Department of Banking
JOHN P. BURKE, Commissioner
Established - 1837
Statutory authority – CGS Titles 36a and 36b, and Related Laws
Central office - 260 Constitution Plaza,
Average number of full-time employees - 118
Recurring operating expenses - $15,884,741
The mission of the Department of Banking is to protect users of financial services from unlawful or improper practices by requiring that regulated entities and individuals adhere to the law, assuring the safety and soundness of state chartered banks and credit unions, educating and communicating with the public and other stakeholders, and promoting cost-efficient and effective regulation.
The Department of Banking is responsible for the regulation and examination of financial institutions and various related entities chartered, licensed or registered by the state. The Banking Commissioner is charged with administering the banking and credit union laws of the state as well as the laws regarding securities, tender offers and business opportunities. The Banking Commissioner also administers the Truth-in-Lending Act and other consumer credit laws and a major portion of the law concerning rental security deposits.
Specific regulatory functions are assigned to divisions within the department.
Consumer Credit Division is responsible for regulating the activities of first
and secondary mortgage lenders, brokers, and originators; small loan companies;
sales finance companies; debt adjusters; consumer collection agencies; money
transmitters; issuers of money orders or travelers
checks; and check cashing services. The
Division is responsible for the licensing and examination of these entities and
the enforcement of related
Institutions Division is responsible for the supervision of state-chartered
bank and trust companies, savings banks, savings and loan associations and
credit unions. The division also licenses foreign banking organizations that
establish and maintain representative offices, agency offices or branch offices
The Securities and Business Investments Division is responsible for the registration of securities and business opportunity offerings for sale in Connecticut; the registration of broker-dealers and investment advisers, along with their agents and branch offices; the examination of broker-dealer, investment adviser and branch office registrants; and enforcement of the state's securities, business opportunity and tender offer laws.
The department's customers include the general public, representatives of the public, regulated entities and consultants. The public at large, including depositors, borrowers, investors, landlords and tenants, and others who use the services of regulated financial entities, benefits broadly from agency activities. Agency services protect public funds in depository institutions, offer important investor and consumer protections, assist in dispute resolution and provide helpful public information.
Representatives of the public including the Governor and the General Assembly, other elected and appointed officials and federal, state and municipal agencies receive information, advice, proposed legislation, case referrals and other important services from the department.
Financial entities are subject to regulatory oversight. Consultants, including law firms, accounting firms, consumer advocacy groups, trade associations and others, receive information, advice, policies and guidelines from the department.
of Banking is strongly committed to maintaining a standard of excellence in
meeting its regulatory responsibility, while being responsive to Governor
Rell’s desire to promote a business friendly climate in
In order to provide the public with convenient 24-hour, 7-day access to information on department programs, licensing activity and educational resources, the department maintains a website on the Internet at www.ct.gov/dob. During 2005-2006 over 663,000 visitors viewed approximately 2.67 million pages on the agency website.
fundamental part of its mission, the department is committed to protecting
Consumers are encouraged to contact the department whenever they need assistance in dealing with financial institutions. Agency employees will promptly assist consumers with issues involving banks, credit unions, mortgage lending and other consumer credit matters, rental security deposits, and matters relating to securities and business opportunity investments.
During the 2005-2006 fiscal year, examiners in the department’s Government Relations and Consumer Affairs Division handled 15,511 telephone inquiries and 2,613 written complaints from the public. As a result of their efforts, the department obtained $640,289 in adjustments and reimbursements on behalf of consumers during the period.
The public received restitution of approximately $130,000 relating to penalties imposed upon licensees by the Consumer Credit Division as part of the examination process. The Consumer Credit Division continued its focus on enforcement activities. During the period, the Division was involved in approximately 50 enforcement actions resulting in the denial and revocation of licenses and civil penalties of $18,000.
Intervention by the Securities and Business Investments Division during the fiscal year resulted in restitution and rescission offers to the investing public totaling $345,406. The division also imposed $3,642,943 in fines for violations of the state's securities and business opportunity laws.
