Public Meeting Regarding Citicorp and Travelers Group
Friday, June 26, 1998
Transcript of Panel Twenty-Four
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Public Meeting Regarding Citicorp and Travelers Group |
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2 MR. LONEY: Let me call the last
3 scheduled panel that we have, Panel
4 Twenty-four.
5 Nancy Roberts, Abdul Rahmaan
6 Muhammad, Joanne Oplustil, Dennis Kremer,
7 Robert Davenport and Jennifer Adolph Blum.
8 Thank you all for coming. We will
9 start with you, Ms. Roberts.
10 MS. ROBERTS: Good morning. I am
11 Nancy Roberts, president of the Coordinating
12 Council for Foundations, a regional association
13 of more than 80 corporate foundations,
14 corporate giving programs, independent
15 foundations, community foundations and
16 federated funds serving Connecticut. The
17 Council's mission is to promote and support
18 effective philanthropy for the public good in
19 Connecticut.
20 As head of the organization that
21 supports and provides data on and information
22 about the organized grant-making community in
23 Connecticut, I am in a position to observe and
24 comment on the corporate social investment of
25 Travelers as well as other corporate entities
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2 in the state.
3 Travelers has historically been an
4 important contributor to organizations in the
5 Hartford area that heal, educate, entertain and
6 inspire -- and its support has been steadfast.
7 The headquarters community usually
8 receives the greatest corporate support.
9 However, after the merger of Travelers and
10 Primerica, greater Hartford was still the
11 beneficiary of sizable support from Travelers.
12 Most recently, within the past four
13 years, Travelers has provided significant
14 support through its foundation in the area of
15 education, from early childhood through college
16 years.
17 Let me give you a few examples.
18 Following the merger with Primerica,
19 Travelers quickly brought to Hartford the
20 academy program which had been successfully
21 provided in other parts of the country. The
22 Academy of Finance at Weaver High School not
23 only became a success story in its own right,
24 but it provided the model and design that
25 stimulated the development of other academy
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2 programs supported by other corporations and
3 the State of Connecticut in the two other high
4 schools in the City of Hartford.
5 A three-year commitment to the
6 Hartford public schools for instrument repair,
7 replacement and music instruction provided much
8 needed support to a neglected program for the
9 cultural enrichment of children in Hartford.
10 In January 1998, Travelers donated
11 30,000 square feet of space in their Education
12 Center to the University of Connecticut for
13 three years to support business education. In
14 addition, they will provide a scholarship fund
15 and paid internships for high school and
16 college level students. This effort
17 exemplifies Travelers' efforts to link
18 educational opportunities for students to job
19 opportunities.
20 In addition to the above-mentioned
21 commitments to public education, the Travelers
22 Foundation contributes to community-based
23 tutoring, mentoring programs for children and
24 youth, to cultural and arts programs, to health
25 programs, totalling more than $1.4 million in
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2 1997 going into the Hartford community.
3 Matching gifts to educational
4 institutions has been replaced with a program
5 which both encourages and rewards employees who
6 contribute volunteer time to their community.
7 With all of the downsizing of the number of
8 employees which has happened in the greater
9 Hartford area, one of the least discussed but
10 most strongly felt effects has been the loss of
11 volunteers to both boards of directors and
12 direct service in nonprofit organizations. In
13 many corporations, employees have not been
14 encouraged to participate outside of their
15 workplace.
16 But Travelers Volunteer Incentive
17 Program provides a strong message that it is
18 not only OK to volunteer, but it is important
19 to give back to the community. Employees may
20 request up to $1500 on behalf of the charitable
21 organizations for which they volunteer, and the
22 amount received further encourages
23 participation since grants are based on the
24 longevity with the organization as well as the
25 hours of service. In 1997 over 60 employees
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2 took advantage of this program with an
3 additional $30,000 contributed to charitable
4 organizations.
5 The nonprofit community has also
6 benefitted from Travelers' generous in-kind
7 support, including opening its space in the
8 education center for conferences, programs and
9 events of community organizations. One recent
10 event for which Travelers provided space and
11 technical assistance and financial support was
12 the Greater Hartford Area Child Care
13 Collaborative's Quality Child Care Teacher
14 Award, which recognized and rewarded the best
15 early childhood teachers in greater Hartford.
16 The final area I would like to touch
17 on is Travelers' support for the civic
18 infrastructure of the greater Hartford
19 community.
