Re: Proposal by Travelers Group, Inc. 

to 

acquire Citicorp 

June 26,199s 

I’m Edward Sheeran 

I am special assistant to the Mayor of the City of Yonkers, Westchester County, New 

York. Iam also Exective Director of Yonkers Industrial Development Agency. 

The City of Yonkers is the largest city in the County of Westchester and the fourth largest 

city in the State ofNew York with approximately 190,000 residents. Yonkers has the 

largest number of high poverty level census tracks in the County of Westchester. For over 

a decade a New York State financial control board has been overseeing the city’s financial 

activities. 

Citibank, one of the nations largest banking institutions serves the residents of the county 

of Westchester with eighteen full service branch banking facilities. The areaa Citibank has 

elected to service within Westchester County are affluent upscale areas. These areas are as 

follows: 

AMlOllk 

Bedford 

Bronxville 

Chappaqua 

Eastchester 

Harrison 

Hastings 

Larchmont 

Mount Kisco 
New Rochelle 

Ossining 

Pelham Manor 

Rye 

Scarsdale 

Somers 

White Plains ( 2 Branches) 

Last year Citibank opted to close its only manned branch in the City of Yonkers. 

Accordingly, Citibank has no manned bank facility to provide day-to- day banking service 

to the 190,000 residents of the largest city in Westchester County 

Recently, I spoke to Citibank’s Westchester County Senior management regardmg 

Citibanks red lining of the City of Yonkers. I was advised that it was Citibank’s strategy 

to provde banking service to its customers through techonology rather than bricks and 

mortar and that Citibank would not be adding additional branch facilities to it’s network. 

This statement was cotrdicted in Craines June 15, 1998 publication when it reported 

Citibank had branches under construction in the State of new Jersey and in particular in 

Fort Lee and Englewood. 

Clearly, Citibank’s strategy is to provide day- to- day, personal banking service to aflluent 

upscale communities and to ignore the day- to- day banking need of less aftluent 

communities. We believe its Westchester network of branches, is an orchstated example of 

this and proves that the 190,000 residents of the City of Yonkers are not being given the 

same banking conveniences that are provided by Citibank to towns, villages and hamlets 

within the County of Westchester 

We,in the City of Yonkers beleive in addition to providing day-to-day banking service, 

large fmancial institutions such as Travelers Group. Inc. and Citicorp should be obliged as 

good citizens, to participate in the economic revitilization of cities, such as the City of 

Yonkers. We believe they should utilize their vast resources, both financial and otherwise 

to promote, encourage and finanance economic development. By doing this they will be 

contributing to creation ofjobs and increasing the quality of life for ah our citizens. 

Citibank’s activities to date have been to’the contrary. The future must be based on past 

performance. Frankly, we are not satisfied with the manner in which our city has been 

ignored and our citizens treated by the powerful Citibank. Should the aquisition be 

approved, Citibank will be the largest and most powerful institution in the country. This 
may very well be good for aEluent upscale areas, but if Citbank’s past is any indication of 

the future, then our 190,000 residents in the largest city of Westchester County can expect 

more of the same from the nations most powerful financial institution.. 

1 am here today on behalf of the citizens of Yonkers to request that the approval of the 

acquisition of Citicorp by Travelers Croup. Inc. be denied until such time as Citibank 

institutes and delivers programs that provides services to the citizens of the City of 

Yonkers equal to services they provide to the citizens of the eighteen affluent upscale 

communities in the County of Westchester.. 
Citibank branches out locallv 

Offices are set er f~ horn-New Jersey. 

The bank has branches under 

in affluent suburbs, construction just over the George 

but bank faces 

Washington Bridge in Fort Lee and 

neighboring Englewood. Aseriesof 

heavy competition drive-up gutomatic teller machines 

is already operating in Fort Lee, 

where the full branch is exoected to 

BY CHRIS lSl”ORE open late this year.The Englewood 

Citibank,whosc branch network branch, where an existing building 

extends to eight spates and 40 for- is being renovated, should open in 

cign coonrrics, is expanding its late s”mmcr or early fall. 

rrach into new tcrritorya little clos- The bank’s only New Jersey 

# 

Jersey 

operation before this was a Parsippany sales oflice, but that facility does not provide full-service 

branch banking. 

“AU the marketing they’ve been 

doing for years has carried over into 

New Jersey,” says Charles B. Wendel, president of Financid Institw 

tions Consulting Inc. “It’s a natural 

chance to leverage that.” 

Citibankoff~cialsdeclincd todiscuss their New Jersey strategy The 

bank traditionally has concentrated 

_ 

more rcsaxccs on international 

expansion than domestic branch 

growth. New branches recently 

opened in Ukraine and Vietnam. 

