John Shemo 

Testimony re: Travelers Group to acquire Citicorp 

Federal Reserve Bank at New York 

June 25.1998 

Good afternoon. [names or titles] 

My name is John Shemo and I am here on behalf of the Connecticut Capitol Region 

Growth Council, which is the lead economic development organization for the 29-town 

MetroHartford region. I serve as the agency’s Executive Vice President. 

I am pleased to have this opportunity to testify before you in favor of the Travelers Group 

proposal to acquire Citicorp. There are two reasons that we at the Growth Council support this 

merger. The first is job preservation and growth. The second is Travelers’ long history of - 

and. we believe, even stronger prospects for-being a good corporate citizen in our community 

The mission of the Growth Council is to boost the local economy by fostering job growth 

in MetroHartford. It is our opinion that the Travelers/Citicorp merger would not only preserve 

the thousands of jobs these companies currently provide in MetroHartford, but also would offer 

the potential of expanding the local employment bases of the two companies. 

Travelers has always been a key employer for MetroHartford. Before the company’s 

earlier merger with Primer& about 5,000 Travelers’ jobs were lost and thousands more were at 

serious risk. Since that merger. the company has reversed this situation, returned to profitability 

and begun to grow its workforce again. The Travelers Group now employs roughly 7,000 people 

in Hartford. Plus, another 1.000 jobs were saved by Travelers selling its health benefits 

operations to another insurer 

In effect, Travelers’ practices of strategic acquisition and restructuring has preserved 

9,000 jobs for MetroHartford residents. 
Separately, the Growth Council recently completed successful negotiations to bring a 

Citicorp in-bound call center to MetroHartford. This customer service center will employ 

between 550 and 600 people. We believe that the Travelers/Citicorp merger will have a positive 

impact on this operation as well, as the two companies begin cross-selling their products through 

telemarketing efforts. As the company’s customer base expands, so, too, should the call center. 

The second reason that the Growth Council supports this merger is, as I said, because of 

Travelers’ strong track record in our community. We believe that, as a larger company, its 

ability to promote the region’s economic development will be enhanced. 

Travelers was an original incorporator of and investor in the Growth Council. The 

company is again funding our efforts this year. 

There are several other examples of Travelers’ community support, of which I will cite 

just two. 

Travelers currently provides the use of its Education Center to the University of 

Connecticut as a downtown campus. We view this as a first step in creating an even larger 

Downtown Hartford higher education center, combining course offerings from many of the local 

colleges and universities. The higher education center is high on our list of projects that would 

both draw more people downtown and benefit the city’s current employers and workers. 

Riverfront Recapture, which has revitalized recreational activities on the Connecticut 

River, also has been a recipient of Travelers’ generosity. To date, the company has invested 

more than $1.1 million in Riverfront programs, which give new life to the region and attract both 

residents and visitors to Hartford, East Hartford, and other towns along the river. 

It is our opinion that the Travelers/Citicorp merger would serve the best interests of the 

MetroHartford region. We urge you to consider it favorably. 

Thank you. 
Statement By 

F. Peter Libassi, President 

Children’s Fund of Connecticut, Inc. 

Before the 

Federal Reserve Bank of New York 

Travelers Group and Citicorp 

June 25. 1998 

My name is F. Peter Libassi. I am a Travelers retiree and a Travelers shareholder. 

I am here today in my capacity as President of the Children’s Fund of 

Connecticut. Inc.. a grant making foundation. The leadership role played by the Travelers 

Corporation in the establishment of this foundation and the public benefits which have 

followed are the subject of my statement. 

What are the most important health needs facing Hartford’s children? 

In 1992, the Newington Children‘s Hospital, in Newington Connecticut, an 

orthopedic hospital. proposed that it close and reopen as a specialized children‘s hospital 

in the City of Hanford. In reviewing the health needs of children in the City of Hartford. 

the Travelers saw a serious need for primary and preventive health care services. The 

issues which appeared to be most in need of attention were teen age pregnancy, prenatal 

care. low birth weight and premature babies, immunization, well baby check-ups. quality 

early child care and the prevention and identification of developmental delays and 

deficiencies, Travelers raised the question of whether in fact a high tech specialized 

hospital as proposed would actually address the health needs of city children. 

Travelers launches studv of children health needs. 

With this question as its focus. Travelers announced that it would fund an 

independent study of child health needs. Thereafter, other corporations in the Greater 

Hanford area asked to join project. The study completed by Lewin’ICF and Associates 

concluded that a children’s hospital was in fact needed, albeit a much smaller hospital 

than was originally proposed. However. in addition, the study concluded, as Travelers 

had argued. that the health needs of the children of Hartford would only be served if a 

serious campaign were launched focused on primary and preventive health care for 

children. 

Addressing the need for primary and preventive health care services. 

As a result. the Children’s Fund of Connecticut was established with a leadership 

grant from the Travelers Corporation of $1 million dollars. With gifts from other 

corporations and area hospitals this Fund has grown to $17 million dollars. It is the 

mission of the Fund to support community-based primary and preventive health care 

initiatives in Connecticut. primarily focused on underserved children, in order to improve 

the quality of their lives. 
The Children’s Fund focus: 

Earlv childhood development 

Training for those who provide care for children 

The Board of the Fund decided to focus its attention on early childhood 

development, the prevention of developmental delays and deficiencies, and on the linking 

of health and child care services. Before committing its resources to these issues, the 

Fund undertook an extensive information gathering effort. 

This drive included a study by the Yale Bush Center, interviews with over 350 of 

the most knowledgeable representatives of public and private agencies, and five 

independent focus group sessions. 

From this information, the Fund’s Board reached several conclusions, one of 

which provided that: There is an immediate need for a statewide education, information 

and training capacity focused on primary and preventive care for children. 

Based on this conclusion, the Board agreed to establish a statewide Training 

Academy which would help those who provide care and services for children to: 

#Learn of recent research findings related to children’s health, and to 

*Accelerate the application of this knowledge and best practices in child care. 

The Role of the Training Academy 

As an example of the “catalyst” role made possible by the Travelers leadership, in 

1997, the first assignment for the Training Academy was to initiate the formation of a 

consortium of four state agencies and three private organizations to launch a statewide 

training program in best practices for child care providers. 

