Public Meeting Regarding Citicorp and Travelers Group
Thursday, June 25, 1998
Transcript of Panel Ten
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22 MR. LONEY: We will begin with the
23 panel that was scheduled for 2:35, Panel Ten.
24 Everybody is here.
25 Mr. Schallau, is that how you say
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2 your name?
3 MR. SCHALLAU: Very well done. Thank
4 you. My name is Doug Schallau. I am president
5 of Junior Achievement of New York City. We are
6 a franchise of Junior Achievement Inc., which
7 has 163 domestic franchises in the United
8 States and it has programming in over 100
9 foreign countries.
10 This year in New York City we will
11 reach 150,000 students with our programs, all
12 taught by volunteer role models from companies
13 like we are here to talk about today. And
14 specifically I'd like to just spend a moment
15 talking about our experience with Citibank,
16 which has been absolutely tremendous and
17 positive and, therefore, I am here to speak
18 very much in favor of the consolidation.
19 Over the past ten years, Citibank has
20 contributed funds to Junior Achievement of New
21 York in excess of half a million dollars, which
22 has allowed us to bring our programs to young
23 people that are very much in need of these. In
24 addition to that, they have provided their
25 employees, approximately 350 of those over the
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2 last ten years, to go into the classrooms with
3 our programs to teach kids about free
4 enterprise and economics. In fact, our purpose
5 is to educate and inspire young people to value
6 free enterprise business and economics in order
7 to improve the quality of their lives.
8 I think this is where the similarity
9 exists with, for example, Citibank, that we
10 have a great experience with, and our
11 organization. We are both trying to improve
12 the quality of lives for the kids we reach, and
13 for Citibank the people in the locations where
14 they exist.
15 In addition to all that, they have
16 been very generous. Their employees have been
17 very generous with their time in teaching in
18 the classroom, as I mentioned, and also helping
19 in our special event fund-raising. They have
20 raised probably another half a million dollars
21 over the last ten years through our special
22 events and, primarily, through our Bowl-A-Thon.
23 That involves their employees helping raise
24 money and then participating in the event.
25 I'd also like to specifically talk
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2 about the leadership role that Citibank has
3 played with us and other organizations like
4 ours, particularly our focus, which is the
5 education system. Without question, they have
6 taken a leadership role in a number of areas,
7 some of which -- as an example, in education
8 technology Paul Ostergard, who heads the
9 foundation, has been a pioneer and a driving
10 force in involving technology in education. He
11 has also been very supportive with Junior
12 Achievements International operations and is in
13 Citibank involved in a number of foreign
14 locations, has been very innovative in
15 connecting the people that they are lending
16 money to in their microlending program,
17 involved in their Junior Achievement program,
18 to help those people understand business and
19 free enterprise and responsibilities that go
20 with it.
21 So I just would like to summarize by
22 saying that I believe that this can only be an
23 expansion of this leadership role to help
24 improve the quality of lives in everyplace that
25 this organization is located, and we certainly
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2 appreciate it not only here in New York City
3 but all the locations where they are involved
4 with us. And they are truly a leader,
5 enlightened philanthropy not only in the United
6 States but globally, and we appreciate it very
7 much.
8 Thank you.
9 MR. LONEY: Thank you.
10 Mr. Porter.
11 MR. PORTER: Good afternoon. My name
12 is Ralph Porter. I represent Mid-Bronx
13 Desperados Community Development Housing
14 Corporation. So on behalf of the board, staff
15 and its residents, it a pleasure to come speak
16 before you today.
17 I am especially going to speak about
18 our involvement with Citibank over the past ten
19 or more years. One, when we first started
20 sponsoring a community development credit
21 union, Citibank came to our aid in terms of
22 giving us a grant for operations over a two- to
23 three-year period. As time went on, we also
24 received grants for general operating.
25 The last two specific grants that we
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2 received, which we were in dire need of, was
3 one for our job resource center, which was a
4 job training program basically geared to deal
5 with welfare recipients and our residents to
6 take them off of the welfare rolls.
7 Another grant -- we were approved
8 last year -- was the grant where we were
9 dealing with economic development, and this
10 grant went to maintaining a director of
11 development, which presently we are in the
12 process of developing a 136,000 square foot
13 shopping center, which that money was given
14 directed toward the salary for that particular
15 person who had been on that project for some
16 years, and also consulting fees.