During the fiscal year, the department, through the Securities Division, settled two major cases involving brokerage industry practices that created or maintained inappropriate influence by firm investment banking department personnel over firm research analysts. Both matters were part of similar investigations conducted by a multi-state task force and by the Securities and Exchange Commission. In December 2005, the department levied a $301,763 fine against Deutsche Bank Securities, Inc. In April 2006, California-based Thomas Weisel Partners LLC was fined $52,480 following conflicts of interest claims involving research analysts.
the agency's security deposit investigator received approximately 3,100
telephone inquiries; resolved 265 landlord tenant disputes in the fiscal year;
and recovered $75,950 for
the end of the fiscal year, there were three state-chartered banks in various
stages of organization: Higher One Bank (
In July 2005 and in June 2006, the Financial Institutions Division held a meeting with representatives of the Certified Public Accountant community to discuss industry and accounting issues facing the banks and credit unions regulated by the department. The meetings provide an opportunity for exchange of issues and ideas with the Banking Commissioner, division staff, regulators and industry representatives.
June 2006, the Banking Commissioner and members of the Financial Institution
Division met with members of the International Advisory Committee. The members of the committee include
representatives from each of the
The Financial Institutions Division continued
to produce its quarterly “DeNovo Report” for the benefit of bank executives and
boards of directors; industry representatives; and consultants. The report offers a comparative view of the
financial performance of new banks in
During the fiscal year period, the Financial Institutions Division
conducted surveys of
2005, the department, through the Financial Institutions Division, produced a
Real Estate Loan Products Survey for
April 2006, a follow up survey to the original Real Estate Loan Products Survey
Each year the department, with the coordination of the Government Relations and Consumer Affairs Division, conducts an active legislative program. During the 2006 legislative session, five department proposals concerning banks, consumer credit and securities were enacted into law.
Public Act 06-211 modifies the Commissioner’s authority with respect to fees, procedures and deadlines for bank and credit union applications. The act also extends the time frame for review of certain credit union documents.
Public Act 06-35 changes the licensing period for money transmitters and check cashers from an annual period of July 1 through June 30 to a bi-annual period of October 1 through September 30, beginning October 1, 2007, and prohibits them from using any name other than the one on their license. The act increases the commissioner's authority to impose penalties on check cashers and clarifies certain other licensing issues.
Public Act 06-45 was enacted to protect borrows from excessive charges and fees if a loan is not completed. It defines license fee schedules, and clarifies certain mortgage broker business, application and legal procedures.
Public Act 06-75 clarifies that the banking commissioner has the authority to take administrative or court action against persons who have already violated the Connecticut Business Opportunity Investment Act. It increases, from $10,000 to $100,000, the maximum fine for violations of the act and makes the act's annual $100 registration renewal fee non-refundable.
A fifth bill made technical changes to statutes.
As a benefit to industry and the public, the Legal Division prepared compilations of the statutes and regulations within the department’s jurisdiction and certain other related laws. The compilations are continually revised to reflect new legislation or changes in regulations and are available for free download on the agency website.
The division also posted on the Web copies of administrative actions taken by the agency against various entities, as well as indices to advisory opinions issued by the Commissioner concerning bank, credit union, consumer credit, landlord/tenant and business opportunity matters.
Effective October 31, 2005, electronic filing of broker-dealer and investment adviser branch office registrations through the Central Registration Depository became a reality. The Central Registration Depository is a national database administered by the NASD which allows registrants to make multiple filings electronically and promotes regulatory uniformity.
As a means to keep industry apprised of new regulatory developments, the division published its quarterly Securities Bulletin. Taking advantage of technological advances, the agency made the switch from paper distribution to electronic delivery in 2006. Listserv distribution lists and website e-alerts provided a way for industry members to receive information more quickly, and provided a significant cost saving to the agency as well.
During the year, the agency also extended relief to customers and securities industry personnel displaced as a result of Hurricanes Katrina and Rita. In addition, in an effort to reduce the amount of duplicative regulation, effective November 3, 2005, Connecticut-registered investment advisers were no longer required to file copies of their advertising material with the Securities and Business Investments Division. Such materials, however, would have to be retained and produced to Division examiners during the course of an examination.
The department emphasizes educational efforts to help the public understand financial services offered in the marketplace and recognize fraudulent investment offers. A weekly News Bulletin provides information on applications before the agency and intended changes in regulations, and other publications are produced as needed.
The Government Relations and Consumer Affairs Division increased its focus on educating the public through outreach. During the fiscal year, department staff gave informative talks and presentations on topics including credit repair, fraud, banking scams and identity theft. In cooperation with the Governor’s Office, the department was part of the Identity Theft Information Team which conducted a series of identity theft prevention seminars for veterans throughout the state.
The department took an active role in the area of financial literacy as one of the founders of the Connecticut Jump$tart Coalition for Personal Financial Literacy. The coalition was created in response to growing evidence that an increasing number of young people are not being prepared to save, invest or spend money responsibly. The organization will work to improve awareness of the issue, increase the level of resources available to address it and ensure there are more financial literacy programs for youth in the state.