The Department of Social Services (DSS), the State Department of Education 

(SDE), the Connecticut Commission on Children (CCC), the University of Connecticut 

Health Center’s AHEC Program, Wheeler Clinic, Connecticut Charts-A-Course (CCAC) 

and the Children’s Fund joined forces and resources. 

Within less than five months, in March of this year, twenty-one training sites 

were identified, and contracts were approved for the training of over 1600 home care 

providers following an approved curriculum to be delivered by approved faculty. 

In addition, funds were set aside to finance 1800 voluntary onsite visits with home 

care providers by approved consultants. 

This public-private partnership combined $200,000 from the Children’s Fund 

with $620,000 in resources and talents from four state agencies to launch Connecticut’s 

first large scale statewide training program for child care providers. In September, over 

10,000 children will reap the benefit of being under the care of providers who are 

receiving the very finest in child care training. 

There is no question that these activities would not now be underway if it had not 

been for the leadership and foresight of the Travelers Corporation. 

Thank you 
Background: 

The best known microenterprise peer lending program in the world is the Grameen Bank in 

Bangladesh. It was founded in 1976 by US trained economist, Dr. Muhammad Yunus, to 

offer access to credit to the poorest of the poor who had no collateral except their 

willingness to be self-employed. The extraordinary success of Grameen , which now has 

more than 2 million borrowers and creates a lending cycle in excess of 25 million U.S 

dollars, has spawned replication efforts around the world. 

In the United States, there are forty loan funds based on the Grameen model, the most 

successful of which is Working Capital, headquartered in Cambridge Massachusetts. In 

addition to Florida, Working Capital has office Hubs in Maine, Vermont, New Hampshire. 

Delaware, Massachusetts, Metropolitan Boston, Atlanta and Russia. 

Working Capital Florida was one of seven national agencies who received the first 

Presidential Award for Excellence in Microenterprise Development, presented by President 

and Mrs. Clinton. 

Economic Impact: 

Even the smallest businesses can become increasingly productive with access to those 

advantages enjoyed by larger companies, namely, access to capital, sales leads and business 

connections, practical business education and support from peers. At the $500 loan level, 

microenterprise borrowers in the United States report an increase in monthly sales between 

50% and 100% Microenterprise peer lending has demonstrated that increased sales for 

member-owned businesses recycles for greater economic growth, employment and 

community revitalization. 

Funding: 

Working Capital / Partners for Self-Employment obtains loan funds from local and regional 

banks. Initial tinding for program operations came from the state of Florida Hurricane 

Andrew Trust Fund Metropolitan Dade County’s Department of Business and Economic 

Development Metro Miami Action Plan (MMAP). Other funding comes from private 

foundations, corporations and individuals. 
WORKING CAPITAL FLORlDA 

Parhws for SelfEmploymenl 

Business Credit and Training for the Self-Employed 

Working Capital Florida is a nonprofit corporation dedicated to providing the self-employed with 

access to credit, loans, business training and peer support. Through the program participants can: 

l obtain a business loan of $500 to $5,000 

l build a credit record 

l develop stronger business skills 

. meet and share ideas with other business owners 

Small Business Owners: 

l join a Business Loan Group of 6 to IO persons 

. apply directly to their Group for loans (The Group reviews loan applications and decides 

which to approves) 

l repay their loans to Working Capital Florida 

l participate regularly in business training and networking events 

Types of Businesses: 

Members can use loans to start and operate a variety of businesses including: arts and crafts; 

beauty and hair care; business services; clothing; education; entertainment; food services; health 

services; home services, import/export; etc 

Who can Join: 

Any US citizen or resident alien who owns a business or intends to start a business may join 

Working Capital Florida. Minority groups are welcome. 

How to Join: 

Interested borrowers can contact participating community organizations, business assoctauons. 

social agencies and universities, as well as civic and religious groups in Dade County. 

Working Capital Florida 

(305) 670-7411 (phone) 

(305) 670-7419 (fax) 

9200 South Dadeland Boulevard Suite 103 h4iami. FL 33 156 
A Few Facts 

As of June 1, 1998 

Program Founded: 

Communities Served: 

1994 

Dade County: Allapattah, Carol City, Little Haiti, 

Little Havana, North Miami, North Miami Beach. 

Model City. Opa-Locka, Overtown. Perrine, Kendall, 

Coconut Grove, Princeon, Florida City, Goulds, 

Homestead, Richmond Heights and South Miami 

Heights. 

Total Number of Members: 348 

Total Number of Borrowers: 214 

Number of Loan Groups Formed: 57 

Total Number of Loans: 397 

% Value of Loans Disbursed: $289,600 

Average Loan Size: $129.47 

Average Loan Term: 7.76 Months 

Working Capital Florida Loan Fund ParticiDants 

Central Bank 

Chase Manhattan Bank 

Citicorp Foundation 

City National Bank of Florida 

Commercebank, N.A. 

First National Bank of Homestead 

First National Bank of South Miami 

Helm Bank 

Sun Trust Bank. Miami, N.A. 

United National Bank 

3000 Biscayne Blvd., Ste IOlA + Miami, Florida 33137 

Phone (3tJS) 438-1407 . Far (305) 438-141, 
ENTREPRENEURS MONDAY. MARCH IO. ,997 Y THE HERALD 

Working Capital’s name savs it all 

d 

National program 

offers start-up loans 

as small as $500 

This has helped my 

~vsiness 

remendously. 

Vkat I’m looking 

rt now is 

mg-rangegoals. 

‘m looking to buy a 

igger truck later 

tn. after I make 

‘igger loans. Now, 

‘m really looking to 

he future. * 

JuEsnomLs,: 

Pm8 

If one paon defaults. the entire 

group pays. So far, Working Capitars repayment rate IS 98 percent. 

“The reason this works 8s bccauw 

‘Now Z have the 

flexibility to make a 

living for my 

family and #end 

time with my 

children. Z couldn ‘t 

have done this 

without [Working 

Gapital]. ’ 

EusAcnEsm. 

