|Posted:||December 1, 2020 10:17 AM|
|From:||Senator Daniel Laughlin|
|To:||All Senate members|
|Subject:||Strengthening the Independence of 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 which are then deposited into the Banking Fund to pay for its operations 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 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 address this issue and strengthen the independence of the Banking Fund.
Introduced as SB432