New Banking Bill Could Expand Powers of State Bank Regulators
Chittum, Sam, THE JOURNAL RECORD
House Bill No. 1339 has the support of State Banking Commissioner R.Y. Empie and the Oklahoma Bankers Association.
The expanded powers would give the Commissioner and the Banking Board powers almost equal that of federal bank regulators.
A key feature of the new bill is a provision allowing the Commissioner to issue cease and desist orders, which he cannot do now. The commissioner's enforcement powers would also include an injunction or a fine.
Empie said he hopes being able to issue cease and desist orders will enable him to act more quickly to correct problems at troubled state banks.
Such orders issued by federal regulators often arrive when problems are beyond remedy, he said.
"If I had the power to issue and desist order," said Empie, "I could do it more promptly and it would be more pin-pointed. That's better than waiting and lowering the boom with a 30-page order that's too late."
Such orders are "for the purpose of helping banks," said Empie. "There's no penalty or fine. It's just one of the stronger things we have to get their attention and require them to institute corrective measures."
Another key feature concerns expaned powers to order removal of bank officers, directors or employees.
At present, executives at state banks can only be removed if they violate the State Banking Code. The new law would enlarge that to inlcude:
- Violation of any federal banking law, regulation or order.
- Participation in any unsafe or unsound practice in connection with a bank or trust.
Empie pointed out that the change would bring Oklahoma up to date in terms of enforcement since "most of the new banking laws of the last eight years have been at the federal level."
The area of unsafe and unsound banking practices, although not yet specifically defined, would include abuses in the all important area of lending - such as ignoring a bank's lending policies, selling too many participation loans, speculative loans, abuse of insider lending and others.
At present, Empie is unable to take action against individuals for such abuses.
Lending abuses are the most common and most dangerous problems found at troubled institutions, Empie indicated. The new "unsafe and unsound" provision is intended to be the title which will take inthe whole catalog of improper lending activities.
One of the biggest motivations for expanding powers at the state level are structural changes in the works at the federal level, said Empie.
"I'm just trying to avoid having to fall back on federal regulators to regulate state chartered banks," said Empie. …