While the more typical entry 

into any market is through acquisition, building new branches probably makes sense for Citibank when 

it is so close to home, especiallywith 

prices forbanksrocksforcingbuyers 

to pay a stiff premium. 

Precise targeting 

Mr.Wendelsays thatbybuilding 

new branches, Citibank can target 

desired segments of the market 

more precisely than it could through 

the purchase ofanotber bank. 

The cities in Bergen County, and 

especially these two towns, are affluent suburbs with a large percentage ofresidents commuting into the 

city each day. Bergen Coun 

fifth-most-prosperous cot 

thecountry.The lY90ccns~ 

Fort Lee with a median fax 

come of 160,628, and ma 

4O%ofitsemployed residen 

ing in New York City. 

Englewood, just to tbt 

had a median household ins 

$49,249 in 1990,with abou 

ofits employed residents wo 

the city 

But Bergen County’s a: 

also has made it one of tl 

heavily banked counties 

entire nation, with 416 ba 

thrift branches, only 30 fe\r 

Manhattan. Even with Ci 

name recognition, two ne 

branches won’t change the 

significantly. 

“You’re talking abou 

brlnihes in an a~el already 

branched.” savs lee Wesselv 

rive vice &ihek and rr& 

agcr for New Jersey for I 

based Fleet Bank, which id 

Bergen County as its mat 

tint county in thr state. 

“We obviously have sper 

time keeping (Citibank! 

radar screen, but don’t view I 

an immediate threat,” hc sa) 

Unconquered territory 

Banks with branches in 

llavc a limited presence in 

County. Fleet Bank, Bank 

York Co. and Dime Savings : 

New York are the only one 

ranked in the top 10 in the c 

market share, and among tht 

have less than 14% of t 

posits, according to SNL 

ties. Princeton, N.J.-based 5 

Bank is the market leader 1 

branches and a quarter of i 

posits in the county. 

The branches arc not Gil 

only activity in the ncighbc 

Last fall, it leased a 40,000-: 

foot off~e building in Eng 

Cliffs,whichadjoinsbothto, 

a l,SOO-employee data pm 

centcr.Thc center is set to SI 
TESTIMONY OF: 

WCKIE HURE WIT2 

SENSES 

Statewide Emergency Network for Social and Economic Security 

275 State Street 

Albany, NY 12210 

June 26,199s 

Testimony To: 

Federal Reserve Bank ofNY 

Public Meeting Regarding 

Citicorp and_T~ GrDslp~ 
TESTIMONY 

Good morning distinguished members of the Federal Reserve Board. Thank you for giving me 

this opportunity to express my opnion about the Citicorp-Travelers merger. My nameis U&e 

Hurewitz and I am here representing the organization SENSES which stands for the Statewide 

Emergency Network for Social and Economic Security. We work on a variety ofgublicpolicy 

issues which affect low-income people here in New York State. SENSES is a member of the 

National CommunityB Cc&ion 

As I thought and read about the Citicorp and Travelers merger and HRlO the Financial 

modernization bill that would allow the merger ifgassed, I decided there were three questions 1 

wanted to address in my testimony. 

First, if this were just a standard mega-merger like so many we have seen lately, how are these 

two institutions doing in terms of their fair lending and community reinvestment ob&ationsunder 

current law? A merger can be denied if either party has not met these obligations. 

Second, I ampuzzled as to how this merger can occur since HRIO is still making its way through 

Congress? 

Third, what are the most important issues around HRIO that should be addressed before the law 

passes. 
HOW ARE THE INSTITUTIONS DOING UNDER CURRENT LAW? 

The Home Mortgi?ge Disclosure Act requires CitiCop and all its lend& subsidiaries and 

affiliates to report out detailed information on every Home Purchase, Home Improvement, and 

Refinance application taken. Using 1996 data, lperformed a limited HMDA analysison 

Citibank’s lending in all the metropolitan areas of New York State. I only examined those 

markets where an individual institution took more than 30 applications, statisticians considerthis 

an ample sample size. 

I compared the market penetration of CitiCorps’ entities among Black borrowers to all categories 

of borrowers. I also compared the banks loan denial rates to Black versus White applicants tothe 

rate for all lenders in the individual markets. The reason I only looked at these particular 

indicators is that I am still in the-process of database devel.ogment In the tinme I will be ableto 

look at many more indicators of bank lending performance across New York State. 

