Pago Pago, AMERICAN SAMOA — There is no guarantee that the people’s money deposited at the Territorial Bank of American Samoa (TBAS) is protected due to the fact that the bank is not FDIC insured.

This was the statement from the TBAS CEO and president, Dave Buehler when he appeared before the House Government Operations committee last week to testify on the bank’s status.

Rep. Avagafono Tuavao Vaimaga Maiava said that while he understands it takes time for the bank to qualify for FDIC coverage, he wanted to know if the people’s money deposited in the bank everyday is being protected.

Avagafono said the issue of safeguarding the people’s money deposited in TBAS keeps bothering him because a majority of the bank’s customers are low income families who only have $300 or $500 deposited in the bank.

Buehler made it very clear to the committee that there is no guarantee the people’s money is protected because TBAS is not FDIC insured — “ …but the total focus of the TBAS management is to protect customer’s deposits,” Buehler said.

He explained that the average consumer-side deposits are not very large. Maybe between $500 to $800, but what concerns the bank is large businesses that maintain large balances and FDIC insurance only goes up to $250,000.

“So if a bank fails FDIC finds another owner for the bank and there would be no loss on deposits for any depositor,” Buehlar said, adding that “I can’t guarantee the safeguarding of the people’s money, however, that’s our focus everyday — to do everything we can.”

Getting the TBAS insured by the FDIC is a must, however, according to Buehler, as long as the bank is owned by the government it is not eligible to be insured by FDIC. So, part of their strategic plan is to privatize the bank in order to meet this requirement.

When asked by committee members to reveal any future plans, Buehler said it would probably be one or two more years before they target local private investors for the bank.

Avagafono said that FDIC is a big issue and this is one of the reasons why people go to the ANZ Bank for their banking rather than TBAS. He wanted to know what the Fono can do to help TBAS privatize.

Buehler said the one factor that may come up in the process of privatization is there may be a chance for the Fono to review the statute that established the bank because the statute for a private bank requires FDIC insurance. He stated that maybe the Fono needs to adjust the statute just for this particular situation.

Swains Island Faipule Su’a Alexander Eli Jennings said that it is interesting to hear the contradiction of legal opinions between the FDIC and the TBAS where FDIC says as long as it’s owned by the government we won’t get insurance, while the TBAS legal opinion says the bank doesn’t belong to the government.

Buehler said he was not present in the beginning of 2016 when the bank opened but he went through the files and it’s clear to him and the management that the original intent for creating the bank was to take the place of Bank of Hawaii until the territory can privatize the bank. According to Buehler, they’re still following that intention and TBAS is heading in that direction.

MASTER CARDS AND ATM SERVICE

Rep. Lua’itaua Gene Pan said a lot of people are coming to him about the issue of credit cards because they’re having problem when it comes to shopping at several stores around the island.

He said a lot of people are experiencing problems with the TBAS Master Cards when they use the ANZ payment terminals at the checkout counter to pay for their shopping, so, they have to go to an ATM machine to withdraw money to pay for their shopping. Lua’itaua said TBAS needs to address this problem because this mostly happens on weekends.

In response, Buehler explained that the primary system for merchant payment terminals in Tutuila is an ANZ device. In his opinion, these devices are out dated, not digital and very slow and a lot of time the system rejects a transaction for security reasons.

Sometimes a person swipes the card 3 to 4 times before its works and shop owners will make that a reason to ask their customers to go to an ATM machine to draw out cash for the shopping.

Buehler also explained that there is a fee to the merchant for using the payment terminal and some merchants don’t like paying that fee, so they will ask their customer to go to an ATM machine to get the cash.

If that is the problem, Lua’itaua suggested that TBAS should provide their own terminals to merchants and lower the fee so that the people can have access to this service instead of driving around to find an ATM machine where they can withdraw cash.

Buehler said they’re still negotiating this issue with a provider of such a service and they will have it in place as soon as possible — especially since if ANZ goes away all of their terminals will no longer work.

TBAS is looking at May 1st to have TBAS payment terminals in place at stores.

(Samoa News points out that to-date there has been no official notification by the ANZ Bank- American Samoa that it is leaving the territory — just ‘strong’ rumors.)