YMY- 
TUESDAY, FEt3RUARY 17. ,998. THE HERALD 

JOHNS KNIGHT mw,sw JAMES L KFIICHT ~1%W991) 

DAVlD LWRENCE JR. tbbfishrr od flJe.,i~~ 

JOWU JIM k$.l.lTON DOUGLAS C. CUlTON 

.Guy,iw Eaim 

! Small loans, big.results 

I&is to friends of those in power, but 

qtgdc. .the rich richer wbilc further mir- 

. 

:‘%%e %~rpo~~&l philosophy 

3iembers. Default mtcs ate extraordirrarily low. because no gtou member 

gets more credit should ano 8 cr default 

Catering in Naran’a. She now is expanding with a $50, ood loan through the U.S. 

Small Business Administration. The 

beauty of microcrcdit. Ms. Lucas says, 

“is not iust the loans but the education 

about b-usiness.” 

A new three- ear, 

from the Mott F 

34S0,OOO grant 

oundation wifl -allow 

Working Capital Florida to expand its 

good work into Broward and Palm 

Beach, says Kathleen Gordon, its presi-. 

dent; Support from other private 

sources, commercial banks, and state 

and federal governments would help the 

group grow lier. 

Certainly. the goal is worthy. Working 

Capital Florida and other microcredit 

programs push economic opportunity 

toward the people who need tt most. As 

Ms. Gordon aotlv sueaests: “The .real 

economic e ‘ie hU & from ,the bottom up, not T rom the top dorm.” 
_ 

Man behind microcredit revolution visits S. Fla. 
Very small loans to start 

very small businesses 

Man behind microcredit revolution visits South Florida 

WORKINO CAPITAL 

FLORIDA DINNER 
THE HERALD, SATURDAY, JUNE 6.1998 

Muhammad Yunus 

+;’ Re Juhanne Malveaux’s excel- 

%;lt May 1 I Viewpoin& Page column. W/IO ‘I/ figl2r for the poor?, I 

+ ‘-%ye an answer .-~~Myhammad 

pus, founder of.:ihe~.Grameen 

%aik in Bangladesh. ‘Dr. Yunus has 

&feceived innumerable awards from 

C,qnFchs and other heads of state 

Yor his outstandins achievements in 

rrteating opponuntties ~for the poor 

1 to pull themselves out~of poveny. 

Dr. Yunus is snot just .I 

I gangtadeshi hero..,He does noi 

! belong 10~ ones cpuqtry but is a 

- ! 

] 

&rid persona who has the~caliber 

pfthe g&eSt ~Wo;la le.CIers. Yet he 

! IS a simple man wi$,a simple mes- 

: sage: Give ihe ~poor~‘-;:‘especiall! 

: women - acceSs t&edit for their 

! “&WI busibesses,~and:the~~ill show 

the sane creativi!y, inge~nuiry. and 

dedication as the rest of the world.5 

entrepreneurs. 

Lending only to the most desw 

tuk. the Cramsen Bank is beIns 

replicated worldwide. Some 10 

million borrow& ‘take ~repayinf 

their loans. setting aside savings. 

sending their children to schoo!~ 

and providing nourishing meals for 

their families. A recent study of a 

Grameen ~replication’ in Malaysi:, 

shows that after completing a sect 

and lendin: cycle. two-thirds of rhc 

women borrowers successfully had 

led ihru families out of poveq 

This is remarkable. 

No. his. Mal\,raux, the baton car_ 

ried h!, h4anin Luther King Jr. and 

iliher> h;is ii”, ken dropped. Thi\ 

.‘Pooi People’s \larch” is resound- 

>“: ID ihs chorus uf “We‘re do>,,: it 

OUiSCI\&“ 

GAIL E. NEUMANN 

,W3.~! 
.i THE HERALD, THURSDAY, MAY 28.1998 ~., 

MUHAMMAD: 

YUNUS 

Replacing 

,poverty with 

selfsufficiency. 

Credit where it’s due /’ 

T he qnly question is. Should he get the Nobel Prize 

for economics or peace? That “he,” of course, is 

Muhammad Yunus, whose idea of lending tiny 

amounts to the most destitute of folks has lifted untold 

millions from poverty and.its hopelessness. 

South Florida is fortunate to have him visiting again. 

After.speaking at yesterday’s fund-raising dinner for Work- 

. Ing Sapital Florida, a nonprofit group that ably applies his 

mlcrpcredit model, Dr. Yunus this morning is to talk wtth 

those trying to spur economic development in South Florid& Would that all are inspired by his story. 

With a doctorate in theoretical economics from Vanderbilt University in hand, Dr. Yunus was unprepared for 

what he saw when he returned to his native Bangladesh, 

among Earth’s poorest nations. Entire villages were living 

on the edge of starvation, despite peasants working I6 

hours a day. In 1976 he lent a few dollars to a woman who 

was weaving bamboo stools. Once in business for herself, 

she prospered, and he founded the Grameen Bank on the 

novel concept of lending money to those who have none. 

Today this bank lends half a billion dollars to more than 

2.3 million borrowers, 96 percent of them illiterate women 

borrowing an average of $1.50. Grameen is go-percent 

owned by its borrowers, has a 98-percent repayment rate 

that rivals any commercial bank, and is making a profit. 

Worldwide, another six million people now borrow 

under the microcredit models popularized by Dr. Yunus. 

Poverty, he believes, is amon 

hce. The antidote is to create 

today’s biggest threats to 

B manclal and other institutions that remove social and economic barriers keeping the 

poor from prosperity. 

“We can build a poverty-free world at a fraction of what 

we spend on war preparatiops,” Dr. Yunus has said. “As 

long as one single human being in this vast world dies of 

hunger or fails to take care of the minimum human needs 

for survival with dignity, our society will be less than the 

society mankind deserves.” Well said, sir. 
GIVING CREDIT 

by Robert E.Grahun WHERE CREDIT’S DUE 

I 

FROM FLORIDATO 

BANGLADESH, MICROCREDIT 

think everyone’s heart skips a beat 

when meeting a celebrity or a hero. 

IS PROVING TO BE A 

Last fall I met someone who is both of POTENT ANTIPOVERTY TOOL, 

these to me-Muhammad Yunus. Along with ENRICHING THE LIVES OF BOTH 

20 members from the board, staff and major 

donor rolls of the Katalysis North/South BORROWERS AND LENDERS. 

