Pago Pago, AMERICAN SAMOA — The Federal Deposit Insurance Corporation (FDIC) maintains until the Territorial Bank of American Samoa comes under “private ownership” only then will it “entertain an application for insurance.”

This is according to TBAS Manager David Buehler when he testified before the House this week, regarding an administration bill to amend the code annotated 28.0214.

This is in regard to deposits of American Samoa government funds and semi-autonomous agencies with the bank as indicated in the local statute when the bank was first established in 2015.

Three witnesses for this proposed measure were Attorney General Fainu'ulelei Falefatu Ala'ilima-Utu; Office of Financial Institutions Commissioner Tuasivi John Marsh and TBAS CEO David Buehler.

According to Fainuulelei, basically back when the law was created in 2015 there was a requirement to have all government funds deposited into TBAS, including funds from semi-autonomous authorities.

“But what happened was a lot of Federal Grants — as you know we get a lot of federal grants — required that they be deposited into a federally insured bank such as an FDIC insured bank. So we're doing this amendment so that the government and various semi-autonomous agencies can comply with both the federal grant requirements and also the local law.

“And that's what we want to do — not to violate either the local law or violate the federal law.  But as you know federal law and regulations under the supremacy clause — they have a priority in terms of, that if there is a conflict” federal laws will prevail.

The AG said this is an appropriate amendment for this particular section of the law in the statute that established TBAS.

Tuasivi said this is good legislation and it's long overdue. “We've had many difficulties with the [current] legislation and this will clean up a lot of the difficulties we've had previously.”

Buehler said TBAS has been concerned that ASG and its agencies have not been following the statutes since the bank's inception.

“And we look forward and support this change to ensure compliance for those deposits which are restricted by the grantor —  US government typically; however we have not been advised in writing regarding this grantor requirement and have been unable to locate any such written restrictions in the regulations.

“The bank welcomes more deposits as the added liquidity affords us to earn additional revenue from risk-free deposits at the federal reserve bank and various investments such as US Treasury bills at interest rates that have increased over 4 percent points over the last 12 months; excess liquidity and FRB deposits and investments have a 0 percent risk rating and therefore do not impact the ratio of risk base assets to capital requirement.

“So as an example, based on the ARPA funds alone if they were deposited with TBAS, we would have had the potential to earn an average of 2 million dollars a year in additional income,” explained Buehler.

Rep Vailoata Amituana’i queried whether TBAS has been informed officially about the grantor regulations that some grants be deposited only in FDIC banks and Buehler said there has been no written documents submitted to the bank indicating this policy by the federal grantor, they are taking it the word of ASG ARPA Oversight Office executive director Keith Gebauer.

“If the restriction is in fact in effect we cannot [receive those deposits] but they do transfer the funds to TBAS  when they're going to spend them locally and they're in the bank for a period of time until they're spent,” said the Bank Manager.

Furthermore, Buehler said he met with FDIC officials in San Francisco and their concern was that TBAS is government owned.

He suggested that if “private ownership comes in and becomes a majority ownership, which would then be in control, which would then allow the FDIC to entertain an application for insurance.”

Asked whether any steps have been taken to move it to a privately owned bank, Buehler replied that the board has not approved putting the bank on the market for sale.

“However we do have one unsolicited offer from a private group. The governor has been clear to the directors of the board that as long as the government remains in control, that’s what he wants.

“He’s not going to allow the bank ownership [namely ASG] to be in a minority position and therefore so long as ASG is in control, the FDIC will not entertain an application,” said Mr Buehler.

Fainu’ulelei added that they are going to Washington DC with the governor for the national governors association meeting.

“We are asking the FDIC at this time for a meeting so we can discuss these issues.

“Now I understand that Mr Buehler had discussed these issues with a [FDIC] desk officer, but was trying to get them to commit to a position when our allies are there; the Department of Interior and the White House and have their leaders committal position on whether or not they can insure TBAS even with the government in majority ownership.

“As you know right now it's 100 percent owned by the government but how about maybe a 51 percent government-controlled and 49 percent privately owned? 

“And so we’re looking at those issues and even one that would [have] the TBAS maybe 51 percent owned privately and 49 percent owned by the government. 

“So we're going to be hoping to discuss those issues with FDIC leaders in Washington DC in several weeks,” said the AG.

For federal grants that require deposit into an FDIC insured facility, the local government uses the Utah-based Zions Bank.