OLYMPIA, Wash. (3/22/10)--Washington Gov. Chris Gregoire signed two bills designed to strengthen the regulation of the state-chartered credit unions and banks. "This legislation updates our existing laws and allows us to more effectively fulfill our mission as regulators," said Scott Jarvis, director of the Washington State Department of Financial Institutions (DFI). "In these times--more so than in just about any outside the Great Depression--effective financial regulatory oversight is crucial to maintaining sound financial services." Linda Jekel, director of DFI's Credit Union Division, noted that "While DFI has not had to close a credit union yet during the existing financial crisis, the credit union bill addresses some potential shortcomings in Washington's Credit Union Act." She said the bill "provides DFI with an improved regulatory toolbox in order to protect consumers' financial interests." For credit unions, EHB 2830 would:
* Add tools to permit stronger regulatory oversight and earlier enforcement of troubled credit unions; * Update and streamline early regulatory action for troubled credit unions by providing for early regulatory intervention when a credit union becomes undercapitalized; * Strengthen fiduciary duties of board members; * Give DFI authority to suspend credit union directors for harmful activities; * Authorize DFI to fine credit unions for material violations of credit union act or rules; and * Modernize DFI's conservatorship and receivership provisions for credit unions.
A similar bill, EHB 2831, addresses banks. It gives DFI enforcement powers over bank holding companies; improves the Division of Banks' authority when institutions are less than well-capitalized; brings DFI's enforcement authority in line with federal standards for prompt corrective action for institutions that are less than well-capitalized; and clarifies factors the division uses in closing an unsafe and unsound bank.