Legislature(1993 - 1994)
02/23/1993 01:35 PM Senate L&C
| Audio | Topic |
|---|
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
SENATE LABOR AND COMMERCE COMMITTEE
February 23, 1993
1:35 p.m.
MEMBERS PRESENT
Senator Tim Kelly, Chairman
Senator Steve Rieger, Vice-Chairman
Senator Drue Pearce
Senator Georgianna Lincoln
Senator Judy Salo
MEMBERS ABSENT
NONE
COMMITTEE CALENDAR
SENATE BILL NO. 97
"An Act relating to enhanced 911 emergency reporting
systems; and providing for an effective date."
SENATE BILL NO. 99
"An Act relating to the improvement of state finances
through reduction of operating costs of certain state
agencies and establishment of certain fees; and providing
for an effective date."
BANKING CODE REVISION
PREVIOUS SENATE COMMITTEE ACTION
SB 97 - See Labor & Commerce minutes dated 2/16/93.
SB 99 - See Labor & Commerce minutes dated 2/16/93.
WITNESS REGISTER
Tom Boedeker, Attorney
Kenai Peninsula Borough
144 North Binkley
Soldotna, Alaska 99669
POSITION STATEMENT: Supports SB 97.
Larry Crawford, Manager
Municipality of Anchorage
P.O. Box 196650
Anchorage, Alaska 99519-6650
POSITION STATEMENT: Supports SB 97.
John George represented
Alaska State Fire Fighters Assn. &
Alaska State Fire Chiefs Assn.
P.O. Box 171
Cordova, Alaska 99574
POSITION STATEMENT: Supported SB 97.
Gordon Parker, Director
Carrier Relations
Anchorage Telephone Utility
600 Telephone Avenue
Anchorage, Alaska 99503
POSITION STATEMENT: Supported SB 97.
Larry Fanning, Fire Chief
City & Borough of Juneau
155 South Seward Street
Juneau, Alaska 99801
POSITION STATEMENT: Supports SB 97.
Jack W. Wray, Executive Director
Alaska Police Standards Council
Department of Public Safety
P.O. Box 111200
Juneau, Alaska 99811-1200
POSITION STATEMENT: Gave information on SB 99.
Juanita Hensley, Chief
Driver Services
Division of Motor Vehicles
Department of Public Safety
P.O. Box 20020
Juneau, Alaska 99802-0020
POSITION STATEMENT: Supports SB 99.
Don Hitchcock, Director
Division of Risk Management
Department of Administration
P.O. Box 110218
Juneau, Alaska 99811-0218
POSITION STATEMENT: Supports SB 99.
Sharon Barton, Director
Division of Administrative Services
P.O. Box 110208
Juneau, Alaska 99811-0208
POSITION STATEMENT: Supports SB 99.
Cheryl Frasca, Division Director
Division of Budget Review
Office of the Governor
P.O. 110020
Juneau, Alaska 99811-0020
POSITION STATEMENT: Supports SB 99.
Kit Ballentine, Acting Director
Division of Environmental Health
410 Willoughby Ave. #105
Juneau, Alaska 99801-1795
POSITION STATEMENT: Supported SB 99.
Jeff Bush, Attorney
175 S. Franklin St., #318
Juneau, Alaska 99801
POSITION STATEMENT: Employed by Division of Banking.
Willis Kirkpatrick, Director
Division of Banking, Securities, & Corporations
Dept. of Commerce & Economic Development
P.O. Box 110807
Juneau, Alaska 99811-0807
POSITION STATEMENT: Banking Code Revision.
Charles McKee
7800 Debarr Road E. #63
Anchorage, Alaska 99504
POSITION STATEMENT: Banking Code Revision.
Jim Crawford, CEO
City Commerce Corporation
560 E. 34th, #201
Anchorage, Alaska 99503
POSITION STATEMENT: Banking Code Revision.
Marc Langdon, CEO
NorthRim Bank
9620 Spring Hill Drive
Anchorage, Alaska 99508
POSITION STATEMENT: Banking Code Revision.