20 Travelers has been a founder and key
21 player in important civic events, including the
22 Capital Region Growth Council, which was
23 developed to stimulate economic growth in the
24 greater Hartford region, and Riverfront
25 Recapture, an effort to reconnect the Hartford
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2 area towns and cities to the Connecticut River.
3 Along with the grants from its foundation, the
4 in-kind and human resources and the civic
5 efforts support to enhance the quality of life
6 in the greater Hartford area.
7 In closing, I would like to reiterate
8 that in my opinion Travelers has exhibited
9 ongoing strong commitment to greater Hartford,
10 and I expect that commitment will continue.
11 Thank you.
12 MR. LONEY: Thank you, Ms. Roberts.
13 Mr. Muhammad.
14 MR. MUHAMMAD: Yes. My name is Abdul
15 Rahmaan Muhammad, and I am here in my role as
16 the senior vice president for Community Support
17 Services and diversity manager for the Village
18 for Families and Children.
19 I am pleased to have this opportunity
20 to participate on this panel, to provide
21 information relating to factors the Board is
22 required to consider under the Bank Holding
23 Company Act.
24 I appear before you on behalf of the
25 Village for Families and Children, Inc.,
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2 located in Hartford, Connecticut, and its
3 president Mr. William A. Baker. I express my
4 appreciation for this opportunity to present
5 testimony pertaining to the convenience and
6 needs of the communities to be served. I will
7 also briefly address our long and beneficial
8 relationship with the Travelers.
9 As one of the oldest human service
10 agencies in the country, the Village for
11 Families and Children has been at the forefront
12 of the development and provision of quality
13 social and human services. The Village has
14 been a key leader in the process of meeting
15 human needs for more than 185 years.
16 With a cadre of trained, experienced
17 and diversity qualified professional and
18 para-professionals, the Village has been
19 influential in research, training and service
20 provision.
21 Our services range from programs for
22 infants to the elderly. We provide outpatient
23 behavioral and mental health counseling,
24 special needs adoption services, specialized
25 foster care services, extended day treatment
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2 and family preservation programs, family
3 reunification and residential teen transition
4 programs, teen pregnancy and family housing
5 alternative services, and advocacy on behalf of
6 those most needy in our community.
7 Within the past five years, we have
8 become increasingly family centered and child
9 focused. Working in collaboration with other
10 affiliations in the community, we have
11 successfully implemented several school-based
12 family resource centers.
13 These programs have become one-stop
14 shopping centers for comprehensively meeting
15 family needs and improving the quality of life
16 by developing community-based resources.
17 Our services and programs have
18 positively impacted the lives of thousands of
19 clients, consumers and customers statewide.
20 Such cost-effective programs have been made
21 possible in part due to partnership and support
22 from the private industry in general and the
23 Travelers Group in specific.
24 The Travelers involvement and support
25 to the Village has been long-standing and
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2 consistent. For many years they have made the
3 financial difference in our summer enrichment
4 programs, as a part of our extended day
5 treatment program. This program has provided
6 services to many children.
7 In the more recent involvement for
8 them, the Travelers has funded several projects
9 in our family resource centers. Such projects
10 include, but are not limited to, our computer
11 lab in the North Hartford Family Resource
12 Center, parent educator and parent specialist
13 services and recreational and other services
14 for children.
15 With support from Travelers, both
16 financial and human, we have been able to meet
17 the needs of children needing tutoring in the
18 sciences, teens needing mentors, mothers
19 needing supplies and living space, seniors
20 needing transportation to services, and
21 families needing food and gifts for their
22 children during special observances and holiday
23 seasons.
24 Volunteers from the Travelers have
25 been crucial in improving and enhancing the
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2 program sites for many of our community-based
3 services. Not only has the Travelers provided
4 services at our program sites, they have made
5 available space at their local offices for
6 training and community-based programs. During
7 a recent annual United Way-sponsored volunteer
8 program called A Day of Caring, several of the
9 Travelers volunteers provided a full day of
10 services to the human service organizations in
11 the community.
12 The past long-term partnership
13 between the Village for Families and Children
14 and the Travelers, which includes hundreds of
15 thousands of dollars and staff involvement,
16 lead us to believe that a bigger and better
17 Travelers would continue this high quality of
18 service and support that have been products and
19 outcomes of the previous years.
20 Therefore, the Village for Families
21 and Children would like to go on record as
22 positively supporting the merger with Citicorp,
23 possibly leading to the potential for greater
24 contributions of resources, both financial and
25 human. In our estimation, such a situation
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2 would only lead to the potential enhancement of
3 the human conditions throughout the greater
4 Hartford area, would lead to volunteer support,
5 quality service provision and continued
6 financial support.
