EDWARD SAUNDERS
Cites ‘outdated criteria’
The Joint Committee on Banks and Banking held a public hearing last Wednesday to hear testimony on six bills dealing with the licensees of the Massachusetts Division of Banks.
DOB Deputy Commissioner and General Counsel Joseph Leonard testified on behalf of the Division of Banks for all six bills, which pertain to a variety of topics from confidentiality and debt collection to criminal justice authority and DOB supervision of financing companies.
H. 10, An Act Relative to Confidentiality of Documents Within and Access to CORI Data, seeks to establish the confidentiality of examination reports and other information of DOB licensees, as well as provide additional confidential treatment for examinations of state-chartered banks and credit unions.
The act also recommends that the DOB be considered a criminal justice agency for the purposes of obtaining criminal offender record information, or CORI, reports and access to additional criminal records.
Members of the committee voiced concerns over the DOB acting as a criminal justice agent.
“Most criminal activity ends up in the courtroom; therefore, the public has access to the information,” said Rep. Joyce Spiliotis, D-Peabody. “I am not comfortable with a banking agency being a criminal justice agency with CORI status.”
Leonard reminded the committee, however, that the DOB currently has access to CORI data and there has been no documentation of misuse with CORI information in the division.
‘Fundamental Change’
H. 13, An Act Relative to Debt Collection and Loan Servicing Agents, rewrites the state’s debt collection agency laws and adds a provision that requires third-party loan servicers to register with the DOB.
Representatives from the Retail Association of Massachusetts stood in support of the bill, along with the DOB, saying state collection agency laws need to be revisited and designed to protect consumers from third-party solicitation activity.
After hearing testimony from the DOB on the bill, Rep. John F. Quinn, D-New Bedford, the committee cochairman, noted that the new telemarketers law recently enacted in Massachusetts does not have correlation with debt collection agencies.
The DOB also hopes to establish a list of powers and exemptions that address confidentiality with respect to licensees under the jurisdiction of the DOB in H. 14, An Act Establishing Uniform Enforcement Provisions and Making Other Changes Applicable to Certain Licensees.
According to Leonard, the DOB is seeking to “create a consistent list of exemptions for banks in Massachusetts while addressing confidentiality” among member banks and third-party agencies.
H. 14 also proposes to update the coverage of the statute governing loans of $6,000 or less for “small loans” by increasing the amount to $9,000 with an annual adjustment based on the Consumer Price Index.
Also under current law, renewal license dates occur on June 1, Oct. 1, and Nov. 1. The DOB believes that the annual renewal process could be improved by allowing the DOB to set annual renewal cycles and makes that recommendation as part of H. 14.
H. 15, An Act Relative to the Licensing and Supervision of Financing Companies, would combine the four statutes of provisions currently governing financing companies under one new chapter in the Massachusetts General Laws.
House Bill 2560, An Act Relative to the List of Legal Investments, generated the most support at the hearing.
The so-called Legal List, a list prepared annually by the division that lists the investment powers of various state-chartered financial institutions and investments for savings banks, has been “frozen in time since 1983 … and should be a vehicle for more extensive changes,” said Leonard.
The DOB proposes two changes to the process for preparing the Legal List: eliminate the petitioning process currently enjoyed by credit unions and allow Thomas J. Curry, the state’s commissioner of banks, to have more control over which investments make the Legal List.
Also testifying in support of H. 2560 was the Massachusetts Credit Union League, represented by Senior Vice President and Legal Counsel Edward Saunders.
MCUL, the state credit union trade association serving 248 federally chartered and state-chartered credit unions, said the current statute is cumbersome and needs revisions.
“This [proposal] attempts to address outdated criteria from 1983,” said Saunders. “The current process to add investments for inclusion on the Legal List is cumbersome and unrealistic, and excludes small credit unions from the process.”
The last bill to hear testimony, H. 3109, An Act Relative to the Transmission of Money, was not supported by the Division of Banks and seeks revisions from the non-bank transmittal group – a transfer agent group including Western Union and American Express Travel.
Both groups acknowledged the necessity to rewrite the law, which currently governs only the transmission of money to foreign countries. H. 3109 would make a fundamental change by expanding the Massachusetts General Laws statute’s coverage to oversee the transmission of funds in the United States.
“After still-too-recent tragic events in the United States and the increased focus to address all aspects of terrorism, the transmission of money to foreign countries has received significantly increased attention in the last 19 months,” said Leonard. “The Division of Banks believes H. 3109 should be reviewed in that light, particularly since it appears the vast majority of the petition was written in 1998.”
Leonard said that although the DOB would recommend changes to the existing law, “Fundamental change by expanding the statute’s coverage of the domestic transmission of money is not a recommendation of the division.”
Melanie Nayer may be reached at mnayer@thewarrengroup.com.