17 Citibank has also made it available
18 for free training for some of our development
19 staff to come to many courses and to increase
20 their knowledge and talents so that they can
21 come back into our community and be put to use
22 in development in our community.
23 I do have -- I asked myself the
24 question that, what can this merger contribute
25 to especially a not-for-profit organization,
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2 and directly a community development
3 cooperation such as Mid-Bronx Desperados and
4 other community groups?
5 I view community development groups
6 as the glue for this society, to maintain what
7 has been invested in these communities in
8 affordable housing, economic development, etc.
9 They become a living organism and a hub for
10 being able to support the community in its
11 efforts.
12 It's important that private industry
13 gets involved, and especially in the banking
14 area I can say that I know you are in the
15 business of making money, but there is also the
16 business of social corporate responsibility.
17 And as I look at this merger and I see this
18 $115 billion over a ten-year period, I ask the
19 question, in terms of community development,
20 how much of those funds are going to be
21 contributed in grants for operation support for
22 buildings, for organizations, of
23 not-for-profit. It is extremely important that
24 we look at those dollars figures that they have
25 recommended, and they be increased in reference
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2 to insurance Travelers and what have you.
3 I would ask you to take a very hard
4 look at how can you reduce your rate for lower
5 income communities.
6 Thank you.
7 MR. LONEY: Thank you, Mr. Porter.
8 Mr. Morrow.
9 MR. MORROW: I am Phillip Morrow,
10 president of the South Bronx Overall Economic
11 Development Corporation. We are an economic
12 development corporation that covers the Bronx
13 south of Fordham Road, and I should say we were
14 organized in 1972. Citibank at that time was
15 one of a group of people who gathered together
16 with the Bronx borough president at the time,
17 Bob Abrams, in terms of creating an economic
18 development organization that would help
19 reverse the decline and deterioration of the
20 Bronx. Citibank was there at the beginning.
21 They are one of the founding banks, one of five
22 founding banks, that started the organization,
23 that financed it over the years. They have
24 provided us with continuous support over 26
25 years of operation, both for project staff and
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2 support of economic development projects.
3 Lately, in our more recent activity
4 there, Citibank has been involved in a project
5 called Credits, providing early funding, a
6 $100,000 revolving loan fund, and $10,000 a
7 year for five years to provide financing for
8 small businesses in the south Bronx. The money
9 they loan to us, which we loan to businesses
10 that otherwise would not qualify for credit.
11 Members of Citibank sit on the credit committee
12 and review those loans and work with us in that
13 fashion.
14 In addition to that, Mr. Hector
15 Ramirez is on our organization we call
16 Employers for Education, because in addition to
17 doing commercial revitalization and industrial
18 development, SOBRO is a major actor in the
19 world of training unemployed residents of that
20 neighborhood for jobs. So Hector is a founding
21 member of SOBRO's advisory group called the
22 Boarders of Education, with the specific
23 purpose of identifying ways in which we can
24 make end roads to find jobs for unemployed
25 people, for people on welfare, for youth in the
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2 south Bronx.
3 We are also a member of Citibank's
4 Partners for Progress, which is working on
5 commercial development and revitalization
6 projects with both grants and loans, and we are
7 looking forward to doing some financing of
8 those projects in an area of the south Bronx,
9 that up until now has been totally ignored by
10 the south Bronx, and revitalization of that
11 community.
12 We are working quite hard on
13 community development. As Ralph Porter was
14 talking, in commercial revitalization, economic
15 development, industrial development, and job
16 training, Citibank has been there as a partner.
17 That is why we enthusiastically support the
18 merger.
19 I think when I look at this -- and
20 there is also a branch on 149th Street in the
21 hub, in the middle of the south Bronx, a
22 Citibank-based branch, and we anticipate will
23 remain there, and they will have a fight with
24 us if they are going to move it since branch
25 backing is pretty important to our neighborhood
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2 and community. And we have been engaged by
3 them -- they happen to have stolen one of my
4 staff members, one of my best people, Paula
5 Espinosa. I had to say that because she's
6 sitting out there. And we have been engaged
7 with them in planning on how some of this
8 money, which is going to be available as a
9 result of the commitment, the $115 billion
10 commitment that's been made, would be
11 reinvested in the south Bronx.