7 Should you have questions, I would be
8 pleased to address them when they are
9 appropriately asked. On the other hand, we
10 thank you for this opportunity and we express
11 our appreciation to be here.
12 MR. LONEY: Thank you, Mr. Muhammad.
13 Ms. Oplustil.
14 MS. OPLUSTIL: My name is Joanne
15 Oplustil. I am the executive director of
16 CAMBA, a nonprofit agency in the Flatbush
17 section of Brooklyn, New York.
18 In 1985 when I took over the agency,
19 I was the sole employee. Today we have over
20 350 employees and we service over 14,000
21 individuals a year. The programs that we run
22 are employment programs, health and aids, youth
23 business development, microloans, civic
24 services, homeless and education programs.
25 We're opening a primary health care center in
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2 1999, day care center in 1999, and we are in
3 the process of developing housing for special
4 needs populations, specifically people who are
5 HIV positive.
6 Through those years when I started
7 out, Citibank was always there; and, quite
8 frankly, if they weren't with me -- certainly I
9 was by myself for a while -- encouraging and
10 also giving grants to the agency, we would not
11 be where we are today.
12 I think that the merger between
13 Travelers and Citibank will only benefit
14 communities such as ours. In addition to
15 banking services and assistance that we get --
16 for instance, we work with many people who are
17 either on public assistance or who are
18 immigrant refugees who are not always familiar
19 with the banking systems. They don't have
20 accounts. They want to cash some checks. They
21 don't have the fees. They are not able to pay
22 the fees that the banks charge. We've worked
23 out with Citibank where many of our low-income
24 clients are able to open banks or cash checks,
25 and fees had been either reduced or eliminated.
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2 And we plan to continue to work with Citibank
3 in this effort, particularly with New York
4 City's very strong push to get people from
5 welfare to work.
6 People who are now going to be
7 working are going to ultimately need to open
8 bank accounts. We are going to need
9 consumer-friendly bankers who are going to work
10 with marginal population or low-income who may
11 not have the resources to pay all the fees
12 immediately, to assist them with opening
13 accounts. That is good business, because
14 ultimately people who open a small account will
15 ultimately have larger accounts.
16 With regard to Travelers, we view
17 that as positive, because insurance is a very
18 important component, certainly in the Federal
19 Reserve. But in nonprofit agencies you
20 breathe. You have a new program, you need new
21 insurance. We hope that this merger will
22 assist us in our insurance needs, educating us
23 not only nonprofits, but also educating
24 community members on the needs of insurance,
25 what insurance is, what it is all about and how
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2 to access insurance, reduced fee insurance.
3 Our microloans -- you had asked
4 another question to the other panel about
5 having intermediaries. We do microloans. We
6 give out up to $5,000 loans. Banks can't
7 afford to give out $5,000 loans. We have been
8 very successful with working with populations
9 in giving $5,000 loans, combining them with
10 other intermediaries to make them either
11 $10,000 or $15,000 loans, where the businesses
12 have been turned down, and ultimately will then
13 go to a Citibank for a larger loan.
14 So other entities providing loans are
15 very important, because we are the ones that
16 will walk them through and ultimately they will
17 be able to access larger loans from Citibank,
18 and we have Citibank supporting our microloan
19 program and all of our other programs.
20 Thank you.
21 MR. LONEY: Thank you.
22 Mr. Davenport.
23 MR. DAVENPORT: Thank you for the
24 opportunity to speak. Like Mark Winston
25 Griffith earlier, I sort of looked at this
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2 opportunity as a no-win situation because our
3 constituency includes many of the
4 community-based organizations that have spoken
5 over the last two days, and some of our
6 constituency, some of the community-based
7 organizations have spoken in opposition to the
8 merger and some of them have spoken in favor of
9 it. So whatever I say I am going to make some
10 enemies as a result of it.
11 I, like Mark Winston Griffith,
12 thought it was a marvelous week to take a
13 vacation. But in spite of that, I want to
14 speak in favor of the proposed merger for two
15 reasons, and I will explain those in a second.
16 First of all, just a word about NDC,
17 our organization. We are one of the nation's
18 oldest not-for-profit organizations engaged in
19 community development and housing development.
20 We started in 1968. Our founder had worked for
21 Bobby Kennedy, and when Bobby was shot, he
22 organized the National Development Council,
23 founded with a Ford Foundation grant.