Development Partnership-the nonprofit my wife, Wendy, and I founded-I listened with 

fascination as the gentle, scholarly Yunus talked about the passion of his life: microcredit. 

“Microcredit is not about money,” he said. “It’s about dignity. It’s about opening doors.” 

Yunus, now 57, was deeply influenced by the civil rights 

movement while studying for a Ph.D. in econotics at vanderbik University. Confident that young people could change 

society, he returned to his native Bangladesh in 1972. There, 

he challenged his students at Chittagong University to close 

their textbooks and learn about economics by getting 

involved with the villagers who comprise 90 percent of 

Bangladesh’s population. 

AtIer four years of interviewing people in the field, Yunus 

identified what he believed was his counuy’s central problem: 

Its people had no access to working capital at a reasonable 

cost. As a” experiment, he made his fmt loan, in the amount 

of $25, to a group of 42 people-which gave them 59 cents 

apiece, a small fti step out of poverty. 

Now, Yunus’s Gnmeen Bank lends $1.5 million each 

working day at market interest rates. Grameen’s 2.3 million 

borrowm are the ptxxest of the pcJor-kI”dIess, without 

credit hisxoly or banking couateraI. Yet the payback rate of 

these customers is asto”“di”g: I” the past 20 years, 97 percent 

of the $2.1 billion loans have been repaid--on time. 

More impressive are the social returns. One-third of 

clamee” bo”uwa have moved cut of poverty:a”other onethird are “earing that point. Four hundred thousand new 

homes (costing from $300 to $600 each) have been built with 

Grameen loans. Infant mortality among borrowers is Iw than 

the national average and their voluntary family planning occurs 

at twice the national rate. Yunus insists that these positive 

change.? have happened not because of Grameen. but because 

94 percent of the bank’s bonowers are women. “When women 

get in the driver’s seat, they look around to see what else they 

can do to improve their lives,” he told me. ‘They are the drivers 

for change in the family.” I could”? suppress a” appreciative 

chuckle. because this had been my experience as well: Not 

only are women good at business, but they also spend the profits on their families, not on themselves 

A couple of years before I turned 50, I made the decision 

to begin devoting half my time and resources to service. My 

business partner dubbed it the “50-50 at 50” plan. In 1988, 

inspired by reports of Muhammad Yunus and the Grameen 

Bank, Wendy and I began uperimenting in Honduras with 

microloans of less than $100. We quickly saw fir&and why 

micmaedit is considered to be the most effective develop 

ment methodology since the Marshall Plan. By 1997, KataIysis 

was focused excIusively on tiavcredit.We developed a pannership network with Ioc-aI cu”un”“ity development organizations, and now have loaned approximately $3 million to 
V die Lucas couldn’t imagine ever being committed 

to a job. For years. just barely squeaki”g by, she driftedworking cons”uction, repairing refrigerators and doing several stints at what she calls the food factories (McDonald’s and 

Burger Kin&. These days, the single mother of four has a new 

attitude: She loves t” get up in the morning, amazed t” fmd 

herself totally committed t” growing her Naranja, Florida, 

business, Alvi’s Take Out & Catering. Not that it’s been easy. ‘I 

used to think business owners were the richest people in the 

world,” she says. “Now I know that if they are. it’s because 

they worked for it.” 

Vickie Lucas is a client of Working Capital Florida, a 

mlcrolendiig organization stated by Kathleen Gordon, a 

Miami entrepreneur. Like D&a Ofelia, Lucas willingly recites 

the exact am”u”t of each loan she’s received: $500 in 1994 to 

p”pare her legal papers and buy a fax machine; then $l,ooO 

for supplies; then $1,500 t” rent a storefront to m”ve the business “ut of her house. ‘Tomormw, I get a loan of three thousand dollars to stock up on inventory for the holidays,” she 

says, excited about the money she’ll save by buying in bulk 

Gordon tells all of her clients that credit is like medicine. 

‘Small atn”““ts “vet time make you well.” she says. ‘Overdose on it and you’ll kill your credit rating and your business.” 

Gordon, 57, developed a complex of art galleries and a 

wholesale art business while in her 20s. She the” married, 

moved to Miami, and turned her boundless energy to lobbying 

politicians on hunger, poverty and children’s issues. She ukimately became one of the founders of a grassmots organization 

with the unwieldy name of Responsibility for Ending Starvation 

Using Legislation, Trim-Tabbing, &Support (RESULTS), which 

now has chapters and affiitez around the world. 

in August of 1992, Gordon went t” Bangladesh to meet 

Muhammad Yunus and learn about Grameen Bank. Just days 

after she returned, Hunicane Andrew hit, and she was’faced 

with the kind of death and destruction that had previously 

seemed to happen only in places far away: ‘Some of us decided we needed a Grameen Bank right here,” she says. 

There was initial c”ncem that the microcredit methcxlolw 

gy, developed by Grameen I” Bangladesh and ACCION in 

Latin America. would not translate in the U.S. The loans would 

have to be much bigger and borrowers would compete in a 

m”re competitive market with many m”re regulations, which 

would negatively affert the repayment rate. But there is now 

$126 million loaned ““t in the U.S. (through more than 300 

programs). Although it’s too early for statistical studies, the 

anecdotal evidence to date indicates a healthy repayment rate 

of appmximately 90 percent. 

One of the leaders in adapting Grameen-type microcredit 

to U.S. conditions is Working Capital, the Massachusettsbased organization founded by Jeff Ashe. Gordon decided t” 

become one of its affiliates so she “didn’t have to reinvent the 

wheel,” and got a jump start with money from the Hurricane 

Andrew Recovery Fund and a $5O,COO grant from the local 

community foundation, Five years later, Working Capital 

Flodda has $300,000 in outstanding loans and about 400 lxx 

rowers, all with household incomes of less than $15,ooO. 

Almost half the borrowers live in south Dade County, which 

was hardest hit by the hurricane, but all told they come from 

photographs by Andrew Kaufman 
20,CCO borrowers in Honduras, Guatemala and El Salvador. 

