 or about 44.5

  18     percent of the applications taken.  By

  19     comparison, in 1996 among banks in Brooklyn

  20     that took in at least ten applications, the

  21     overall approval rate was 52 percent, 7.5

  22     percentage points above Citibank's approval

  23     rate.

  24               Assuming an average loan amount of

  25     $150,000, Citibank returned to its communities


   2     in Brooklyn about $82 million in mortgages in

   3     1996.  This amounts to about 3.9 cents in

   4     lending for each dollar deposited by Brooklyn

   5     residents.

   6               I must add that of the over 200

   7     mortgages or about $12 million in home mortgage

   8     lending given to purchasers of BEC developed

   9     homes none were granted by Citibank.

  10               Similarly, of the $100 million in

  11     construction lending used by BEC for

  12     residential development in Brooklyn, none was

  13     from Citibank.

  14               As a leading community group in

  15     Brooklyn, BEC feels that Citibank needs to do

  16     better.  Rather than reaching out to lend in

  17     the developing countries around the globe, why

  18     not lend in the developing neighborhoods in

  19     Brooklyn, for many residents are immigrants who

  20     left just those developing countries that

  21     Citibank appears so eager to lend to.

  22               We feel it is time that Citibank

  23     returned to its role as an innovative leader

  24     right here in New York.  If Citibank wants to

  25     take deposits of Brooklyn residents, we feel it


   2     should be willing to give back its fair share

   3     in loans to the Brooklyn community.

   4               Thank you for your consideration.

   5               MR. LONEY:  Thank you, Mr. Todd.

   6               Ms. Rice.

   7               MS. RICE:  Yes.  Good morning, and I

   8     am glad to be here, and thank you for giving me

   9     this opportunity.

  10               I am Florence M. Rice, president of

  11     the Harlem Consumer Education Council.  I must

  12     say I oppose -- I am opposed to the merger of

  13     Citicorp Group and the Travelers Insurance

  14     because of their practice of racism through

  15     redlining and refusal to loan to

  16     African-Americans.

  17               I am very concerned with Citigroup

  18     and the Citicorp and Travelers merger.  I want

  19     to see a better world, but we can't see a

  20     better world with racism running rampant like

  21     it still does.

  22               Living in New York State all my life,

  23     and at my age of 79, I understand very well

  24     institutional and economic racism, as I have

  25     experienced it in this country all my life,


   2     along with my brothers and sisters.

   3               As slaves, African-Americans were

   4     forced to build the wealth of this country for

   5     the benefit of white Americans.  Today I'm

   6     going to speak to you about the three robbers

   7     of African-Americans, and I think I would like

   8     to say the speakers of City Watch are the ones

   9     that has said many of the things that I have

  10     said, so there is no sense in repeating it.

  11               What I wanted to do, I wanted to do

  12     something different.  I call it the three

  13     robbers of African-Americans; they are racism,

  14     power and control.

  15               The belief is that race is the

  16     primary determiner of human traits and capacity

  17     and that racial difference produced an inherent

  18     superiority of a particular race.  Many white

  19     people practice racism in the corporate

  20     world -- antagonism toward African-Americans,

  21     especially as a result of the racist belief, a

  22     belief in the superiority of the white race,

  23     prejudice based on this, and the theory,

  24     ability, to determine by these races in our

  25     society.


   2               Race riot is caused by racial

   3     dissension and hatred -- which is many times

   4     perpetrated by the corporate world -- power,

   5     and the ability to produce a result, possession

   6     to control authority and influence others,

   7     having such power of controlling groups, that's

   8     what happens in today's world.

   9               I would like to speak third on

  10     control, the power of direct command under the

  11     corporate CEOs and the board of directors,

  12     because that is where much of this racism stems

  13     from, the power of restraining, the power or

  14     authority to manage the regulation of economic

  15     activity, especially by the corporate world

  16     direct, one that controls a means of

  17     determining the policy of a business.

  18               The records of Citicorp and certainly

  19     Travelers speak for themselves.  I'm deeply

  20     concerned.  Like someone here said, if we're

  21     talking these large companies, I'm concerned it

  22     carries this race, economic racism, and this

  23     racism within their companies travelling the

  24     world.

  25               I'm looking to make this a better


   2     world.  I am not looking to make it the kind of

   3     world that I have grown up in and that I know

   4     of.  So, therefore, I would say I have spoken

   5     quite differently, but I am speaking this way

   6     because many of my colleagues here have really

   7     expressed my feeling.

   8               I just want to thank you that I could

   9     be here.  I will put this -- I can send it in.

  10     Again, I will say I am very glad to be here.  I

  11     am 79.  I haven't changed my opinion on the

  12     banks and the redlining and Travelers, which

  13     never dealt with our black community.  So I

  14     again am supporting some of the other speakers

  15     that this merger -- because mergers don't help

  16     community people, poor people, because they are

  17     always looking to make the executives and make

  18     themselves a trillion dollar bankroll, that

  19     they can go off and live better than anyone

  20     else.

  21               Thank you, and I am a little angry.

  22               MR. LONEY:  Thank you, Ms. Rice.  You

  23     don't look angry.

  24               I have a couple of questions.

  25               Mr. Sheeran, could you describe for


   2     me -- and you probably did and I may have just

   3     didn't quite understand it -- the demographics

   4     of Yonkers.  I am not familiar with Yonkers.

   5     Is it a low-income community largely?

   6               MR. SHEERAN:  We have, the southwest

   7     part of Yonkers is the low income.  There are,

   8     I think, six census tracts that are poverty

   9     level.  The city of is made up of about 40

  10     percent African-Americans, 45 percent white,

  11     and the rest others.