ACTION NARRATIVE
TAPE 93-13, SIDE A
Number 001
CHAIRMAN TIM KELLY called the Labor and Commerce Committee
meeting to order at 1:35 p.m.
SENATOR KELLY introduced SB 97 (ENHANCED 911 SYSTEMS) and
invited the sponsor, SENATOR DRUE PEARCE, to review her
bill. She clarified the committee was on teleconference to
Anchorage and Soldotna.
SENATOR PEARCE offered a committee substitute as a working
draft, and said the legislation would enable the emergency
dispatchers to better assist people who call 911 when they
are in a threatening situation. She explained victims,
often the elderly and the very young, have difficulty giving
clear directions after they dial 911, and if passed the
bill would create a mechanism to help fund and enhance the
911 recording systems.
SENATOR PEARCE said the bill was permissive, and the
benefits would be the immediate visual display of the
location of the caller to the dispatcher, automatic routing
to appropriate emergency response unit, for a faster
response time. Also, there would be a curtailment of the
abuses of the system, except in certain cases.
SENATOR PEARCE gave some history of the legislation and
explained that REPRESENTATIVE FRAN ULMER had been working on
a similar bill, which was of great interest locally. She
thought there might also be some interest state-wide.
SENATOR KELLY opened the teleconference to Soldotna and
introduced TOM BOEDEKER, Attorney for the Kenai Peninsula
Borough.
MR. BOEDEKER indicated support for CSSB 97 from the Kenai
Peninsula Borough for the enhanced 911 system, and he
discussed the cost factors. He was pleased the bill was put
under Title 29 rather than Title 42, as it would allow some
flexibility in dealing with the issue.
SENATOR KELLY invited LARRY CRAWFORD, Manager for the
Municipality of Anchorage, to testify.
Number 098
MR. CRAWFORD said the municipality supported the bill, but
was unclear as to the cost.
SENATOR RIEGER asked MR. CRAWFORD whether the boundaries of
the Anchorage Telephone Utility match up with the
Municipality of Anchorage. MR. CRAWFORD explained it nearly
did, and in talking to ATU, it was indicated they could
collect fees from the MatSu - Eagle River area, as well.
They discussed border lines and agreements.
JOHN GEORGE, representing the Alaska State Fire Fighters
Association and the Alaska State Fire Chiefs Association,
testified in favor of the legislation to enhance the 911
system. He praised the bill as being a funding mechanism to
support the system and make it work.
GORDON PARKER, Director of Carrier Relations for the
Anchorage Telephone Utility, indicated the utility's support
for the legislation, and he gave some history of previous
support from other telephone companies in the state.
Number 158
LARRY FANNING, the Fire Chief representing the City and
Borough of Juneau, in supporting the bill and offered a
recommendation to enhance the 911 system. He suggested they
send the communications by radio to the emergency response
units from the information received at the public safety
answering point. He explained how the extra communication
would work, and SENATOR KELLY asked if he had proposed
language. MR. FANNING directed the committee to page 7 of
the work draft, and conceptualized an amendment, which would
include essential communication equipment necessary for the
success of the emergency response.
SENATOR KELLY suggested some language on line 22, of page 7,
and the amendment passed. Without objections, so ordered.
Number 180
SENATOR RIEGER directed attention to page 5, lines 8 and 9,
and asked for clarification on the wording. He moved to
amend the language on those lines to include "all of" before
city and municipality. Without objections, so ordered.
SENATOR RIEGER moved to adopt the CS FOR SB. 97
incorporating the new amendments. Without objections, so
ordered.
SENATOR RIEGER moved to pass CS FOR SENATE BILL NO. 97(L&C)
from committee with individual recommendations and a zero
fiscal note. Without objections, so ordered.
SENATOR KELLY introduced the fee bill by request of the
Governor, SB 99 (FINANCIAL ADMINISTRATION OF STATE
GOVERNMENT), and he explained a committee substitute would
be written for Tuesday, 3/2/93. He also explained what has
been done on the bill and asked JACK WRAY, Executive
Director for the Alaska Police Standards Council, whether
the fee should be charged to both public and private
security officers, and MR. WRAY corrected his question to
include "police" officers.