Three Citibank entities Citibank (NYS), Citibank Mofi@,ag.e and Citibank N.A. accepted 

applications for Home Purchase loans in 1996. Citibank N.A. is minimally active in two markets 

upstate, Buffalo and Rochester, the other two lenders are_primar$y downstate inthe New York 

City and Long Island areas. With the exception of Citibank NYS in the two upstate markets, all 

the Citibank entities had a lower market share of Black applications than of all wlications InaIl 

areas for all the Citi entities the loan denial rates to Black versus White borrowers was higher 

than the rate for all lenders in the markets. In Rochester, for example, Blacks were denied at 

over 9 times the rate of Whites compared to I .8 times as often for the aggregate lenders. 
Two Citibank entities Citibank (NYS) and Citibank N.A. accepted Home Improvement 

Applications in 1996. Again Citibank(NYS) was active upstate and Citibank N.A downstate 

In all cases market penetration was lower amongst Black borrowers than White with the 

discrepancies being somewhat h&her downstate, With the exce&on ofUiba&NANA 

Long Island area loans were denied to Blacks at slightly higher rates than to Whites although the 

differences are not~as marked as they were with Home Pur&as&ans 

Three Citibank entities Citibank (NYS), Citibank Mortgage and Citibank N.A. accepted 

applications for~Refinance loans in 1996. In addition to the markets Ialreadymen&ned 

Refinance applications were taken from the Albany, Syracuse and Orange county areas. Except 

for Citibank MofiBe in the New York City are& once gain market_pem%&n was lower 

amongst Black borrowers for all Citi entities and markets. Denial rates remain high to Black 

borrowers. 

Travelers Insurance Company unlike Citibank is not required to report under HMDA nor is it 

covered bythe&mmunityReinvestmentAct. Itishowever~covered bythe Fair He 

1968. Currently HUD is investigating a Fair Housing complaint brought by the Fair Housing 

Council of Washington DC. The complaint alleges that the comJ_ 

discriminatory impact on African-American and Latin0 policy seekers and neighborhoods. In the 

DC area Travelers has a.poiicy wherebaminimum yalueit willQQOOthis 

automatically excludes from coverage 90% of homes in Atiica-American and Latin0 

neighborhoods Traveler’s also has apolicy of limiting cover&g.e to homes whicharelessthan 45 

years old, this has the impact of excluding almost twice as many homes in minority neighborhoods 
as in White neighborhoods. 

Interestingly, Washington DC is one of the four cities that has been in Traveler’s Urban 

Availabilityo fTnsuranceEragranlapragram whichwasfbunde& 1994 toimprove the 

availability of insurance in urban areas. I wonder what the company’s policy would be in DC 

without th@ogram 

Given that Travelers has this suit pending against it and given my HMDA findings on Citibank I 

am convinced thateven ifthis wereastandard mega-merger it shouldnotheallourebuntil 

these fair lending issues are addressed. Regarding Citibank, I am well aware that the Community 

Reinvestment~Act is mostlyabout ~creditavailable in low-and moderate-incomearea& 

however it is stated in the legislation that “in arriving at an institutions (CRA) rating the agencies 

consider whether thereis evidence of discrimination~in violation of the Fair Housing Actor the 

Equal Credit Opportunity Act or evidence of other illegal credit practices. “ I am also well aware 

that HMDAhas never been used tomove discrimination, however; as my analysisshows. &edata 

can point to patterns that need further investigation. 

Before going on withthis merger I request that HUD invest&ate Travelers underwritmgcriteria 

other urban areas where it writes policies to determine if there are possibly hidden discriminatory 

patterns that_preventprotected classes f?om_gettingro~e_&y insurance. I also reguesUhaUhe 

Federal Reserve look at Citicorp entities underwriting criteria for the three HMDA reportable 

loan types to see if what is responsible for the bank&poor sho~wiiamo~owers 

across New York State. 
cond point: 

LN THIS MERGER OCCUR SINCE EfRlO IS NOT YET LAW? 

ased mergeris illegal Under current US law banks and insurance cow 

I merge.. This prohibition dates back to the Depression when the Glass-Steagall Act 

toglace toprotect banks from the instability of the marketplace This instabilitystill 

sY. 

r-rent law a waiver would have to be granted that would force Travelers to divest itself 

-axe business which accounted for_(accordimg to the New York Ties), 47%ofits 

r year The divesture must occur within two years sometimes extensions of up to five 

granted. Or Citicorp could abandon its bank&g charter and r& on TravelersS&L 

for its banking business. Neither one of these scenarios seems too likely. What does 

y is that Citicorpand Travelers will continuetheir 5nious multi-million dollar lobbyir?g 

in Congress to insure the prompt passage of HRlO. 

ngsmetomythirdandtinalpaint: 

IRlO ISSUES SHOULD BE ADDRESSED BEFORE ITS PASSAGE? 