12 I wanted to also mention that I have
13 been in New York for 15 years, and before that
14 I was in Hartford, and I was very familiar with
15 Travelers Insurance Company as a partner and
16 supporter and a founder of an organization that
17 I used to run there. So I can speak positively
18 about my recollection of Travelers in the days
19 20 years ago I left Hartford. But at the time
20 we were -- they were a good corporate citizen.
21 To me, the key here is that you have
22 two companies that have a demonstrated history
23 of being a good citizen in their communities
24 where they work, providing support for these
25 efforts of making reinvestments and being in
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2 leadership, and none of that brings me pause
3 about these two giants coming together and
4 pooling the resources to try to make things
5 better in communities like the south Bronx.
6 Thank you.
7 MR. LONEY: Thank you, Mr. Morrow.
8 Ms. Gerrol.
9 MS. GERROL: My name is Lisa Gerrol.
10 I am the president of the Greater Connecticut
11 Chapter of the National Multiple Sclerosis
12 Society, and we are in the Hartford area, where
13 Mr. Morrow is from, and I can talk a little bit
14 about what has been happening in recent years
15 with the Travelers.
16 As in most communities, the
17 Connecticut area has thousands and thousands of
18 corporations and businesses. Among those
19 numbers, one local corporation, the Travelers
20 Group, has distinguished itself as the
21 corporation of the year of the National
22 Multiple Sclerosis Society. I would like to
23 take a few minutes to tell you why we selected
24 the Travelers Group as the corporation of the
25 year and how they have changed the lives of
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2 thousands of people with multiple sclerosis.
3 Multiple sclerosis is a chronic,
4 often disabling disease of the central nervous
5 system. Symptoms can be mild, like a tingling
6 sensation in your limbs, or they can be severe
7 and cause total disability, blindness, and
8 increasing towards serious further disability.
9 Most people with MS are diagnosed
10 between the ages of 20 and 40 years old, yet
11 the impact of MS lasts a lifetime. The
12 progress, severity, and specific symptoms of MS
13 can't be predicted. They are devastating, and
14 with MS someone can wake up in the morning and
15 not be able to see and not see for days on end
16 or weeks on end and be totally blind. They can
17 wake up several weeks later, be able to see,
18 but be in a wheelchair and completely unable to
19 walk.
20 The National Multiple Sclerosis
21 Society provides local services and research.
22 The services are to help end the devastating
23 effects of multiple sclerosis, and the research
24 is to find the cause, new treatments, and
25 eventually a cure for multiple sclerosis.
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2 Our history with the Travelers
3 Foundation began about ten years ago when a
4 small group of Travelers employees helped at
5 one of our programs called MS Vacation Week.
6 This is a program for people who are primarily
7 severely disabled with MS, although they are
8 young adults.
9 People with MS at Vacation Week can
10 enjoy an accessible environment where they are
11 accepted, understood, and they are able to
12 participate in programs that otherwise they are
13 not able to do. For example, they are able to
14 go boating, they are able to go fishing, they
15 are able to go swimming, they are entertained,
16 and they have the opportunity to learn about
17 treatment programs and ways of coping with
18 their disease.
19 The program also benefits caregivers,
20 because people who are day in, day out, caring
21 for someone who is severely disabled need a
22 break, and this gives those caregivers an
23 opportunity to have a break.
24 The Travelers Foundation, in the
25 early years when we first began Vacation Week,
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2 supported this program in a small way. Their
3 support increased during the last three years.
4 They have been the major sponsor of MS Vacation
5 Week allowing us to provide the program to far
6 more adults than we have ever been able to. In
7 addition to that we have been able to improve
8 and increase the quality of the programs that
9 we offer.
10 In addition, the Travelers
11 Foundation, the Travelers Group, allows their
12 employees to come help at Vacation Week, even
13 though it is a program that is held during the
14 week and they pay their employees to attend
15 Vacation Week for the entire week, which is a
16 wonderful benefit to our organization.
17 Another example of how the Travelers
18 has shown a commitment to giving back to our
19 community and in helping the MS Society is
20 through our walk. Eight years ago a small
21 group of Travelers employees participated in
22 the walk, and that group has grown to this year
23 250 employees participated in the MS walk on
24 their own, raising about $23,000 in Connecticut
25 alone.
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2 In addition, the Travelers in their
3 continuing efforts to support the MS Society
4 and encourage their employees to do so, allowed
5 them to publicize and promote the event
6 throughout the country, so that there are
7 hundreds of people in the communities
8 throughout the United States that are
9 participating in walks.