JOSH FINK, aide to SENATOR KELLY, reviewed two questions
referring to an exemption for state and public officers from
the professional certification fees.
MR. WRAY explained the Alaska Police Standards Council was
agreeable to the proposed statute, but he said the
membership was opposed to the exemption of state employees
from the requirement. He quoted the members as considering
it to be a professional certification, and they felt it
would be unfair for municipal police to pay while airport
safety officers be exempt. SENATOR RIEGER clarified the
fees would be paid by the individual officers.
Number 265
SENATOR KELLY questioned the amount of the fee, and MR. WRAY
thought it should be $50 for an entry level certificate for
all new police officers. SENATOR KELLY agreed to put that
amount in statute.
SENATOR KELLY continued on to DON HITCHCOCK, Director of
Risk Management in the Department of Administration.
MR. HITCHCOCK referred to Section 62 on page 19, and gave
some background information on the need for claims recovery
legislation in relation to the state insurance catastrophe
reserve account. SENATOR RIEGER questioned the process, and
MR. HITCHCOCK explained the appropriation process and the
insurance fund. At present the fund contains $4.1 million.
SENATOR KELLY asked for a review of Sections 61 through 64.
JUANITA HENSLEY, Chief of Driver Services gave an
explanation from the audience that was inaudible.
SENATOR KELLY asked about Section 64, and MR. HITCHCOCK said
he was only interested in AS 37.05.289.
MR. HITCHCOCK explained, in answer to a question from
SENATOR RIEGER, the mix of federal and state money in the
catastrophe reserve account, and his interest in the state's
fair share.
Number 363
There was still some discussion about the account, and MR.
HITCHCOCK said the federal government wanted to be sure
Alaska is using the money for which it was originally given
by the Federal government.
SENATOR LINCOLN questioned where the money was previously
deposited, and MR. HITCHCOCK explained the state had bought
an insurance policy that guarantees that the state will not
pay out any more than the amount received from the federal
government. He discussed the use of an aggregate loss
policy to be reimbursed for claims in excess of the money
received from the federal government in a recovery process.
MR. HITCHCOCK explained the audit department of Health &
Human Services reported that if these claims paid were
originally paid out in support of insurance programs that
were supported by federal money, and, if we recover the
money, the federal government wants their percentage of the
recovery. SENATOR KELLY asked for his explanation in
writing.
SENATOR LINCOLN asked about the cap, and MR. HITCHCOCK said
there was a $5 million cap, and he cited AS 37.05.289(c) in
reference to the cap. Any money in excess of the cap
returns to general funds.
Number 428
MS. HENSLEY referred to two concerns from the last meeting,
the first being a question on exemptions from a $10 fee for
motor vehicle registration not conducted by mail. The
department would waive the fee if a person had to come into
the office for such reasons as to clear an non-sufficient
check, a stolen status on the vehicle, a name change or a
title change.
MS. HENSLEY referred to a question from SENATOR RIEGER and
gave some statistics from the Department of Transportation
on traffic on roads not connected to a state maintained land
system such as the Whittier traffic.
SENATOR KELLY asked if there was anyone from the Department
of Environmental Conservation, and KIT BALLENTINE, Acting
Director for the Division of Environmental Health, appeared
to testify on Sections 66 and 67. She answered a question
on those public facilities which are inspected: restaurants,
bars, markets, food processors, health care facilities,
residential care, schools, pre-schools, barber and beauty
shops, public showers, and two (unintelligible) facilities.
She said it would exclude the facilities within the
Municipality of Anchorage.
SENATOR KELLY clarified the legislation would expand the
inspection state-wide. MS. BALLENTINE explained they had
always been inspected, but fees had not been charged.
There was a discussion on the fiscal note by MS. BALLENTINE
and MR. FINK.
Number 470
SENATOR SALO gave an example of inspecting a restaurant at
Cooper Landing and asked what fee they would be charged.
MS. BALLENTINE explained they were presently permitted to
charge a fee on a sliding scale depending on the seating,
but the bill would extend to all of the public facilities
not previously covered. They continued to discuss the
expanded list, the inspection, and the collection of fees.
