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Don’t be pushed into Charter Bank decision, Galea'i says

Senators concur that American Samoa will be in need of another bank when Bank of Hawaii departs — but at the same time, a handful of senators suggested amendments to an administration bill which sets up a government-owned Charter Bank to serve local banking needs.

 

The comments and recommendations were made yesterday during a Senate Budget and Appropriations Committee debate, called by committee chairman Sen. Laolagi F.S. Vaeao to get input from all senators on the administration’s proposed Charter Bank — to be called the Territorial Bank of American Samoa — and overseen by a new holding entity, Territorial Bancorp.

 

In order to address any lingering concerns, the American Samoa Economic Development Authority board returns this morning for a third committee hearing. The goal for the Senate is to act on this measure before the Fono goes into its mid session recess this Friday.

 

Both the Senate and House versions of the bill have been debated by senators, with Sen. Galeai M. Tu’ufuli saying that this legislation is a major issue for the government, and that as far as he is concerned — as an individual residing in the territory — the government should not get involved in the private sector — setting up its own business, such as the banking business.

 

He says the government is seldom successful in ventures in which it holds and controls the interest and operations. For example, the Development Bank of American Samoa’s history shows that there are many times people’s loans were written off because they were unable to pay those loans. He gave another example of an unsuccessful venture — the Rainmaker Hotel, and he wonders what happened to the shares of those people who invested in it.

 

Under the current bill, the “governor is the bank of the territory”, said Galeai and acknowledged that current banks are not able to address local financial needs, which was the reason for proposing a locally owned bank.

 

Galeai commended the governor for coming up with a solution to address local banking needs, but recommended that if the Fono is going to support this proposal, all efforts should be in place to ensure the protection of consumers.

 

Because the “governor is the bank” any good or bad coming out out this venture falls squarely on the governor’s shoulders, he said, and questioned the need to give the board compensation, when its members include two directors and the lieutenant governor — all of whom receive high salaries in their ASG jobs.

 

While supportive of the bill, Galeai asked senators not to rush into a decision on the bill until all aspects of the legislation have been fully reviewed. Additionally, he urged the senators not to be pushed into making a decision, similar to what happened in the House, with their version of the bill being rushed through.

 

“This is a major and important piece of legislation that should require thorough review. Don't rush a decision because of what the administration wants,” Galeai said and Senate President Gaoteote Tofau agreed.

 

However, Gaoteote said, the most critical issue is that American Samoa needs another bank, but it’s important that the Senate has a full understanding of the bill before approving the Charter Bank legislation.

 

He pointed out that the committee has already held two hearings on the measure and the House did the same before approving their version of the bill which they sent to the Senate. He also agreed with the House amendment that the bank's chief executive officer should be an ex officio board member, with no vote in the decision making of the board.

 

Gaoteote suggested further amendments dealing with the bank board, for all seven members to be appointed by the governor and confirmed by the Legislature. He said specific names in the bill to be board members — such as Commerce Department director, ASG Treasurer and Lieutenant Governor — should be deleted, along with the CEO.

 

He said in his proposed amendment, all qualified members of the community would be allowed to serve on the board. Gaoteote said it's been two years since American Samoa has been waiting for another bank to fill the void that will be left when BoH departs the territory. He stressed again that American Samoa needs a second bank.

 

Sen. Magalei Logovi’i gave his recommendation, in which the Retirement Fund account shouldn’t be banked with the Charter Bank because it’s in conflict with the Retirement Fund law.

 

There were many senators who supported the need to have a second bank but at the same time, want to make sure that the bank will be successful going forward.

 

It was also suggested that the committee work with representatives from the administration to review any proposed amendments so that any changes made to the bill are agreed upon by both sides.