Aug, 3, 2004 – The Senate Finance Committee passed the Financial Services Act and its numerous attendant amendments on to the Rules Committee Tuesday and also approved two Public Works Department federal grant proposals.
Although the committee chair, Sen. Adlah "Foncie" Donastorg, was "not comfortable" with moving the voluminous Financial Services Act out of committee without reading the 78 amendments that were attached Tuesday morning, he was outnumbered four to one by his colleagues.
The Financial Services Act was drafted to keep pace with the modernization of the banking world and to align the territory with the Gramm Leach Bliley Banking Act, which was passed by Congress in 1999 and went into effect in 2001. The Bliley Act led the way in modernizing the banking system, breaking down barriers that had prevented banks from engaging in activities such as selling insurance, providing support for real-estate transactions, acting as stock brokers and engaging in other non-banking financial services.
Deverita Sturdivant, director of the Division of Banking and Insurance of the Lieutenant Governor's Office, said after the Finance Committee meeting that the Financial Services Act will do the same thing in the territory.
According to Cassan Pancham, president of the V.I. Bankers Association, the territory's banking laws had not been amended since 1968.
Sturdivant said that mortgage companies and other lending and financial entities have been setting up shop in the Virgin Islands and conducting business without regulation. She said the Financial Services Act will put an end to that.
The act in its draft form is 63 double sided pages. The 78 amendments take up 40 pages.
Sen. Lorraine L. Berry sponsored the bill, which was drafted with the help of the Banking and Insurance Division and the Bankers Association.
In simple terms, Pancham said, the measure "broadens the offerings" banks can make.
It allows local banks to issue and process charge cards.
It prohibits the imposition of conditions on V.I. banks that are not imposed on banks located in the 50 states.
It also repeals the usury law that limited consumers to borrowing at least $100,000 for real-estate or home-equity loans by dictating that all real-estate loans under $100,000 had to be at fixed rates.
Pancham explained that it has been beyond the banks' ability to deal with the complications involved in creating a new loan any time a consumer borrowing under $100,000 wanted to borrow more or draw down on a home-equity line of credit. "Throughout the entire term of the loan you cannot change it," he said referring to a mortgage under $100,000 obtained under the usury laws; nor can the borrower repay [such loans] or borrow against them without "resetting the interest rate."
The measure also unifies the regulation of automated teller machines, or ATMs, in the territory and of fees for their use. Pancham said there are two fee structures and oversight authorities for ATMs now. He said the bill would consolidate regulatory oversight in the Lieutenant Governor's Office and provides for 25 percent of ATM fees to go into the Tourism Advertising Revolving Fund.
Sturdivant said the Financial Services Act would "revolutionize the banking system in the V.I. and bring it into the 21st century."
Sen. Luther Renee called the bill "timely" in view of the number of financial management companies locating in the Virgin Islands.
Sturdivant also said the bill "helps us in terms of regulating" Economic Development Commission companies, many of which are financial management firms.
Sens. Louis Hill, Norman Jn Baptiste, Shawn-Michael Malone and Renee voted in favor of moving the bill out of Finance to Rules. Donastorg voted against it, but explained that did not mean he opposed the measure. "My 'no' vote reflects not enough time to peruse the amendments," he said. Berry, who was in attendance, is not a member of the committee.
Public Works Grant Applications Approved
The committee approved two federal grant applications from the Public Works Department, for $337,500 and $1.8 million.
Mirko M. Restovic, Public Works environmental engineer, told the committee that DPW had done more for less in Phase I of the operational and structural assessment of the territory's sewer systems. And, he said, he is confident that he can complete Phase II easily, despite the unexpected loss of $96,200 from a grant.
In Phase I, DPW was charged with inspecting and evaluating 1,100 manholes on St. Croix using a $450,000 grant from the U.S. Environmental Protection Agency. Public Works ended up evaluating 1,356 manholes at a cost of $420,000, coming in "below budget and above anticipated scope of work," according to Restovic.
The Phase II grant, to allow DPW to inspect the manholes on St. Thomas and St. John, was reduced from $433,700 to $337,500 after EPA advised "what was actually available," Restovic said.
The three-phase project involves inspecting the territory's sewer system using closed circuit television technology and zoom lenses. Where problem are identified by the state-of-the-art technology, the $1.8 million grant will allow Public Works to make immediate repairs.
Among other accomplishments on the project, Restovic said, DPW purchased a new vacuum sewer truck and trained 10 to 15 employees in the use of the new equipment.
When Phase II is completed, he said, "for the first time in V.I. history we will have an accounting and mapping of all the manholes." And at the end of the five-year project, DPW will "know every connection from every house to every manhole" in the territory. "If there is a particular area with a problem," he said, "I will be able to see a video of exactly where it is and see what the problem is."
Sens. Donastorg, Hill, Jn Baptiste, Malone and Renee voted in favor of approving the applications.
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