SENATOR SALO asked for information on the kinds of fees, and
asked for a list of examples.
SENATOR RIEGER expressed concern at the $6 million price tag
for the Clean Air Act, and asked for the number of permits
involved. MS. BALLENTINE talked in terms of indirect costs
related to the Federal Clean Air Act, and she explained the
present fee system. SENATOR RIEGER thought the fiscal note
should more properly be attached to a clean air bill
currently going through the legislature. (HB 39)
SENATOR KELLY had some questions on Section 67 and Sections
13, 14, and 15, but MS. HENSLEY didn't have all of the
information. (She gave some inaudible testimony from the
audience.)
SENATOR RIEGER led a discussion on the reimbursement of a
dollar to those people selling Fish & Game licenses, and he
outlined the cumbersome way presently used.
Number 537
SENATOR LINCOLN asked if the committee had reviewed Section
65, the fees in parks. SENATOR KELLY asked for her
questions, and she expressed a problem with the number of
"mays" in the section. She gave examples of those that
bothered her.
SENATOR KELLY said no one from the Division of Parks had
been advised to attend, and he asked MR. FINK to work on her
questions.
SENATOR KELLY asked for concurrence to drop the Department
of Environmental Conservation from the bill, and it was
agreed. #
SENATOR KELLY presented a work draft of proposed legislation
and regulations to revise the banking code. He introduced
WILLIS KIRKPATRICK, Director of the Division of Banking,
Securities, & Corporations, who would lead the committee
through the proposed bill. SENATOR KELLY stated for the
record he had no conflict of interest with the proposed work
draft. Since it was not officially a bill, only testimony
was presented, but no actions taken.
Number 572
MR. KIRKPATRICK explained he would give an introduction
leading up to the drafting of the proposed legislation, and
would ask JEFF BUSH to join him for an in-depth description
of the rough draft.
TAPE 93-13, SIDE B
Number 001
MR. KIRKPATRICK reviewed the problems with the present
banking code, and he gave some examples such as not
addressing the cash management account and non-banking
institutions like Sears, ATT, etc. He said the Division
of Banking decided it was time to look at various aspects of
the banking code and work out those areas that needed to be
addressed.
MR. KIRKPATRICK said no amount of legislation could
legislate good management, and they found the denial
syndrome from the boards when their bank started to
deteriorate. He described how they rated the banks on
capital assets, liabilities management, and liquidity, but
the banking code did not address the problems of the banks
that were deteriorating.
MR. KIRKPATRICK continued a lengthy description of multiple
bank failures, depositor losses, the 13 C open bank
assistance program, FDIC, sale of assumptions, all of which
needed to be addressed in the banking code. He praised the
vision and action COMMISSIONER GLENN OLDS brought to the
banking division, and COMMISSIONER OLDS wanted the division
to work on a process to allow international banks better
entry into the Anchorage area. MR. KIRKPATRICK described
the advantages of a strong international banking system.
For all these reasons, MR. KIRKPATRICK was asked to recodify
the banking code, and he described a 10 month period in
which they planned their action, including the hiring of MR.
BUSH, who was previous counsel to the Division of Banking.
He described the search for assistance, their choice of MR.
BUSH, and his assignment.
MR. KIRKPATRICK outlined their plan, saying they did not
want to re-regulate the financial institutions, and he
mentioned the repealer for the Savings and Loan Act. He
described the detailed plans for the savings and loans in
making loans, and he lamented the loss of three saving and
loans. He summarized the problems with the Savings and Loan
Act, and suggested solutions using the Mutual Savings Bank
Act. MR. KIRKPATRICK said he was using the Mt. McKinley
Mutual Savings Bank in Fairbanks as a model for legislation.
MR. KIRKPATRICK described using the input from the bank
examiners with their 10 years of experience through good
periods of banking as well as the down side of the economy.
He carefully outlined the procedure for collecting the
information from survivors of the recent banking failures.
At this point, MR. KIRKPATRICK introduced MR. BUSH, who
would give an outline on the proposed banking code.