When I’m asked what our borrowers are like, I tell Doiia 

Ofelia’s story. Doti Ofelia (who is probably in her early &IS, 

although like many of the women in this area, she looks 15 

years older) owns a small restaurant in San Esteban. high in 

the scruffy hiUs above San Pedro Sula, Honduras. When we 

met there recently, I asked how business was. “Witi the IOXIS 

from Nuestm Triunfo Community Bank and the training it pn>- 

vides, I’ve built this business,” she said. I” npid-fue Spanish, 

she recited the exact amount of each loan: $37, $65, $102 and 

$190. “Each time I paid one back, I borrowed more and 

improved this place.” She looked around at the restaurant: 

rough-hewn tables, walls made of whke-painted bcxu-ds; candles on each table not for ambience but to defend against the 

village’s power failures. Smi@ with pride, she told me of her 

plans to expand becmx she has so many custotners. Doti 

Ofelia is a widow with six children-her business sum 

meansthatthetwostillathomewillbebenerdothedandbetter fed and will stay in school longer than their older siblings. 

‘I need another employee, though,” she tells me. 

When 1 asked what the hours would be, Ofelia said, The 

same as mine. Four in then “xmning until nine at night, every 

day. “0 days off.” The pay? ‘Fit&” Lwz_bimsa day IS2.171 and 

so”lethi”g to eat.” 

Akhough women perform two&i& of the wodd’s work, 

they earn only one-tenth its income. And in the Majority 

Wodd-the nonindustrialized countries where 80 percent of 

the world’s population resides-those are typical wages and 

hours for women. The proliferation of large-scale plantationgrown crops and the increasing population pressures on the 

environment mea” that women must walk miles farther to find 

safe water, firewood and land suitable for farming. And worldwide cuts in spending on health, family planning and education continue t” make the lives of women more difficult. 

Yet, as Yunus explains, “The basic question these poor 

people respond t” is, ‘Can I take care of myself?’ ” Doria Ofelia. like millions of Grameen borrowers, is able to answer with 

cc&dence: yes, if I have a chance, I can take care of myself.” 

It is this sense of yes, plus the solid results posted by 

Grameen. Katalysis. ACCION, Working Capital and several 

thousand other nonprofit microcredit lenders around the 

world, that makes microcredit the most promising antipoverty 

methodology. There are now 8 to 10 million microcredit barrowers worldwide, and the goal of the 

1997 Microcredit Summit Campaign is 

to provide credit to 100 million of the 

world’s poorest families by the year 

2005. Increasing numbers of private 

and public foundations are rising to 

the challenge. Corporations, led by 

Monsanto, and banks, including Citicorp, Bankers Trust and J.P. Morgan. 

recognize the great benefit.? (humanitarian and fmancial) associated with 

“licrolending. 

critics, of course, carefuuy point 

out that “licr”c”xlit is not a panacea. 

There are many problems, such as literacy, population, health and environmental issues, that small loans may 

help but are certainly not designed to 

solve. ‘Ihus. it’s important for funding 

to those areas to be maintained. 

A number of individuals from the 

private secta have devoted significant 

working hours and fmncial resources 

to making loans available. Recently I 

interviewed Kathleen Gordon, Bill 

Clapp and Rosali”d Copisarcw to learn 

what motivated them t” undertake service to others through microcredit. 
W BILL 

CLAPI’ 

ith his sthking blue eyes, Bill Clapp has the 

appearance of a ma” who has given himself, and the world he 

lives in, a lot of thought. And he has. As chairman of Matthew 

G. Norton Co., a family holding company in Seattle, Clapp has 

spent much of his life in corpcxate boardrooms. I” 1989, for 

reasons hard t” explain, he decided to take a six-month sab 

batical, during which he read extensively. He was especially, 

influenced by Peter Russell’s book 7be Global Brain, which 

prompted hti to reflect on how t” best use his personal abilities and his wealth t” serve a broader purpose in life. Clapp 

stretched his sabbatical from 6 t” 18 months, so that he could 

do eve” more thinking. 

“I saw that I’m best as an experiential learner,” he reports. 

“If I wanted to be of service, the thing for me to do was get 

involved.” A descendant of a distinguished pioneer family in 

the Seattle area (his great-grandfather was one of the founden 

of Weyerhaeuser, one of the largest timber companies in the 

world), Clapp began his service career at a men’s shelter--not 

as chairman of its board, but as a volunteer. That opened my 

eyes t” a lot of things,” he says. 

Clapp’s interest in micmcredit turned into action when 

RESULTS offered him a free plane ticket to one of their pmjects 

in El Salvador. When he told his wife, Paula, where he was 

headed, she announced that he wasn’t going without her. ‘So 

I had to pay some money aher all,” he quips. 

Clapp found microcredit to be ‘entrepreneurially exciting 

and challenging,” and he and his wife continued visiting different projects in other nonindustrialized countries. “In those 

travels we saw a richness of human spirit in circumstances 

that 1 would have thought to be completely devastating.” 

They thought they were prepared for Bangladesh but were 

shaken by what they saw. “It was hard to anticipatetie chaos 

of masses of humanity, the extreme poverty, the sickness and 

the heat in Dhaka.” says Clapp. “But we experienced people’s 

bravery and ingenuity, especially in the villages where 

Grameen was operating.” 

Inspired, the clapps started their own nonprofit in 1994. 

Global Partnerships (GP) may be the only micmaedit p’~ 

gram in the U.S. entirely funded from private sources (mostly 

donations from the Seattle business community). I” paruler- 

--_ 

ship with the Foundation for lntetnational Community Assistance (FINCA), a U.S.-based microlending otganizatio” started 

in the early ’80s by John Hatch, GP set up a program that 

reached 4,ooO w”me” borrowen in Guatemala. “The loans 

enable the w”me” t” increase their income, save money and 

get their families out of poverty,” says Clapp. GP now assists 

other ~crolenders in Central America as well. 

