The Connecticut Department of Banking is quietly wooing half a dozen banks to convert to a state charter in advance of the Dodd”“Frank Wall Street Reform and Consumer Protection Act that kicks in this July.
Speaking to a panel of the Connecticut General Assembly in February, state banking Commissioner Howard Pitkin disclosed the effort as part of a broad overview of his department”™s outlook for the coming year, without specifying the identities of the banks in question.
As part of the Dodd-Frank bill, the federal Office of the Comptroller of the Currency is assuming regulatory oversight for banks currently under the umbrella of the Office of Thrift Supervision. OCC is seen as a far more stringent regulator than OTS, which is being eliminated as part of financial regulatory reform.
“The Office of the Comptroller of the Currency, which is not considered an agency that handles small banks very well, is going to take over all of the community banks on a federal level,” Pitkin said. “We do expect that before this coming July ”¦ that there may be half a dozen banks that migrate over to a state charter.
“We”™re trying to convince them ”¦ and do everything we can to act like nice guys before they come over,” Pitkin added. “Some of our thrifts who are now regulated by OTS don”™t want to be regulated by OCC. It”™s a little confusing but it”™s a good thing to happen, and that may increase the number of charters we have.”
Pitkin noted banks that remain under federal regulation will now also be subject to the oversight of states”™ attorneys general, on a case-by-case basis. Both Connecticut and New York have new attorneys general in George Jepsen and Eric Schneiderman, respectively.
“That is an authority that we didn”™t think they were going to get,” Pitkin said. “In terms of what we do, we”™ve gotten a lot more recognition under the Dodd-Frank bill.”
While Gov. Dannel P. Malloy outlined plans to cut the number of state agencies by 30 percent, he has yet to air any plan to consolidate Connecticut”™s banking and insurance departments, as the case with New York Gov. Andrew Cuomo who is also folding the state consumer protection agency into a single department of financial regulation. New Jersey also has a consolidated banking and insurance department.
Pitkin said that because he was unsure whether Malloy would reappoint him commissioner, the Connecticut Department of Banking submitted a relatively small package of legislation for the current session.
“One of the goals I have this year is to try to help the Legislature and other people who are concerned with our budget to understand the impact that that”™s had on us over the years, and how ill-prepared we are to meet our mission as quickly as we can because of constraints that have been put on us,” Pitkin said. “We have a backload of 500 cases, and probably eight people that are working on them ”¦ During a bad time like this, that”™s not the time to cut (our budget) because we”™re trying to help clear up the problem. The time to really take a look at our efficiency and our staff levels is when things firm up a little bit and the economy is not in such bad condition and the banks aren”™t requiring so much supervision.”