SENATOR LINCOLN suggested she might have a conflict with the
committee, since she is a party to a lawsuit between FDIC
and United Bank Alaska. SENATOR KELLY said he was not aware
of any conflict.
Number 103
MR. BUSH reviewed the hand outs for the proposed
legislation, including a Sectional Analysis on the 2/19/93
work draft for details on each section. He noted two
changes in the draft on page 14, Section 87, removing
paragraph (3), and he explained why. The second change was
on 17, near the bottom, to replace AS 06.05.521 with AS
06.05.570.
Number 136
MR. BUSH referred the committee to the handout entitled
Outline of Presentation on Recodification of the Alaska
Banking Code, and began by listing the three major subject
headings: BANK POWERS, BANK REGULATION, and ENFORCEMENT.
On page 51, in Section 88, MR. BUSH described setting up a
new article on interstate and international banking, to
allow foreign and other US banks to enter the Alaska market
place. He then listed all of the prerequisites for
implementing these provisions dealing with interstate or
international banks, and discussed the distinction between
interstate and international banks. He explained how the
new banks could be established in Alaska.
SENATOR KELLY asked if that could be done now, and MR. BUSH
said they could. SENATOR SALO clarified it also meant
international banks, and MR. BUSH explained the rules for
establishing a foreign bank in Alaska.
Number 171
SENATOR KELLY asked MR. KIRKPATRICK if there was any
interest by other countries in the establishment of a bank
in Alaska, and MR. KIRKPATRICK noted a Korean bank was
interested earlier. He said they had discussed it with
other interests, but had not been approached for an
application.
MR. BUSH said the distinction was that an international bank
could establish a new branch in Alaska, but an interstate
bank could not, and must buy an existing bank or branch. He
outlined the regulations that would have to be followed by
an interstate bank, including reciprocity and FDIC
insurance, while an international bank would have to
maintain assets in this state at least equal to 100% of its
Alaska deposits. This would mean full protection for
depositors.
MR. BUSH explained that any banks, either foreign or
interstate, would be subject to examination, just the same
as an Alaskan bank. Additionally, the Division of Banking
would be authorized to examine the home office of the bank
any where in the world, for the protection of Alaska
depositors.
MR. BUSH said the second significant change in the proposed
recodification would allow the banks to have subsidiaries,
and he explained the code specifically authorized real
estate ownership, development and leasing, insurance, and
securities brokerage.
Number 222
SENATOR KELLY asked if this was allowed at this point, and
MR. KIRKPATRICK explained, at present, there was no
authority for the banks to have any other subsidiaries. MR.
BUSH explained the present limited conditions. SENATOR
KELLY asked why this was being allowed, and MR. KIRKPATRICK
discussed reasons such as a limited market, competition,
profit centers, management decisions, and trust
subsidiaries. He described in an area without services such
as a title company or insurance coverage, a bank could set
up those services, and he gave an example in Fairbanks as a
way to finance needed businesses. He also described the
federal prohibitions in relation to banks, and he gave an
example of this in Oregon.
SENATOR RIEGER confirmed securities brokerage was allowed,
and asked if it was a service for a fee.
Number 200
MR. KIRKPATRICK described two instances where securities
could be purchased in the State of Alaska through banks, and
in both instances the banks provided the facilities for the
sales - but didn't provide the salesman.
MR. BUSH said a third major area in the BANK POWERS section,
that has changed, is in the lending statutes, and he
explained the banking code has a unique clause called the
"wild card statute," which permits the division to adopt
regulations, even if they conflict with statutes, that are
necessary to allow state banks to be competitive with
national banks. MR. BUSH gave extensive background
information on this wild card clause in relation to the
lowering of federal lending standards.
MR. BUSH said the code would throw out all regulations
adopted under the wild card statute and adopt statutes that
are competitive with the federal statutes, so all banks
could follow state law. He took the federal lending limit
restrictions and put them into state statute.
Number 248
SENATOR KELLY asked if the wild card was still around. MR.