24 In a nutshell, we are finance people.
25 Our role is to channel capital into low-income
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2 areas in productive ways. In any given year,
3 we are working with 100 to 125 community-based
4 organizations, partnering with them to create
5 jobs and to stimulate investment, private
6 sector investment into the low-income
7 communities.
8 We own 2,000 units of low-income
9 housing nationwide. We have $250 million worth
10 of direct development experience. We're the
11 only nonprofit with what's called a small
12 business lending license from the SBA, which
13 entitles us to make SBA-guaranteed loans to
14 small businesses who invest into low- and
15 moderate-income areas.
16 As I said, I want to speak in favor
17 of the merger for two reasons, and they relate
18 very much to our experiences with Citibank, and
19 the first is really what I call attitude.
20 For 30 years our organization has
21 known that a major obstacle to the flow of
22 capital into low-income communities is not the
23 lack of investment opportunities but the
24 perception that there is a lack of investment
25 opportunities. Our experience has always been
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2 that there are a lot of good business
3 investment opportunities in low-income
4 neighborhoods and all we have to do is uncover
5 them and work to structure the deals.
6 No bank is perfect. Citibank is not
7 perfect. But our experience with them has been
8 that they do view their CRA responsibility and
9 investing in the low- and moderate-income
10 communities as an opportunity. It is good
11 business. It is an opportunity to employ
12 capital in a neighborhood. They are
13 sophisticated enough to know that it takes hard
14 underwriting and careful structuring of these
15 deals, but they don't view it as some burden or
16 some guilt money. They have the attitude this
17 is "can do," and with a little bit of hard work
18 we can make it work.
19 That makes them an excellent partner
20 for our type of development. They view low-
21 and moderate-income neighborhoods as equal
22 partners in the development process. Because
23 of this attitude, what they have done with us
24 is they have become the largest sponsor of our
25 nationally recognized training for
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2 community-based organizations, teaching them,
3 bringing the hard development and the hard
4 financial skills to the community-based
5 organizations so they have the capacity to do,
6 to catalyze, their own investments in their own
7 communities.
8 We are also funded by HUD and other
9 large state governments to do this, but
10 Citibank is the only bank and the largest bank
11 to support our training activities. In New
12 York City Citibank has underwritten directly
13 100 percent of the cost of bringing this
14 training to 200 neighborhood-based nonprofits.
15 Citibank has also engaged us to
16 survey the neighborhood organizations to
17 identify new investment opportunities for them,
18 and they booked a lot of new business as a
19 result of that.
20 They have been a major investor in
21 our $35 million low-income housing tax credit
22 fund that will, in fact, create $100 million
23 worth of new low-income housing.
24 They are the only bank that has
25 directed us to work with the low-income
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2 populations in Puerto Rico, which is one of the
3 neediest, and that really is the first reason
4 why we are in favor of it.
5 Second reason is we all know, as
6 Joanne has mentioned before, that while the
7 financial problems of low-income neighborhoods
8 goes far beyond the problems of commercial
9 banks and thrift institutions, it rests to
10 great degree also with insurance, the ability
11 to get insurance. It also rests with the
12 access to equity capital, which is almost
13 impossible in a low-income area.
14 We feel confident that a merged
15 Citicorp/Travelers will, in fact, create a new
16 generation of investment vehicles for community
17 development. For that reason, we are very much
18 in favor of the merger.
19 Thank you.
20 MR. LONEY: Thank you, Mr. Davenport.
21 Ms. Blum.
22 MS. BLUM: Good morning. I am the
23 director of government relations and
24 communications at the Brooklyn Chamber of
25 Commerce. On behalf of the Brooklyn Chamber of
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2 Commerce, I am pleased to offer this testimony
3 in support of Citibank and their pending merger
4 with Travelers.
5 The Brooklyn Chamber is a nonprofit
6 membership organization founded in 1918. This
7 is our 80th anniversary. Our mission is to
8 assist Brooklyn businesses in ways that promote
9 commerce, stimulate economic growth and improve
10 the quality of life throughout Brooklyn. We
11 serve a diverse borough-wide membership uniting
12 small and large businesses located throughout
13 Brooklyn and beyond, and we advocate on behalf
14 of Brooklyn's 35,000 businesses.
15 Citibank has been an active Chamber
16 member for almost half a century. Currently
17 two Citibank executives, Jill Kelly and Natalie
18 Abatemarco, are very active members of our
19 board of directors. In fact, almost ten years
20 ago Jill Kelly was the first woman elected to
21 our executive committee.