The Department of Banking is committed to providing equal employment opportunity on the basis of merit; to assuring nondiscrimination; and to implementing affirmative action and contract compliance programs, as required by law. The department's affirmative action plan, filed with the Commission on Human Rights and Opportunities, reflects the agency's commitment to achieving workforce balance and fairness in all terms and conditions of employment.
Adhering to a fiscally conservative approach, the department under spent its budget during the fiscal year by about $534,000 or three percent. Significant savings were achieved in non-personnel expenses and equipment expenditures.
The Government Relations and Consumer Affairs Division, in cooperation with other divisions, successfully coordinated the migration of the department’s website to the CT.gov portal. In September 2005 the department launched its new website with re-organized pages and new content for improved customer service, which includes a new online Consumer Assistance form.
The Consumer Credit Division’s licensing unit continued to work closely with the Department of Information Technology in developing a new browser-based licensing database system. When finished, the new system will allow applicants to complete renewal applications and make license status checks via the Internet, greatly reducing paper flow and improving turnaround times.
The division developed a comprehensive
examination procedure for its money transmitter and check casher licensees
resulting in increased communication, oversight and regulatory awareness, all
of which provided greater protection to
The division’s examination unit continued to work closely with the Financial Institutions Division by providing Truth-in-Lending Act compliance training to its examiners for use in the regulation of state chartered institutions.
The Financial Institutions Division remains committed to reducing the regulatory burden on state-chartered institutions and streamlining its application process wherever possible. The department continues to accept the “interagency application” for creation of new banks and the “interstate branching application” for banks branching in state or across state borders. Should the bank choose the option of filing electronically, the department has the ability to accept the FDIC electronic branch filing.
In consideration of a long-standing record of compliance with both state and federal community reinvestment act requirements, as evidenced by ratings assigned at on-site performance evaluations, the department has discontinued its use of state-only community reinvestment act (CRA) lending data forms to reduce the regulatory burden on institutions. The department continues to receive and review federal CRA examination reports and is provided with an annual update to banks’ CRA profiles to monitor compliance.
department’s website was expanded to include information related to CRA
examinations of those state-chartered credit unions subject to CRA.
Every bank and credit union examined by the division is provided a post-examination survey that may be privately returned to the Commissioner. Institutions are given the opportunity via the survey to comment on staff performance, examination efficiency and examination time demands in an effort to improve future examinations.
The Business Office continues to successfully utilize the state’s new automated financial management system, Core-CT. Indicative of this, the Business Office made use of the new asset module to track and report financial information pertaining to equipment acquisitions, transfers and retirements. The new module has also served to enhance the department’s ability to report meaningful statistical information to other agencies within state government.
The department reconvened the Health and Safety Committee. Human Resources, in consultation with this Committee, arranged for flu shots for employees and training in Preventing Violence in the Workplace, Driver Safety, and First Aid/CPR. Human Resources met with managers and employees throughout the year to review and update performance measures scorecards, adding to the program and issuing updated scorecards for the 2005-2006 rating period. Two members of the Human Resources staff successfully completed the Human Resources Management Certificate Program offered by the Department of Administrative Services.
The Securities and Business Investments Division is assisted by a Securities Advisory Council, comprised of industry representatives, academics and members of the bar, all of whom serve without compensation, that offers the Commissioner and staff insight on new regulatory initiatives.
In October 2005, the department held its 17th annual Securities Forum. Approximately 300 attendees from industry and the private bar attended the event which featured nine panel presentations and a general session on federal preemption issues affecting the securities, insurance and consumer credit industries. Speakers kept attendees apprised of critical regulatory and compliance developments. Walter G. Ricciardi, District Administrator of the Securities and Exchange Commission’s Boston District Office, delivered the keynote address.
Ralph Lambiase, director of the Securities and Business Investments Division, continued his dedicated involvement with the North American Securities Administrators Association in promoting investor rights and advancing state securities regulation.
2005 and 2006, the division continued to participate in quarterly meetings
conducted by the Connecticut Corporate Fraud Working Group, a body comprised of
the U.S. Attorney’s Office, other federal law enforcement agencies, the
In April 2006, Herline Hill, Administrative Assistant in the Financial Institutions Division, and Michelle Provost, Associate Accountant in the Business Office, were recipients of the Governor’s Service Award, a program established to recognize those individuals who routinely provide excellence in customer service in the performance of their jobs.