BUSH said if changes occurred in federal law requiring the
state to be competitive for state banks, the Division of
Banking would still have the authority. He gave an example
of cases in Alaska where there was unethical lending, and he
explained the legislation would adopt regulations to
determine when a loan to one person would be attributed to
another, for purposes of calculating the lending limits of
AS 06.05.205(b).
Number 384
SENATOR KELLY wanted to know for whom the rules were being
written, and MR. KIRKPATRICK answered by explaining they
were looking at the banks that were chartered under the
Alaska Banking Code. He used a loan to the Jordan Creek
Mall from the B.M. Behrends Bank and the Rainier Bank to
discuss the problem of over-runs in the cost of building the
mall. Money began to be borrowed by separate people still
involved with the building corporation, and MR. KIRKPATRICK
explained it was difficult, under the banking code of that
time, to withhold the loans, but there wasn't enough income
from the mall to pay back the loan. He explained the
problems evolve when the limits of the loan are exceeded.
MR. BUSH explained the recodification in the proposed
legislation applies to state banks, but doesn't apply to
trust companies or federally chartered banks, except for
some changes to the entire Title 6.
SENATOR KELLY reviewed a letter from a credit union in
Sitka, expressing some concerns. He then turned to the
Anchorage site on teleconference to hear JIM CRAWFORD, the
CEO of the City Commerce Corporation, which he entitles a
non-bank.
Number 460
MR. CRAWFORD reported he had reviewed the work draft, and
felt comforted by the remarks from MR. KIRKPATRICK and MR.
BUSH regarding the changes in the industry. He described
his non-bank and said there were passages in the
recodification he would like to see deleted. He spoke
specifically to page 23, Section 49, and, "(d) A person may
not own, operate, or acquire an institution that engages in
the business of making commercial loans, unless the
institution accepts demand deposits."
MR. CRAWFORD explained Alaska has always been a tough place
to get a loan, and he described a growing banking industry
with a non-bank component, which doesn't deal with
depositor's money. He thought depository institutions,
because of federal regulation, were too conservative and
restrictive in their lending, and he cited his service on
the Advisory Council for the SBA for his information from
bankers.
Number 530
MR. CRAWFORD described the pure lenders that match the
source of capital to a source of needed capital for a fee,
and he described an affiliate in Texas who is a non-bank
banker as well as an investment banker. In order to have a
vibrant lending community, he thought raising capital needed
less regulation for small businesses, in particular.
MR. CRAWFORD reviewed:
(The section NUMBERS given by the teleconference
participants were different from those on the rough draft
dated 2/19/93, Bannister. The new section numbers were
substituted for those given by MR. CRAWFORD and MR.
LANGDON.)
- Section 50 - He thought banking business is poorly
defined.
- Section 69 - He disagreed with the provision (5)
prohibiting a person from being on a board of directors, if
that person has filed for bankruptcy.
TAPE 93-14, SIDE A
Number 001
- Section 87 - He disagreed with the definition of
banking, which he said makes any lender a bank.
SENATOR KELLY returned to the Anchorage teleconference to
hear MARC LANGDON, CEO of the NorthRim Bank, and CHARLES
MCKEE.
Number 044
MR. LANGDON basically agreed with the legislation and MR.
KIRKPATRICK, but he thought there should be some changes:
- Section 7 (d) which should have a better definition
on the penalties of insolvency.
- Section 17, which affects a holiday closure, is
outdated.
- Section 15 (a) - He thought it gave too much
authority to an agency to manage a bank.
Number 109
- Section 32 (a) would not permit a customer to have an
overdraft. They happen daily, and the person shouldn't be
considered a felon.
- Section 38, involved a permitting process, which he
doesn't understand.
- Section 51 - He thought present bank examiners were
over-zealous in classifying assets.
Number 171
SENATOR KELLY broke into the testimony from MR. LANGDON to
ask him to fax his suggested changes to his office before
the next hearing on the proposed legislation. He invited
the teleconference participants to let him know if they
wanted to be heard at the next meeting.
There being no further business to come before the
committee, the meeting was adjourned.
| Document Name | Date/Time | Subjects |
|---|