Like everyone involved in microcredit, Clapp has experienced setbacks. But he perseveres because it works. “It’s not 

like welfare. It’s a loan. and it enhances the self-esteem of the 

borrowers.” Not surprisingly, it’s enriched his own life as well, 

which he says has become infiitely more rewarding. ‘Every 

single day m-five thousand children die from povertyrelated diseases,” Clapp says. That’s the devastatig equivalent of a 747 airplane crash every twenty minutes.” And yet he 

estimates that it would take only $25 billion per year for the 

next decade to eliminate the wxst aspects of severe poverty 

worldwide. ‘Expensive? We’ll spend m”re than that on weightloss programs in the US. alone in the same period,” he says. 

“This is not a” insummuntable task; we just lack leadership.” 
17 co”mu”ifies, including Little Haiti and Little Havana. 

The challenge for most microlending organizations is to 

make enough money from the interest charged on loans to 

finance operating expenses. A consortium of local banks 

makes loans to Working Capital Florida at 7 to 8 percentwhich they then lend at 12 percent. The point spread funds 

some of Working Capital Florida’s operating expenses, but the 

majority still comes from donations Gordon is determined to 

become self-sustaining, which she figures will take a loan 

portfolio of $5 million loaned to 5,ooO borrowen at a fivepoint spread. ‘Our program is not charity for our participants; 

we don’t want the organization to be on the charitable end of 

things either,” she tiys. 

When I asked about her repayment rate. Gordon was chatacteristically blunt: ‘Our rate is unacceptable.” Nationally, 

Working Capital has a 97 percent 

rate; the Florida affiliate is somewhere in the 80s. Gordon partly 

blames the culture: ‘“Accountability 

has not been a strong suit of our 

social-service environment.” But she 

suggests another reason: 40 percent 

of her borrowers are me”. Although 

Gordon doesn’t break out repayment 

rate statistics by gender, she’s certain 

it’s bener for women. However, in 

the U.S., she explains, you can’t discriminate against any group if you 

receive public money (such as Working Capital Florida’s ~grant from the 

Hurricane Andrew Recovery Fund). Nevertheless, Gordon is 

determined to collect delinquent loans. ‘“You know, charity 

makes the giver feel good, but it can demean the receiver. It 

can create codependency” 

There is certainly nothing about Vickie Lucas that suggests 

codependency. When I asked what she’d learned from this 

experience, she said, ‘“That I am stronger than I thought I was.” 

Lucas says that the greatest thing Working Capital did for her 

was to open her eyes to what was possible. She and her mother, Albertha Notice (who is also her business partner), have 

been busy strategizing. With their stellar credit history, they’ve 

put together a business plan in preparation for making a” 

application to the Small Business Association for “a big loan,” 

Lucas says. ‘Fii thousand dollars. Big enough for us to tent 

the space next door and turn it into a real sit-down restaurant.” 
couldn’t get it. Suddenly, I had a clear 

vision of those entrepreneurs getting the 

loans they needed.” 

Copisarow admits that she had no clue 

as to how she might do this, but she was 

struck by the novelty of being directly 

involved with the people and businesses 

that she loaned to. ‘Here I was, making 

loans in units of one hundred millionsome deals for chemical plants and oil fields were for a 

billion-and 1 “ever actually saw where the money went, let 

alone the people who put it to use.” 

A few weeks later, J.P. Morgan hosted a dinner party for 

Polish government officials and Copisarow found herself 

seated beside Leszek Balcerowicz, then finance minister. 

Curious, she asked Balcerowicz if he had heard of the 

Grameen Bank. He replied that he thought it was a” extraordinary financial innovation. 

‘“Well, then, what would you think of a crazy foreign 

woman bringing the Grameen concept of microcredit to 

Poland?” Copisarow asked, not quite believing the words she 

heard herself speaking. 

He replied, “Rosalind. if you are willing to give up your 

career to do that, I promise you I’ll give you my support i” 

every way possible. I’ll make inuoductions, write articles ” 

“MY stomach fell to the floor,” Copisarow remembers, “and 

1 moaned inwardly, ‘Please don’t say that.’ ” 

That Christmas, she took a holiday at her family’s cottage on 

the English coast to consider the microcredit possibility. One blustery day as she 

walked the beach, two images came to her. 

“I saw myself on my deathbed. In the fust 

image, I had always taken the safe option 

and despised myself for it. I” the second, I 

had gone ahead with the microcredit project 

and it had failed. It had been a risky venture 

and the money was lost. But I felt good, 

because I had given it my best and been 

stretched to the limits of my capabilities.” 

On July 7. 1994, President Bill Clinton 

announced to the Polish Parliament that the 

Polish-American Enterprise Fund (established under President Bush in 1990) was 

donating 524 million to Fundusz Mikro to 

launch a microlending iaxitution in Poland. 

The founder, chairwoman, and chief execw 

tive officer of Fundusz Mikro was, and is, 

Rosalind Copisarow. 

“We started with freedom. lots of money 

and complete ignorance about what would 

work,” she says. With a small staff, she 

examined 200 different lending methcdologies-i”cluding goat loans, where the fust 

two female kids to be born were =-lent to 

others. “Our ob@t was to discover what 

models resonated with the traditions of the country.” They 

tested nine pilot models for about a year before deciding on a 

program design. 

“In addition to individuals, we also lend to small groups of 

four to seven people. It’s important for borrowers to feel they 

have a choice,” says Copisarow. “And we don’t make ideological speeches to them-in Poland, the disillusionment with 

ideology “ms very deep.” 

Fundusz Mikro now has 20 branches lending to 4,000 

clients. with a repayment rate that rivals Grameen’s: 98.5 percent of $10 million in loans has been repaid on time. In addition, 2,OCQ new jobs have been created and 3,OKJ former 

clients have graduated to the formal economy. 

By 2002, Copisarow wants Fundusz Mikro to be self-suppa&g, with a full banking license. Given what she’s accomplished so far, there’s Little doubt that she will make it happen. 

“When I reflect on my previous banking career, it seems so tww 

dimensional.” Copisarow says. “It lacked soul. What 1 do now 

has put real meaning in my work-and therefore in my life.” n 

photograph by Colin Bell 
gan’s business in Poland, where her 

position was vice president and country officer for Poland. In the previous 

three years, she hadn’t made a loan 

for less than $100 million, and 

Morgan was talking about a promotion 

to China or India. Then, in a lifechanging about-face, Copisarow gave 

it all up for a scratch-start, nonprofit 

microcredit operation in Poland, 

which meant living in a Warsaw flat 

that frequently lacked heat and hot 

water, and rising at 4:30 A.M. to take 

hours-long train rides out of the city 

almost every day of the week 

It all began one day while Copisarow was on her regular 

British Airways commute from London to Warsaw. “I always 

sat in a middle seat. in order to double the amount of market 

information I obtained from my neighbors,” she explains. 

