BoH departure will aggravate decline in local economy
Congressman Faleomavaega Eni has requested the federal banking regulatory district with jurisdiction over American Samoa, conduct hearings with Bank of Hawai’i in the territory as well as Hawai’i to look at alternative banking service for local residents.
Faleomavaega made the request in a Mar. 1 letter to Kelly Walsh, the Consumer Compliance Examiner, with the U.S. Federal Reserve Bank of San Francisco.
The request came two weeks before BoH officially shuts down its two local branches on Mar. 15.
The closure of local operations was first announced by the bank in a media statement on Nov. 30, followed by notices sent to its customers.
In his letter, Faleomavaega pointed out that federal regulations clearly state that “an institution must include a consumer notice of at least ninety days in advance of the proposed closing in at least one of the regular account statements mailed to customers, or in a separate mailing.”
However, Faleomavaega says that he has received information from some concerned residents and constituents who claim that they did not receive any written notice from BoH notifying customers of their decision to cease all operations in American Samoa effective Mar. 15, 2013.
“I respectfully request that the Federal Reserve conduct an immediate investigation of BoH’s non-compliance with the notification process, and that it should continue its operations in the territory until such time this matter is properly resolved,” he wrote.
Faleomavaega also pointed out that BoH has operated in American Samoa since 1969 and is currently the only U.S bank operating in the territory.
“According to the Federal Deposit Insurance Corporation (FDIC), BoH maintains a large market share in American Samoa with over 51% deposits representing $97 million,” he said.
“There is currently no bank in American Samoa that can offer this level of service that BoH offers. The 90-day notice that BoH provided is not sufficient time to find an adequate replacement,” said Faleomavaega. “Unfortunately, BoH’s quick departure will result in a social and economic emergency for the American Samoa Government and local residents.”
For example, he said the only other deposit-accepting institution in the territory is ANZ Amerika Samoa Bank, which is chartered out of Australia, adding that this means transferring money from Hawai’i and the U.S. mainland could take up to three weeks for consumers using ANZ Amerika Samoa Bank.
“With many Samoans living in Hawai’i and the mainland, they regularly send remittances and share accounts with their families in American Samoa,” he said. “The remittances serve as a substantial part of the American Samoa economy where the per capita income is under $8,000.”
“Delaying these remittances for 21 days will dramatically decrease the economic activity in American Samoa,” he said. “Furthermore, the incurred costs of not having access to cheaper banking services, or having only one bank in the territory will include, but not be limited to: ATM surcharge fees, bank transfers, fluid loan interest rates, etc.”
Since the devastating earthquake and tsunami in 2009 and the relocation of one of two tuna canneries, “BoH’s departure will exacerbate the decline in American Samoa’s economy,” he said.
Further, the investment climate will be uncertain given the limited access of capital as well as a decline in investor confidence in a U.S. territory that will only have a foreign chartered bank.
“Again, for these reasons, I request that the Federal Reserve of San Francisco, pursuant to Federal Reserve policy, immediately hold hearings with Bank of Hawai’i and community members in both American Samoa and Hawai’i in order to explore the feasibility of obtaining adequate alternative facilities and services in American Samoa,” he concluded.
The Congressman’s letter followed a request by the Lolo Administration sent last Monday to the Federal Reserve recommending that BoH continue their operations in the territory for an additional 12 months.
The Federal Reserve was also asked to explore “the feasibility of obtaining adequate alternate facilities and services for the territory, including the establishment of a new branch by another depository institution, the chartering of a new depository institution, or the establishment of a community development credit union.”
See separate story in today’s edition on what the governor had to say about his meeting with BoH in Honolulu.
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