10 Two years ago, the Travelers became
11 the major sponsor of this particular event for
12 the greater Connecticut chapter. This is our
13 largest fund-raising event, and it helped us
14 raise about $400,000 this year with the MS
15 walk. This will help fund research to
16 determine new treatments for MS, and one of
17 those treatments has just been approved by the
18 FDA in recent months, as well as two others
19 that actually slow the progression of the
20 disease by about a third.
21 The Travelers has also been
22 instrumental in helping more than 10,000 people
23 in Connecticut and countless others throughout
24 the country in providing local services that
25 change the lives of people with multiple
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2 sclerosis.
3 The Travelers Group exemplifies how a
4 corporation can significantly impact the
5 welfare of our community and improve the lives
6 of its residents. The merger between Travelers
7 Group and Citicorp can only make them stronger
8 and more able to help all those we care so
9 deeply about at organizations like the National
10 Multiple Sclerosis Society.
11 MR. LONEY: Thank you.
12 On a personal note, I am rooting for
13 you, because a very good friend of ours in the
14 Federal Reserve system has been battling that
15 horrible disease for a number of years and a
16 breakthrough would be most welcome.
17 MS. GERROL: We agree, definitely.
18 MR. LONEY: Mr. Buerger.
19 MR. BUERGER: Thank you. I'm Ted
20 Buerger. I am external liaison for the
21 Coalition for Welfare to Work.
22 The Coalition was formed in 1997 by a
23 group of business, religious and volunteer
24 organizations who wished to bring the resources
25 of the corporate and the private sector to help
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2 people move from welfare to productive work.
3 We do this in conjunction with all of the
4 training programs and agencies in Westchester
5 County, simply trying to add supplemental
6 services and resources.
7 Examples of things that we do,
8 briefly, are that we provide
9 interview-appropriate clothing, we provide
10 practice interviews, and we provide mentors
11 after people actually get jobs, to help them
12 not only get jobs but then to keep jobs and
13 move on to better jobs down the road. We do
14 this throughout Westchester County, from Mount
15 Vernon and Yonkers to Peekskill, and everywhere
16 in between.
17 In doing this, we create a human
18 bridge between the world of welfare and the
19 world of work, which is important. As we think
20 of Citibank in a minute, because we are not
21 just providing services, we are providing an
22 open door that says to people we in the working
23 world want you in the world of welfare to join
24 us and work with us.
25 In every area that we have made
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2 efforts, Citibank has shared their professional
3 workforce development skills in great depth and
4 breath, as well as giving us numerous volunteer
5 hours.
6 One example, Citibank, in February of
7 this year, did a clothing drive with large
8 posters and racks in every Citibank in
9 Westchester County and they kept those racks
10 and posters up for months, and they put our
11 brochures out in every Citibank soliciting
12 volunteers for us. They have also had their
13 head of human resources provide professional
14 interview training to our volunteers for
15 interviewing.
16 Citibank employees have volunteered
17 to be mentors and to do practice interviews
18 themselves, including offering to have
19 candidates come into Citibank offices so they
20 could do the interviews in a corporate setting;
21 it would be realistic. They have also trained
22 our clients in personal budgeting and provided
23 tours of their office facilities so people
24 could experience or see the world of work.
25 It doesn't stop there. Citibank has
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2 referred us to other organizations in community
3 development and to potential sources of funds.
4 They have always moved to deepen our contacts
5 elsewhere in the Citicorp organization, and we
6 would hope in the future into the Travelers
7 Group organization.
8 They have given us friendly and good
9 advice about building and managing our young
10 organization over the last year. In all, the
11 Citibank community development team, led by
12 Peter Mosbacher, who I have to mention but
13 would also acknowledge that his group includes
14 six other people who meet with us every other
15 month and then again connect us into their
16 different branches to provide services, they
17 have been professional, focused, creative and
18 always helpful.
19 We are proud of what the Coalition
20 for Welfare to Work has accomplished in its
21 first year, but I will tell you, we would not
22 be where we are today without the many
23 Citibankers who have gone the extra mile to
24 help us. There is no corporation who has
25 helped us more and who has offered so many
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2 services to benefit our clients.
3 Thank you.
4 MR. LONEY: Thank you, Mr. Buerger.
5 Mr. Torres.
6 MR. TORRES: My name is Edwin Torres,
7 and thank you very much for the opportunity to
8 present Bill Aguado's views on the proposal by
9 the Travelers Group, Inc. to acquire Citicorp.