  12               MR. LONEY:  Are there any middle,

  13     upper-income neighborhoods?

  14               MR. SHEERAN:  Yes, there are.  In the

  15     northeast part of Yonkers, yes.

  16               MR. LONEY:  Did I understand you to

  17     say there are no Citicorp branches.

  18               MR. SHEERAN:  No Citicorp branches.

  19     The only manned branch that they had they

  20     closed last year and there is an automatic

  21     teller machine in its place.  We don't regard

  22     that as a facility that they can transact their

  23     business.

  24               MR. ALVAREZ:  You mentioned that when

  25     City closed the branch in Yonkers it said it


   2     would replace it with technology; is that the

   3     ATM?

   4               MR. SHEERAN:  That is correct.

   5               MR. ALVAREZ:  It is a single ATM, no

   6     other ATMs in Yonkers?

   7               MR. SHEERAN:  They have no other ATMs

   8     in the community, right.  As I pointed out, all

   9     the areas in Westchester County are all upscale

  10     areas, Bronxville, Rye, all upscale areas.

  11               MR. LONEY:  Apparently in Yonkers

  12     there are some upscale areas as well.

  13               MR. SHEERAN:  Yes, but they are not

  14     as upscale as the Bronxvilles of the world.

  15               MR. ALVAREZ:  When City proposed to

  16     close the branch, did you talk with them about

  17     why they were closing?

  18               MR. SHEERAN:  I was not in this

  19     position at that time, so I am not quite sure.

  20               MR. LONEY:  So upscale is in the eye

  21     of the beholder.

  22               MR. SHEERAN:  Maybe.

  23               MR. LONEY:  That is interesting.

  24               Ms. Hurewitz, I know you wanted to

  25     talk about your views on the illegality of this


   2     merger.  Do you want to expound on that?

   3               MS. HUREWITZ:  I'm concerned because

   4     currently there is a bill going through

   5     Congress, as we all know, the HR10, the

   6     financial modernization bill, which would allow

   7     this merger.  Under the current law, my

   8     understanding is that if Travelers and Citicorp

   9     were to merge, one of the other would have

  10     to -- Travelers would have to divest itself of

  11     its nonbanking activities within two to five

  12     years, or Citicorp would have to give up its

  13     banking charter and become part of Travelers

  14     Savings & Loan.

  15               My concern is that if the merger goes

  16     through that the waiver will be given, the

  17     five-year waiver will be given, and in the

  18     interim Citicorp and Travelers will continue to

  19     lobby Congress to pass HR10, because it is not

  20     quite clear whether the bill will go through

  21     now.  There is a lot of controversy about it.

  22               So currently these two entities as

  23     they sit are not legally allowed to merge as

  24     they both are.  One or both of them have to

  25     make changes.  That is my concern.


   2               MR. LONEY:  Thank you.

   3               Ms. Tyler, I am sorry, I am not that

   4     good with the geography here.  You explained

   5     that there were, I think the implication of

   6     what you said was there were two branches, was

   7     that in Harlem, on the edge of Harlem?  I

   8     wasn't quite clear on that.

   9               MS. TYLER:  Depending on who you

  10     speak with, the boundaries of Harlem are

  11     different.  Some people would say that it

  12     starts at 110th Street, and if you look at

  13     documents from way past, it did.  Currently,

  14     it's always been considered historically the

  15     African-American community in the north of

  16     Manhattan.  The majority of the

  17     African-Americans, and at this point

  18     increasingly the Latino population, are north

  19     of 125th Street.  South of 125th Street you

  20     have to include Columbia University, where even

  21     though it is in the -- a community district

  22     which includes Harlem, it is higher income and

  23     the population is white, primarily.  North of

  24     125th Street, the majority of the population is

  25     African-American and Latino.


   2               MR. LONEY:  And the branches are?

   3               MS. TYLER:  The branches are all

   4     south of 115th Street.  If you travel further

   5     north, you will find another branch at, I

   6     think, 169th Street, right by Columbia

   7     Presbyterian Hospital.  So the population, the

   8     Latino and African-American population has been

   9     skipped over in both instances.

  10               MR. LONEY:  So the 169th Street, is

  11     that still Harlem?

  12               MS. TYLER:  No.  That is considered

  13     Washington Heights.

  14               MR. ALVAREZ:  Ms. Tyler, you

  15     mentioned that there were, I think you said

  16     $233 million worth of deposits.

  17               MS. TYLER:  Right.

  18               MR. ALVAREZ:  I didn't quite catch,

  19     are those -- who are those deposits from; where

  20     are those deposits?

  21               MS. TYLER:  We don't have access to

  22     the zip code information, so we can't tell

  23     where the deposits originate from.  In those

  24     two branches, the Data Book, which is published

  25     by the Federal Deposit Insurance Corporation,


   2     gives you the figures branch by branch of the

   3     deposits.  But we all know that when people

   4     don't have the convenience of a branch in their

   5     neighborhood, they usually bank where they

   6     work.

   7               Even though these are inconvenient

   8     branches, there are $233 million in deposits.

   9     A portion of that, we suspect, is from

  10     residents of the Harlem community.  And if you

  11     look at the branches in midtown Manhattan or

  12     downtown, I would be willing to bet if we got a

  13     zip-coded analysis that a portion, maybe a

  14     large portion, would be from the 25, 27, 35, 39

  15     zip codes that comprise Harlem.

  16               MR. LONEY:  Do we have any other

  17     questions of the panel?  If not, I will thank

  18     you very much for coming in and talking to us.


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Last update: September 27, 2002