Togiola says new credit union to fill BoH void would be great for territory
Gov. Togiola Tulafono has asked a company — whose identity has not been revealed — to look into the possibility of establishing a credit union in the territory as another option to fill the void in local banking services when Bank of Hawai’i shuts down local operations in March of next year.
Togiola did acknowledge that there will be criticism to such an idea after the failure several years ago of the American Samoa Government Employees Federal Credit Union (ASGEFCU), which was overseen by a board of directors, a board which the governor stated did not do their duty in protecting the institution.
In July 1994, the federal government’s National Credit Union Administration liquidated the local credit union after a $5 million bailout effort failed, while federal officials conducted an investigation into possible embezzlement and self-dealing by the management of the $9 million-asset ASGEFCU.
A few years ago, at least three individuals — including the former general manager — were charged in the failure of the credit union, with one serving time in federal prison.
The idea of another credit union was revealed by the governor on his weekend radio program, when he again spoke on the closure of BoH, saying that since the bank’s announcement more than two weeks ago, this is perhaps the biggest economic concern in the community and he sought out a meeting with a company that has dealings with American Samoa and is familiar with the banking industry.
More than a week ago, said the governor, he met with officials of this company who were asked to come up with plans and recommendations on how best to address the void that will be left behind in local banking services when BoH leaves.
Togiola, who continues to decline revealing any details about the company and who is involved, is hoping that the company will provide their report to the government soon for review and consideration.
The governor said there is an important need to find another replacement for BoH, which wrote to him last Thursday outlining the reasons for closing down and that the bank had no other choice.
What the government is looking for is a financial institution that is controlled locally by residents, said Togiola, who added that this is the only way to ensure that such operations remain here instead of being controlled by an off-island firm that would leave when their profit margin does not meet their expectation or business is on a downturn.
Togiola said he suggested that the company look at establishing a credit union, which is a type of financial institution that could be owned by local residents, through their participation.
It is something that is very important to him, he said, and wold make him very happy, because it would be considered local economic development.
He went on to point out that Amerika Samoa Bank was launched many years ago and was owned and operated by locals, but those who owned majority shares in the bank thought it was best to sell their shares in exchange for a lot of money, bringing in a new off-island company to take over the local bank.
ASB was bought out more than ten years ago by the Australia and New Zealand Banking Group (ANZ).
The governor said ASB was established by locals after other U.S. banks left the local market leaving only BoH, with high costs of banking service fees faced by residents.
According to the governor, the proposed credit union that he wants a full assessment on, would be for everyone in the territory, who wants to be a member, not just for the government. He believes that if the board is strong, the credit union will be well protected.
Togiola says there may be others searching off island to attract other banks and he will not stop such a move — as the door is always open for another bank that wants to enter the local market, and should be accepted by the territory.
However, he said the public should still accept something that is owned and operated by local residents, who should ensure that a credit union is fully protected for future generations of the territory.