Okla. Commissioner's Agenda: Independence, and Road Trips

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While other state officials around the country complained about funding, Oklahoma Banking Commissioner Mick Thompson used his state's budget woes to cut a deal that gives his agency more independence.

Mr. Thompson, 56, just began a one-year term as chairman of the Conference of State Bank Supervisors, and members better be ready for a wake-up call. His motto of "get involved, be involved, stay involved" means his colleagues should rub elbows more often with politicians and bankers so that they command some respect when crises arise.

"Too many of the commissioners go to their office at 8 o'clock and go home at 5 o'clock," he said in a July interview at American Banker's offices here. "To me, you've got to get out. As they say in southeast Oklahoma, 'You've gotta get out amongst them.' "

Mr. Thompson, who after 11 years has been on the job longer than most of his peers, put on a lobbying clinic at the Oklahoma state house this year.

For five years he had been arguing that his department should be independently funded. Instead he had to turn over the assessments collected on bank assets to the state's general fund and reapply for them. Appropriators would give back the money each year -- but after a real haircut. In fiscal 2003, for example, the department received 75% of the $3.8 million of assessments it collected and had to cover the rest of its costs with additional fee income.

"It was kind of like pouring it in a funnel -- big on one end, little on the other," Mr. Thompson said.

He has prided himself on getting national banks and thrifts to switch to an Oklahoma charter -- there have been 21 conversions since Jan. 1, 2000, representing $5.1 billion of assets. Cuts in assessments have been part of the lure. Banks paid 19 cents per $1,000 of assets last fiscal year, which he said was the lowest ever. But the appropriations process meant there was still a markup in the assessments to partially offset the money the state kept, and Mr. Thompson had been telling lawmakers that was unfair.

"I kept saying that, 'Look, this is not their money.' If we don't need it to run the agency, the bankers shouldn't be paying it, and that we are not set up as a profit center, that this is a regulatory agency."

Sensing last fall that one of the worst budget shortfalls in Oklahoma history presented a rare opportunity, Mr. Thompson met with representatives of several trade associations and financial institutions and got them to agree to a special assessment. Banks and credit unions would each pay 5 cents per $1,000 of assets, which would raise about $1 million.

Further, his department would match that amount with another $1 million of savings from attrition and other cost curbs.

The state would be guaranteed a payment of slightly more than $1 million by March 1 of next year and, starting in 2005, 20% of assessments to cover overhead costs such as payroll and retirement benefits.

In return the department would completely fund itself and no longer have to go hat in hand to state lawmakers.

Mr. Thompson said several people, including his own staff members, thought the idea was "crazy." But he was drawing from experience, not only as a regulator but as an ex-community banker and former state legislator. In the late 1970s and early 1980s he was a Democratic state representative and had been chairman of the House Banking and Finance Committee, majority floor leader, and an appropriator. …