‘Usually I wore more ‘arty’ cloth& and carried women’s magazines, which made it easier for men to talk to me, to tell me 

about their business deals.” But on that fateful day, Copisarow 

was dressed in a business suit. She was sitting between two 

banking competitors, which meant she couldn’t safely take 

work material out of her briefcase. Instead, she began to read 

the Financial Times, which happened to include a supplement on Bangladesh-with a story on Grameen Bank. “I read 

that more than a million of the country’s poorest women had 

proven themselves to be more creditworthy than the rich, with 

a repayment t-ate of ninety-six percent on unsecured loans,” 

she says. “Meanwhile, in Poland, there were more than one 

million microbusinesses that needed money to expand and 

He tells the story of Muhammad Yunus‘s visit with the 

Clapp family in Seattle. At breakfast one day, he asked Yunus 

if he had any advice for his 17-year-old so”, who was just 

about to go to college. ‘Yunus looked at my so” thoughtfully 

and said, ‘Well, Ned, I suggest you think about how you want 

the world to be and then set out to make it that way.’ ” 

T ROSALIND 

COP1 SAROW 

his was the scenario in 1993: Rosalind Copisarow 

was 36, with a bachelor’s degree from Oxford and a” MBA 

from Wharton. She spoke four languages (English, French, 

Spanish and Polish), had a dozen years of invesunent-banling experience, and had singlehandedly developed J.P. Morphotograph by Rex Rystedt 
BUSINES 

A FRIDAY, MARCH 6.1998 :&fluWorld Bank’

s message 

to lenders: Think stiall 

!tZZLG%Z ing on the country - the righ:s of 

MANAGUA - Instead of the 

indigenous people. to have 

mega-loans of bygone big-governpeace.” he said. “You don’t just have to make international bankment ems. multilateral lenden en more eflective. You need to 

need to wncentt-atc on getting 

sums as small as a few hundred 

help the people who don’t have 

dollan out into ramshackle little 

eoougb food.” 

towns where they may pay a big 

Wolfensohn, a former Wall 

peace dividend, World Bank Pres- Street investment banker, made 

idcnt James Wolfensohn said his comments in an interview with 

Thursday. The Herald during an overnight 

“People in these tiny rural camstop in Nicaragua, halfway 

munities don’t care how their through a week-long tour of six 

market compa,xs to tbc rest oftbc Central American countries. 

world,” Wolfensohn said. “They Wolfensohn is meeting with 

want to get some dollars to buy P local leaden as well as getting an 

few extra cows and pigs and some 

upclose look at some World 

machinery to collezt their crops. 

.Bank-funded projects in the 

They want a road so they can 

region. There also has been some 

trade with the next village. unplanned excitement: In Nicara- 

“YOU must deal with ihe issues 

of rural poverty, and - depend- PLEASESEE BANK, SC 

World Bank’s message to lenders: Think small 

BA”K. FROM IC 

gua alone. he had to dodge a Iornado, fly in a helicopter wth a 

broken fuel tank. and endure a” 

hour-long blackout at his hotel I” 

sweltering 95.degree heal. 

The tornado and broken fuel 

tank were pan of a visit to a rural 

zane in northwestern Nicaragua 

where the world Bank is provldine small loans of UP to $600 10 

local agricultural producers, precisely the kind of small-scale project Wolfensahn said the bank 

needs to do more of. 

“There are 1.3 billion people m 

the world living on less than % 1 a 

day,” he said. “And there are 3 

billion people living on less than 

%2 a day. Obviously a single 

big project doesn‘t get to a billion 

people. You‘ve got to spread it 

out; you’ve got to distribute the 

lending.” 

That wasn’t always the way the 

World Bank looked at things. 

Wolfensohn acknowledged. For 

years, the philosophy was the 

more loans lhe better, no matter 

bow much red ink got splashed 

around on the ledger sheets of 

small developing countries with 

dubious ability to repay. hlorc 

money didn’t necessarily mean 

better. 

Nicaragua - with a forelgl 

debt ofS6 billion, one of [he high 

csr per-capita debts in the world 

- is a prime example of wha 

sometimes resulted. 

“The bank has been chanwg . 

lot I” xrms of recognizing tha 

,here needs to be a balance 

between large infrastructure pro 

jccts, which you still have to do 

and small things targeted on corn 

munities.” he said. 
PAGE 8 FRIDAY, MARCH 6.1998 

EDlTORIALSIOPlNION 

For Europe’s Jobless, Self-Employment Might Work 

“Thr world has forgouen the 

hun~anlrad~tionofself-employmen!.” he says. “When people 

lwcd in caves they went out to 

help themselves. There was no 

s,n,r 10 ask for help.” 

people who have nothing to organized around Ihe machine 

s!zwt with but who want lo help that they needed a job. someone 

themselves. to assign them a place in the 

11 has proved self-s”s!aining, organizalion and someone to 

They pay back “1 the rate of YR pay them for il. 