1eCottle wrote in the March issue of the Wash&&on Montl&+prior to last summerfew 

s could have told you what continent Thailand is on, much less what its’ financial system 

It starti~ng in early July when the baht fell through the floor, brii&he once robust 

nomy with it, we all had reason to look at a map. 

ieiks 

$0 

his. 

done is 

: to 

we to 

e 

t 

lOhI 

rating 

panics, 

tment 

iia has 

aivate 

xtld be 
fully explored. 

2. Before allowing HRlO to pass the Government Accounting Office should examine safety and 

soundness issues associated with mix% bank&, insuranceandsecllriries Nha~~~the 

and lending objectivity issues around this mixing. Would borrowers be forced to buy their 

homeowners insurance t?om the bank thatgrants them a mortgage? Recent GAO reviewshave 

found that the current financial regulatory system isn’t really equipped to deal with existing 

institutions, much less modernized ones. Lets.take some~time on&is. 

I am opposed to this merger for three reasons: 

The fair lendh records of the two~wlicams. 

The illegality of the merger. 

The potential power of HRlO to destabilize the American economy. 

The United States is a strong democracy which has stood through timesof~eat turmoi!_ In my 

humble opinion our regulated banking system is one reason why. Lets keep it that way. 

Thank you 
Testimonv On Citibank-Travelers Group Merger 

-Friday June 27, 1998 Federal Reserve Bank of New York 

By Gregory D. Todd 

BEC New Communities HDFC, Inc. 

\lAvlY.L “3 ’ - -. 

like to thank the Federal Reserve Bank of New York for sponsoring 

today. I very much appreciate the opportunity to speak on 

ehalf of BEC New Communities. 

ased non-profit housing group. To date 

we have developed about 900 units of housing horn city-owned properties. 

In so doing we have invested almost $100 million in the communities of 

Bedford-Stuyvesant, Crown Heights and Sunset Park. In addition we sold 

over 200 units of ownership housing, including both condominiums and 2 

and 3 family homes. BEC also sponsors a community-based credit union 

with over 2,000 members and $2.2 million in assets. Our organization grew 

out of an interdenominational organizing effort. BEC stands for “Brooklyn 

Ecumenical Cooperatives”. 

I personally came to Brooklyn about 20 years ago horn Michigan. Before 

coming here, I completed a masters in business administration degree and 

worked briefly in a bank. I had heard much of Citibank. I knew it to be a 

leader in the area of consumer banking, having been one of the first banks to 

issue credit cards and one of the first to make extensive use of automatic 

teller machines. 

I had such faith in Citibank that it is where I opened my checking and 

savings accounts and where I currently have a mortgage. 

Unfortunately, in recent years I feel, Citibank’s vision has become less 

focussed on its home here in New York and more directed to a national and 

international audience. 

The branch I used to keep my accounts, on 13” Street and Fifth Avenue in 

Brooklyn was sold to Home Savings (now a part of Greenpoint Bank) about 

15 years ago. Shortly thereafter, Citibank expanded the number of ATM’s 

at its branch in Park Slope, a more affluent area. This pattern appears 

typical of what it is doing throughout the city. 
Citibank maintained 20 branches in Brooklyn in 1996 (that number is now 

down to 15, of which only 12 are full-service). The total amount of deposits 

held by these branches was $2.1 billion. According to Home Mortgage 

Disclosure Act data provided by RTK Foundation, during 1996 Citibank 

received 1,228 mortgage applications from Brooklyn residents. Of these, it 

actually approved 547, or 44.5% of the applications taken. By comparison, 

in 1996 among banks in Brooklyn taking at least 10 applications, the overall ;i ‘,:/L& 

approval rate was 52%, ;, ybp\~~=----_~, )?,,& +_ WGC,; L~TLA$i ;&& 

Assuming an average loan amount of $150,000, Citibank returned to its 

communities in Brooklyn about $82 million in mortgages in 1996. This 

amounts to about 3.9 cents in lending for each dollar deposited. 

.__~? 

As a leading community group in Brooklyn, BEC feels that Citibank needs 

to do better. Rather than reaching out to lend in the developing countries 

around the globe, why not lend in the developing neighborho in 

Brooklyn, many of whose P residents are immigrants who left G 

ose $4 

developing countries that Citibank appears so eager to lend to? 

We feel it is time that Citibank returned to its role as an innovative leader 

right here in New York. If Citibank wants to take the deposits of Brooklyn 

residents, it should be willing to give back it’s fair share in loans to our 

community. 

Thank you for your consideration. 
1996 Home Purchase Lending 

-.. 

1996 Refinance Lending