10 Bill Aguado is the executive director of the
11 Bronx Council on the Arts.
12 Citicorp has been a long time
13 supporter of the Bronx Council on the Arts and
14 in recent years has had a significant impact on
15 the Bronx Council on the Arts' community
16 development initiatives as well as its basic
17 operations.
18 Because of its relationship with
19 Citicorp, the Bronx Council on the Arts has
20 been able to expand its focus of the cultural
21 development of the Bronx to include a new
22 corporation, the BCA Development Corporation.
23 Citicorp, specifically their community
24 development department, recognized the value of
25 our efforts and those of other like-minded arts
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2 organizations to begin exploring the role that
3 we as arts organizations can play in the
4 revitalization of our inner city communities.
5 To that end, Citicorp designed and
6 implemented a special initiative entitled
7 "Cultural Builds Community." The premise is a
8 relatively simple one; that is, by creating
9 partnerships between arts organizations and
10 community development corporations a new and
11 meaningful paradigm of service can be created.
12 Culture Builds Community included a
13 special training initiative for the proposed
14 partnerships to enable them to effectively work
15 together, to overcome and identify whatever
16 management obstacles would emerge, and to
17 assist the participants in program development.
18 BCA and another technical assistance
19 provider, Brooklyn In Touch, were contacted to
20 conduct this important training. The
21 importance of this initiative cannot be
22 stressed enough. The recognition that the arts
23 can enhance community development efforts is
24 what distinguishes Citicorp from other
25 financial institutions.
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2 Over 30 organizations were served by
3 Culture Builds Community. The concept and the
4 experience was such a positive one that BCA
5 created its own version, entitled Community
6 Cultural Partnerships. The concept has had
7 also a positive impact on our Bronx
8 organizations.
9 To be sure, the arts are more than
10 performances and exhibitions. The arts reflect
11 culture which in turn reaffirm the value system
12 of the individuals comprised in that culture.
13 Within the context of the community, the arts
14 have the potential of bringing residents
15 together in a proactive fashion. The arts can
16 and have effectively complemented the efforts
17 of other traditional revitalization entities.
18 Given the economic impact the arts
19 have on the economy of New York City -- $9.3
20 billion -- the arts is an area with tremendous
21 potential for job and business development in
22 our undeserved communities.
23 Citicorp has indeed recognized that
24 potential by being the first to support our new
25 development corporation and one of its major
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2 initiatives, our Arthandlers Job Training
3 Program, of which I am assistant director and a
4 case manager.
5 Specifically, the Arthandlers Job
6 Training component is a first of its kind
7 program which is designed to prepare the
8 unemployed for careers as arthandlers.
9 Arthandlers are individuals who work behind the
10 scenes at museums, galleries, auction houses
11 and corporate collections and help to maintain
12 art collections, install exhibitions, frame
13 artworks, pack and crate, and provide risk
14 management, to name a few tasks.
15 The salaries at the entry level can
16 range from $10 to $30 per hour. Many with
17 experience can have a very lucrative career and
18 in turn support their families and contribute
19 to their community's economies.
20 We are now completing the training
21 and the trainees will be placed in internships
22 during July. By the fall, we expect to place
23 them in permanent positions. Also, many
24 opportunities are now presenting themselves in
25 the form of new services and for profit
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2 business opportunities which would employ
3 additional personnel from our communities.
4 Lastly, Citicorp has allowed us to
5 sustain our efforts during our difficult cash
6 flow times by extending to us an important
7 credit line. Given the uncertainty of
8 contracts for nonprofits, you can imagine the
9 value of the credit line. Moreover, there is a
10 ripple effect one must consider; that is, the
11 credit line allows us to sustain the integrity
12 of our commitment while fulfilling our mandate
13 of service during difficult times.
14 Citicorp is owed a debt of gratitude
15 for the forward thinking, and we have been
16 assured that their commitment to our
17 communities will continue after the acquisition
18 of Citicorp by the Travelers Group.
19 MR. LONEY: Thank you, Mr. Torres.
20 Do we have any questions for the
21 group? If not, I will thank you. You are a
22 very impressive group of folks doing some
23 really nice things. So thank you very much for
24 coming to testify.
25 Panel Eleven is Claudino Otenez,