Two words in the TBAS statute blamed for stalling the issuance of a routing number
“Holding Company” are the only two words in the Territorial Bank of American Samoa statute that need to be amended, paving the way for the Federal Reserve to issue a transiting routing number for the government-owned bank, said Gov. Lolo Matalasi Moliga during a news conference last Friday.
He repeated the same statement at yesterday’s opening of the joint session of the Fono.
Local statute creating the commercial bank states in part that TBAS will be managed by and governed by the Territorial Bancorp Holding Company, which is overseen by a seven-member board composed of four ASG representatives and three members at large.
The governor mentioned in his letter to Fono leaders for the special session, and at last Wednesday’s cabinet meeting, that the Federal Reserve recommended an amendment to the TBAS statute, but he didn’t specify the actual amendment.
During last Friday’s news conference, Lolo was asked about specific details of the proposed amendment and he explained that the only proposed change are the words “holding company”, which are proposed to be removed, in accordance with a recommendation by the Federal Reserve, during a meeting earlier this month in Utah with vice chair Randy Quarles.
Based on information from the Federal Reserve, “holding company” is for privately owned financial institutions and federal banking laws are geared towards these private holding banks, said Lolo, adding that the only exemption is the charter bank in North Dakota, which is government owned and TBAS is mirrored after that bank.
When TBAS submitted its request for a routing number as a commercial bank, under a holding company, with assets owned by ASG, the Federal Reserve board “disagreed” with the setup of a “holding company” for TBAS, Lolo said.
Another issue faced by American Samoa is its political status. Lolo said that based on information from the Federal Reserve, “holding company” is specifically for banks in US states and territories that are “organized through congressional act, but we have an unorganized and unincorporated [political] status,” he said.
According to the governor, the Federal Reserve suggested removing the words “holding company” under local statute and set TBAS law as a government-owned bank, and the government secures the bank's assets, similar to the charter bank in North Dakota.
Lolo said Quarles informed him that upon receiving the amendment to the TBAS statute, the Federal Reserve would be prepared to decide on TBAS's request for a routing number. “So we feel very comfortable now,” he said.
Lolo gave a similar explanation in his address yesterday at the opening of the special session of the Fono that was called to address two agenda items: the amendment to the TBAS statute and confirmation of Sen. Paepae Iosefa Faiai as a High Court Associate Judge.
In his remarks, Lolo said it's been 14 months since the government has been working on obtaining a routing number but ASG was faced with some difficulties, because the federal administration was dealing with changes.
Additionally, it was only learned early this month during the meeting with Quarles, who only recently received US congressional confirmation to the Federal Reserve Board, what TBAS needs to do to obtain the routing number, said Lolo.
He told lawmakers that if the Fono approves the proposed amendment, TBAS is looking at getting a routing number before the end of this year or early next year.
Regarding Paepae’s nomination, Lolo said the Chief Justice recommended the Alataua senator for the job.
Under local law, the sitting governor is only required to address a joint session of the Fono in January each year. However, the governor can address a special session, if so requested by Fono leaders.
For this special session, House Speaker Savali Talavou Ale told the gathering yesterday that he and Senate President Gaoteote Tofau Palaie agreed to a joint opening so the governor can provide directly to lawmakers, details of issues for discussion and vote.