Interim Joint Committee on Banking and Insurance


Minutes of the<MeetNo1> 1st Meeting

of the 2005 Interim


<MeetMDY1> June 8, 2005


The<MeetNo2> 1st meeting of the Interim Joint Committee on Banking and Insurance was held on<Day> Wednesday,<MeetMDY2> June 8, 2005, at<MeetTime> 2:00 PM, <Room> at the Citigroup Call Center in Florence, Kentucky. Senator Tom Buford, Chair, called the meeting to order, and the secretary called the roll.


Present were:


Members:<Members> Senator Tom Buford, Co-Chair; Representative James E Bruce, Co-Chair; Senators Julie Denton, Ernie Harris, Daniel Mongiardo, J Dorsey Ridley, Richard "Dick" Roeding, Dan Seum, and Tim Shaughnessy; Representatives Ron Crimm, Mike Denham, Ted "Teddy" Edmonds, Joseph M Fischer, Danny R Ford, J R Gray, Mike Harmon, Jimmy Higdon, Dennis Horlander, Dennis Keene, Charles E Meade, Frank Rasche, Steve Riggs, Brandon D Smith, and Addia Wuchner.


Guests:  Gregg Morton, Dara Duguay, and Ronnie Burns, with Citigroup.


LRC Staff:  Greg Freedman, Rhonda Franklin, and Jamie Griffin.



The minutes of the November 23, 2004, meeting were approved.


Gregg Morton, Kentucky Site President, Regional Director of Citi Cards Collection and Senior Corporate Officer for the Commonwealth of Kentucky, welcomed the committee to the Citigroup Call Center.  He stated that Citigroup has 3,900 employees across Kentucky.  He stated that Citigroup is the preeminent global financial services company with some 200 million customer accounts in more than 100 counties, providing consumers, corporations, governments and institutions with a broad range of financial products and services, including consumer banking and credit, corporate and investment banking, insurance, securities brokerage, and asset management.  He stated that major brand names under Citigroup's trademark red umbrella include Citi Cards, Citibank, CitiFinancial, Primerica, CitiMortgage, Smith Barney and Banamex.  he stated that the Kentucky businesses include; Citi Cards, Smith Barney, Primerica and Citiphone businesses located in Florence, Kentucky, Citi Cards Private Label, Sears business and Smith Barney in Louisville, Kentucky, and Citi Financial businesses throughout the state.  Citigroup employs over 10,000 people in the tri-state region of Kentucky, Indiana and Ohio.  He stated that CitiCards cut the ribbon on a new facility in Louisville, Kentucky, to service their Sears Credit Card portfolio.  The site currently employees 1,300 people with the capacity to employ over 2,000, with area to expand.  He stated that the Florence facility was doubled in size in 2002 to meet the growing demands of their call center operations.  He stated that the facility has grown in size to 344,000 square feet and includes an onsite National Wildlife Habitat, food court, complete wellness center. The facility has a casual dress environment, health benefits from day one, 401K and up to 80% tuition assistance on any undergraduate degree at any accredited college or university.  Citi recently added express bus service from the inner-city areas of Covington, Newport and the surrounding region to diversify the workforce and sustain long-term growth.


Dara Duguay, Director, Citigroup Office of Financial Education, Washington, DC, stated that the United States has the lowest personal savings rate in the industrialized world.  In 2004, Americans saved just 1.4% of their disposable income.  She stated that the number of personal bankruptcies has nearly doubled since 1994 reaching 1.6 million in 2004.  She stated that individuals under the age of 25 are the fastest growing group of individuals filing bankruptcy.  She stated that one third of retirees over the age of 65 rely on Social Security for 90% or more of their income and that between 25 and 56 million American adults are unbanked and 43% of Americans spend more than they earn each year.  Americans spend, on average, $1.22 for each dollar they earn.  She stated that the average household credit card debt is $8,000, a 167% increase over the 1990 amount of $3,000.  She stated that the average combined retirement accounts for Americans in their 40s and 50s only total $37,000.  She stressed the importance of educating young people about personal finance.  She stated that Citigroup and its businesses have a long history of providing financial education to consumers, businesses, and institutions but never had a central repository and leader guiding these efforts.  She stated that the Office of Financial Education, among other initiatives, was created as a part of the 1998 Traveler's/Citibank merger.  She stated that financial literacy has received intense focus over the last 5 years by financial institutions, regulators, elected officials, and educators.


Ronnie Burns, Director of Business Practices at Citi Cards, addressed the committee regarding identify theft.  She stated that identity theft is the unauthorized use of personal information to establish or assume credit under someone else's name.  She stated that identity theft manifests itself primarily in two ways for credit card fraud: fraudulent application and account takeover.  She discussed the myths and facts of identity fraud and gave tips for consumers to protect themselves.  She discussed possible legislative provisions that would help prevent identity theft.  She stated that Citi is committed to developing the tools and strategies that are necessary to prevent and detect identity theft, and to continue to assist victims of identity theft.  Citi, along with other issuers, work collaboratively to share fraud information and best practices which will help detect identity theft quicker and minimize effects on the victims.  She stated that there needs to be continuing cooperation with law enforcement and legislators in the detection, prevention and prosecution of criminals.


Representative Mike Denham stated that he deals with identity theft on a daily basis and that it is an escalating problem.  He stated that he has seen a decline in financial literacy in the younger population.  He complimented Citibank on the financial education program.


Representative Addia Wuchner stated that the presentation was excellent and she agreed that there needs to be more financial education and legislation that helps prevent fraud and promotes financial education.


With no further business, the meeting adjourned.