Department of Banking
At a Glance
JOHN P. BURKE, Commissioner
Alan J. Cicchetti, Deputy 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
Organizational structure – Administration, Consumer Credit, Financial Institutions, Securities and Business Investments.
Mission
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.
Statutory Responsibility
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.
The
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
The Financial
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
in
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.
Public Service
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.
As a
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.
In addition,
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
As of
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.
In
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
In November
2005, the department, through the Financial Institutions Division, produced a
Real Estate Loan Products Survey for
In
April 2006, a follow up survey to the original Real Estate Loan Products Survey
for
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.
Improvements/Achievements 2005-06
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.
The
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.
During
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.