22 In our view, Brooklyn, New York City
23 and New York State would be hard-pressed to
24 find a more community-minded financial
25 institution. Citibank has an exemplary record
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2 of community outreach, customer service and
3 economic and small business development. The
4 bank, in our view, is a proven leader in
5 commercial revitalization and a respected
6 provider of technical assistance to small
7 businesses.
8 Citibank has funded several specific
9 innovative initiatives at the Brooklyn Chamber.
10 The bank was an active early and generous
11 supporter of a program that we called Good
12 Help. It is a free employment service created
13 to fill the needs of small businesses seeking
14 to hire and retain qualified employees. At the
15 same time, unemployed and underemployed
16 individuals are assisted in finding quality
17 employment which contributes to the overall
18 economic growth of Brooklyn. Good Help works
19 in conjunction with a citywide network of
20 nonprofit training and placement agencies to
21 produce a large pool of job-ready applicants.
22 We are not aware of any other employment
23 service or similar program in the city which
24 focuses on finding employees for small
25 businesses.
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2 Citibank has also created an exciting
3 new program run by the Chamber for the
4 commercial revitalization of failing retail
5 corridors. The approach of the Retail Strip
6 Revitalization initiative combines marketing
7 assistance, physical improvements and market
8 analysis to address the decline of traditional
9 shopping areas whose stores cater to the needs
10 of nearby residents.
11 Their decline disrupts the vitality
12 of otherwise stable and thriving neighborhoods.
13 Citibank recognizes that retail strips which
14 lack strong merchant associations, business
15 improvement districts, local development
16 corporations, organizations like CAMBA to
17 advocate on their behalf, coupled with
18 increased vacancy and increased foot traffic
19 need target development assistance. The
20 commercial industry of Nostrand Avenue between
21 Avenue W and Avenue Y in Sheepshead Bay is
22 serving as the pilot project for this
23 initiative.
24 Finally, Citibank is a strong
25 supporter of Brooklyn Goes Global, the
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2 Chamber's international trade service. The
3 program's mission is to help businesses create
4 jobs by increasing overseas sales of
5 Brooklyn-manufactured goods. The program helps
6 more than 90 Brooklyn manufacturers every month
7 to increase their capacity to export by
8 providing technical assistance, market research
9 and aggressive sales generation.
10 Overseas sales for Brooklyn
11 manufacturers result in increased product
12 demand, ensure more stable business growth and
13 add more needed blue-collar jobs to Brooklyn's
14 economy. Brooklyn Goes Global is considered a
15 model program across the country.
16 The Brooklyn Chamber supports
17 Citibank and the merger with Travelers. We
18 think the bank has an exemplary record as a
19 good corporate citizen and an unparalleled
20 commitment to community development. We
21 believe this commitment will continue and grow
22 if the proposed merger is finalized.
23 Thank you for your time.
24 MR. LONEY: Thank you, Ms. Blum.
25 Any questions of this group?
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2 MR. ALVAREZ: I have one question.
3 Ms. Blum, you mentioned the corridor
4 revitalization program and you said City was a
5 strong supporter. I assume you mean a strong
6 lender in the revitalization, they lend to
7 small businesses that are moving into the
8 corridor.
9 MS. BLUM: No. This is a program
10 that is just getting underway. They have
11 funded us, in conjunction with some government
12 funding, to hire a consultant to provide
13 targeted redevelopment assistance to -- we are
14 starting with one pilot project. It is not a
15 lending program. We have actually hired a
16 consultant who is going to go in and provide a
17 well-rounded approach to revitalizing one
18 certain retail corridor, with hopes that that
19 approach can be then replicated in other parts
20 of Brooklyn.
21 We target areas that don't have
22 existing merchant associations, businesses, at
23 least, or other groups to do that type of work.
24 MR. ALVAREZ: Thank you.
25 MR. LONEY: Barbara.
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2 MS. KENT: Did you choose that
3 Sheepshead Bay/Nostrand Avenue area or the bank
4 chose it?
5 MS. BLUM: It was really a joint
6 decision between the Brooklyn Chamber, Citibank
7 and the office of the Brooklyn Borough
8 President. We thought it provided a perfect
9 example of the kind of area we wanted to help,
10 that is, a corridor that was suffering from
11 increased vacancies, decreased foot traffic,
12 but yet was a vital shopping district for a
13 relatively large community of residents.
14 MR. LONEY: Well, thank you very much
15 for coming in.
16 We are going to take a ten-minute
17 break before we start the open session. Come
18 back at 10 after 12, please.
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