Legislature(1993 - 1994)
03/23/1993 09:33 AM Senate FIN
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
SENATE BILL NO. 149:
An Act revising the laws governing financial
institutions and relating to trust companies, the
Alaska Small Loans Act, and the Premium Financing Act;
amending Alaska Rule of Criminal Procedure 17 and
Alaska Rule of Civil Procedure 45(b); and providing for
an effective date.
Co-chair Pearce announced that SB 149 was before the
committee. SENATOR TIM KELLY spoke in support of SB 149.
He said that he knew of no opposition to the proposed
legislation by the banking industry in Alaska. He stated
that he would offer an amendment suggested by the Credit
Union League.
WILLIS KIRKPATRICK, Director, Division of Banking,
Securities and Corporations, Department of Commerce and
Economic Development, asked Jeff Bush, Attorney at Law, on
contract with the Department of Commerce and Economic
Development, to join him in testifying in support of SB 149.
Senator Kelly stated that these new statutes apply only to
the five state-chartered banks in Alaska, one section
effects pawn shops, and a few provisions apply to state-
chartered credit unions. It does not concern the national
chartered banks. Mr. Kirkpatrick said that Key Bank, North
Rim, Denali State Bank in Fairbanks, First Bank in
Ketchikan, and Mt. McKinley Mutual in Fairbanks, are the
five banks that apply.
Mr. Kirkpatrick said that the marketplace changes and the
advent of the banking problems of the mid-80's pointed out
some incompatibilities and obsolete laws that are in
Alaska's statutes created in the 1930s. The state of Oregon
has recodified its laws at least twice since then, and its
revised regulations were used as a model for this bill. He
said this bill would correct the obsolescence in the
marketplace and regulatory enforcement action, and allow
banks to be more attune to the community needs of Alaska.
End SFC-93 #42, Side 1
Begin SFC-93 #42, Side 2
Co-chair Pearce asked if Mr. Kirkpatrick had spoken to Mr.
Walsh regarding future international insurance issues that
were tied to the banking community, that SB 149 would
coincide with international market opportunities as set
forth by Mr. Walsh in a bill passed last session. Mr.
Kirkpatrick answered that he had worked closely with Mr.
Walsh through the staff of the Commissioner's office in the
Department of Commerce & Economic Development.
In answer to Senator Jacko, Mr. Kirkpatrick said that a
state-chartered financial institution is one that applies to
the state and agrees to conform to state laws through its
corporation and licensing and to the laws of the state of
Alaska. A charter through the federal government is also
available through the Department of the Treasury. There are
more state chartered banks than national chartered banks in
Alaska, but more assets are held by national banks than by
state banks.
Discussion was had by Senator Sharp and Mr. Kirkpatrick
regarding federal reserve requirements for banks and the
banks need for liquidity. Mr. Kirkpatrick agreed that this
bill would allow the state division of banking to make
different liquidity rules than the national chartered bank,
and give the state banks an advantage.
JEFF BUSH, Attorney at Law, on contract with the Department
of Commerce and Economic Development, said that the proposed
regulations set a figure of 15 percent of total deposits as
a required reserve. The current statute is 20 percent of
demand deposits and 8 percent of timed savings deposits,
which is no longer enforced. The current statute is no
longer in force. Also, current regulations require vault
cash for reserve and do not recognize current needs in the
marketplace. The proposed regulation expands what can be
used for calculating reserves to include liquid assets such
as government bonds and deposits on deposit with federal
reserve in other banks. He said that the proposed
regulations will not negatively impact or increase reserve
requirements for in state banks.
In answer to Senator Kerttula's comments regarding real
estate, Mr. Bush said that the proposed legislation would
liberalize lending and remove specific statutory
restrictions that exist on real estate lending and would
allow bank management more freedom in the decision making
process.
In answer to Senator Rieger question about the reserve
requirement for national chartered banks, Mr. Bush said the
requirement was calculated based on a list of different
types of deposits and those numbers would shift as a method
to control the money supply. Mr. Kirkpatrick said at one
time a bank did not have to be a member of the federal
reserve, and now, whether you are a member or not, a bank is
required to follow federal reserve requirements. Mr. Bush
said that this bill is designed to be independent of the
federal requirements, because the numbers change so rapidly.
He explained that if requirements are inconsistent, the bank
would have to meet both. For example, if the federal
reserve requirement is higher than the state's, the bank
would have to meet the higher federal requirement.
In answer to Co-chair Pearce, Mr. Kirkpatrick answered that
CSSB 149(FIN) would not change audit functions in any way.
Co-chair Pearce voiced her frustrations in the 1980s when
some banks closed, some merged, and some sold their real
estate packages to institutions outside Alaska. In answer
to Co-chair Pearce, Mr. Kirkpatrick said there was no
provision in the bill that would provide for a local agent
in case a real estate loan package was sold out of state.
Mr. Bush explained that this was a consumer issue and
addressing it in this bill would have been difficult.
CO-CHAIR STEVE FRANK asked if HFC had a regulation that
required an in-state service office. Mr. Kirkpatrick said
that type of regulation had been considered but did not know
if it was in effect. Senator Kerttula voiced his support
for this type of legislation.
Co-chair Pearce invited Clark Gruening, Attorney at Law,
Alaska Credit Union League, to join the committee at the
table and speak to the amendments regarding credit unions.
CLARK GRUENING stated that the Credit Union League was an
association of all eighteen credit unions in Alaska (sixteen
federal and two state charters). The amendments would bring
the state credit union act on par with the federal credit
union act. Most are small technical changes but one
significant change allows the board of directors of the
state chartered credit unions to appoint a credit committee.
In practice, the loan committee is already chosen by the
board but the statutory requirements maintain another credit
committee. He said there was no opposition to these
amendments by the department or the credit unions. Mr.
Kirkpatrick said he also supported the amendments.
Senator Kelly MOVED for adoption of amendment 1. No
objections being raised, amendment 1 was ADOPTED.
Senator Kelly MOVED for passage of CSSB 149(FIN) as amended
from committee with individual recommendations. No
objections being raised, it was REPORTED OUT of committee
with a "do pass" and with a zero fiscal note for the
Department of Commerce & Economic Development. Co-chairs
Frank and Pearce, Senators Jacko, Kerttula and Kelly signed
"do pass." Senators Rieger and Sharp signed "no
recommendation."
ADJOURNMENT
The meeting was adjourned at approximately 10:45 a.m.
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