Magazine article American Banker

The Lobbyists: Citigroup Had Plan B If Reform Didn't Pass

Magazine article American Banker

The Lobbyists: Citigroup Had Plan B If Reform Didn't Pass

Article excerpt

Citigroup Inc. would have begun a significant restructuring in early 2000 if financial reform had not been enacted this year, its top lobbyist said this week.

When regulators approved the merger of Citicorp and Travelers Group Inc. last year, they gave the combined company two years to sell its insurance underwriting business because bank holding companies were barred from that activity. Three one-year extensions of that deadline were possible.

Most people figured that gave Citigroup plenty of time to win a change in the law. But Roger Levy, Citigroup's senior vice president of federal government relations, said that if financial reform had not been enacted this year, the company planned to start moving to preserve its insurance underwriting powers.

"We would have had to go to a plan B ... by the turn of the year," he said Monday. "Implementing a plan B would have taken almost a full year."

Plan B involved exploiting a loophole, such as using its Delaware state bank with grandfathered insurance underwriting powers. "Our compliance, incidentally, would have been a restructuring, not a divestiture," he said.

Larry LaRocco, managing director of the ABA Securities and ABA Insurance associations, plans to leave March 1 to become chairman of his own lobbying firm. The former House Democrat from Idaho will split time between here and Portland, Ore. Mr. LaRocco helped form the securities affiliate of the American Bankers Association in 1995 and modeled the insurance affiliate after it two years later. Mr. LaRocco said in a statement that he had worked on financial reform inside and outside of Congress for years and that its enactment provided an opportunity to pursue new challenges.

Beth L. Climo, the ABA's group director of financial industry affairs, will succeed him. Ms. Climo joined the association in 1996 and previously headed legislative affairs for the Federal Deposit Insurance Corp. …

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