R 

rcrot. which any commercial The orw economic rwol”~ 

anker would envy, and go 011 lion reqxns Ihe question. HI&! 

from there. factories and offices are laying 

There has b-xn little eflorl 10 offworkers. hut Ihepossibililier 

adapt the idea 10 the very dil- for self-employmem have been 

ferem circumslances in indus- litlIe explored. Tbhr assumption 

trial countries. where the an- is fbat someone m”sl hire you. 

swer lo unemployment has Great ,x,ols of skill and 

ixcome benefits “mil johs arc knowledge are left umapped 

created. But il is an idea well when rple arc rold they must 

suited Lo changing modern look or a Job but cam01 find 

economies. as well as 10 the one. Mr. Yunus is convinced 

fight agains! cndcmx pavcrty. lb:” !he magic hrcak!bro”gh 

Thenouonofjobs,aftcrall. i\ IooI is credit - muocrrdit - 

a direct consequence of the In- al commercial ralcs but without 

dusrrial Kcvol”lion Fcoplc Ihe commuciol rcquiremrm of 

have always labored. but II (vat coll:wral or crisllng earnings, 

no, “n,i, production began 10 he Two more cl~mu”b would he 


CENTE ITY 

Programs that Change Lives 

Y s 2 5 

100 Constirurion Plaza,a.~uite 721,Harrford,Connecricur 06103-1721 

Phonc:860-728.3201 Fax860.549-8550 

Federal Reserve Board 

Federal ReSeNe Bank of New York 

Public Meeting Regarding Citicorp and Travelers Group 

June 251990 

Members of the Federal Reserve Board panel, my name is Paul Christie. I am the 

Executive Director of Center City Churches, Inc. 

Center City Churches is a not for profit, non-sectarian, human services agency in 

Hartford, CT. Started in 1997, we are now comprised of twelve congregations, 

representing ten religious traditions. 

Our mission is to be a partnership of congregations, institutions and individuals 

which cares for the city by finding innovative and effective ways to help Hartford’s 

neediest residents work toward self-sufficiency. 

Since our beginning, we have relied on active partnerships to fulfill our mission. 

Today, with the help of over 400 volunteers annually, dozens of corporate, 

foundation, public and private commitments, we operate six programs. Among 

them: 

Peters Retreat, the first and largest AIDS housing program in CT. 

Laurel Street, the only state licensed group home for the chronically mentally ill in 

Hartford. 

Center for Hope, offspring of the first soup kitchen in the city. 

Center for Youth, the most comprehensive school tutoring and arts enrichment 

program in Hartford, serving over 400 children weekly. 

The Travelers Group, Inc. plays a pivotal role in helping us fulfill our mission. Here 

are some of the ways Travelers puts energy into being a community partner with 

Center City Churches: 

Travelers is providing a three year grant for the Center for Youth which enables us 

to double the number of children we serve by adding a second school to our 

program. 

Travelers purchased a van so we can transport our program participants safely. 

Travelers donates staff time to find office space for our agency and secures 

furnishings for the space; consultations to revise our personnel policies and 

uptp~~;e our pension plan, excluding themselves from being considered as a 

CeZebrating Three Decades 
Federal Reserve Board 

Federal Rt?SeNe Bank of New York 

Public Meeting Regarding Citicorp and Travelers Group 

June 25,1998 

Center City Churches, Inc. Testimony, page two 

Travelers recruits board members and school tutors 

This Spring, Travelers developed an ongoing art gallery in their offices to display our 

students’ work and that of their employees and other community groups; building bridges 

between the neighborhood and the Board room. Already, Travelers personnel have 

purchased some of the students’ work and underwritten an Artist’s Residency at both 

Betances and Sanchez Schools. 

My daughters’ crew experiences in college illustrate what I am trying to say about 

Travelers as a community partner. Every seat has a name and a task in crew. The 

“Stroke” is the team member who sets the pace for the boat. By example, all the other 

rowers align themselves with him or her. The “Stroke” sets the standard. In Center City 

Churches’ experience, Travelers is the corporate “Stroke” for community involvement. 
National Federation of 

Community Development 

Gedit Unions 

120 Wall Street. 10th floor 

New York, NY 1ooos_3goz 

az.8og.18yz tel 

212.809.3274 fax 

w.natfed.org 

Statement by 

Carol Aranjo 

Chairperson, Board of Directors 

National Federation of 

Community Development Credit Unions 

on the Proposed Acquisition 

of Citicorp by Travelers Group Inc. 

June 25,1998 
My name is Carol Aranjo and I represent the National Federation 

of Community Development Credit Unions. The National Federation of 

CDCUs represents 170 credit unions that specialize in serving lowincome and minority communities in 40 states. Our members are 

located both in urban and rural areas. Many of our member credit 

unions have served their communities for decades -- in some cases, for 

as long as fifty years. 

Our credit unions serve people and communities who have often 

been ignored or neglected by banks. For the most part, the members of 

CDCUs have small savings and need small loans. Sometimes they have 

credit histories that would make them unacceptable to banks. Serving 

this market is not very profitable, which is why many banks have 

retreated from our communities. 

Our community development credit unions, or “CDCUs,” have 

decades of experience in trying to fill the banking gap, and bringing 

services to the underserved. But it’s not an easy job, by any means. It 
can take many years and enormous sacrifice for CDCUs to achieve the 

levels of assets and capital they need to serve their members adequately. 

Often, our credit unions need help getting to those levels. 

Citibank has provided that kind of help to the CDCU movement. 

It’s not always easy to convince a bank that it should help institutions 

which some bankers call “competitors” - namely, credit unions. But 

Citibank looked beyond this, to the needs of low-income communities. 

They decided that if their bank’s presence wasn’t sufficient in a 

community, it would be important for low-income people to have 

access to a CDCU, an accessible, nonprofit financial institution owned 

by the community itself. 

So, in 1996, Citibank made a contribution of more than $1 million 

to the CDCU movement, to help our credit unions carry out their work 

of serving low-income people. Through the National Federation’s 

Capitalization program, these grant funds have helped build the net 

worth, or equity capital, of our CDCUs, which is crucial since our credit 

unions are government-regulated financial institutions. Citicorp’s grant 
was the largest of its kind by any bank. Citicorp helped us help CDCUs 

in New York, but also in all the other cities and rural areas where 

Citibank had a presence. The program was bold, innovative, and most 

helpful to us. 

In many other ways, large and small, Citibank has helped CDCUs 

and the National Federation with our work. Whether it was producing 

marketing material, providing consultants, developing training 

programs, or thinking through strategies to better serve low-income 

people, Citibank and its staff helped. Sometim, , they did.:? even wait 

to be asked, but freely volunteered their assistance. 

We hope that this kind of assistance will continue in the future. 

We expect that it will. Citibank’s continuing investment and 

involvement are going to be very important in our work of bringing 

community-owned financial services to increasing numbers of lowincome communities and consumers. 

Thank you for your attention. I would be pleased to answer any 

questions.