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03/29/2024 10:22 AM
Pennsylvania House of Representatives
https://www.legis.state.pa.us/cfdocs/Legis/CSM/showMemoPublic.cfm?chamber=H&SPick=20190&cosponId=31071
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House of Representatives
Session of 2019 - 2020 Regular Session

MEMORANDUM

Posted: January 29, 2020 03:07 PM
From: Representative Mark K. Keller
To: All House members
Subject: Protecting the Banking Fund
 
Please join me in co-sponsoring legislation that would strengthen the independence of the Banking Fund and ensure a strong dual banking system in our Commonwealth.

All banks and credit unions are chartered either by the state in which they are domiciled or by the federal government through the Office of the Comptroller of the Currency (OCC) or the National Credit Union Administration (NCUA). The existence of both state-chartered and nationally-chartered banks and credit unions creates a healthy banking environment and consumer choice.

State-chartered banks and credit unions pay semi-annual assessments to the Dept. of Banking & Securities (DoBS) which are then deposited into the Banking Fund to pay for the operations of the department and for the examination of state-chartered institutions. Additionally, if needed, the Fund can also be used to take control of or liquidate a financially distressed non-federally insured institution (e.g., a non-depository trust company) using the Fund’s Institution Resolution Restricted Account (IRRA).

These assessments are regulatory fees paid in addition to state and local taxes paid by those state-chartered institutions which are subject to bank shares, corporate net income, mutual thrift institution, sales and use, employment and real estate taxes.

In the past 18 months, two transfers have been made from the Fund. In June of 2018, $21 million was transferred to the General Fund and in January of 2020, another $21 million was transferred to supplement the budgets of the Dept. of Conservation and Natural Resources (DCNR) and the Dept. of Environmental Protection (DEP). These transfers violate the purpose of the Banking Fund as described in the Banking and Securities Code, undermine the value of a state charter and erode the dual banking system that benefits consumers and businesses in our Commonwealth.

Regulatory assessments paid by financial institutions should be used to support the operations of the DoBS and should not be used to support general government operations or to augment appropriations unrelated to the purposes for which the assessments were imposed.

This legislation would:
  • periodically adjust the required annual assessments paid by financial institutions to impose a fixed $20 million cap on balances accumulated in the Banking Fund in excess of current operational requirements of the DoBS, an amount sufficient to retain not more than $15.5 million in the IRRA plus balances to needed to satisfy accreditation requirements of the Conference of State Banking Supervisors;
  • convert the Fund into a trust fund and require future laws that impact the Fund to refer expressly to the Fund; and,
  • authorize the imposition of special assessments on an expedited basis if insufficient amounts are held in the IRRA to rehabilitate or liquidate a distressed non-depository trust company.
Thank you for your consideration.



Introduced as HB1957