“They will only support the government bank, they will not support any other bank, and if we try to change that, then Zions Bank will not be our correspondence bank, they are only here to help American Samoa (Government)… only the American Samoa (Government).

Once  we involve the private sector they (Zions) will pull out, because the private sector — all they want is profit — but the government’s vision behind this bank is to help out the public,” Treasurer Ueligatone Tonumaipe’a said during his appearance before the House for the Charter Bank hearing yesterday.

The Treasurer was responding to a question posed by Rep Vailoata Amituana’i on the proposal by Community Bank of American Samoa (CBAS) to the Lolo Administration for a joint working relationship, and also proposing certain changes to the administration’s bill now before the Fono allowing the government to set up a Charter Bank. (See in this edition on full story of CBAS proposal for partnership).

Attending the hearing before the House Economic Development Committee chaired by Rep. Larry Sanitoa were Attorney General Talauega Eleasalo Ale, the Treasurer and the DOC Director, Keniseli Lafaele

The lawmakers heard from the Treasurer that the Charter bank’s correspondent bank is Zions Bank who will provide the services through VISA and Master Card and other credit cards and ATM machines, which can be used all over the world, unlike the ANZ- Guam bank card that is very limited as to where it can be used.

The Treasurer further explained that the Charter bank is not an FDIC (Federal Deposit Insurance Corporation) member, however the charter bank will have insurance to cover its losses if anything happens. He explained that FDIC is not the type of insurance where — if someone steals money from the bank — they will come down and replace that money.

Tonumaipe’a said FDIC will only come down if the bank can no longer operate, then they will step in and take over until another bank is ready to purchase the said bank. 

(According to Wikepedia, the Federal Deposit Insurance Corporation (FDIC) is a United States government corporation operating as an independent agency created by the Bank Act of 1933. As of August 2014, it provides deposit insurance guaranteeing the safety of a depositor’s account(s) in member banks up to $250,000 for each deposit ownership category in each insured bank. The FDIC also examines and supervises certain financial institutions for safety and soundness, performs certain consumer-protection functions, and manages banks in receiverships — failed banks.)

Talauega further explained to the lawmakers that while the Charter bank is not a FDIC member, the government has proposed a bill to establish the Office of Finance Services that will have the authority to regulate all financial institutions that operate or conduct business in the territory, including but not limited to commercial banks, holding companies, credit unions, trust companies, retirement funds, consumer money lenders, money brokers, mortgage loan originators, collection agencies, money transfer services, debt settlement service providers and any ASG-owned financial and depository institution.

He also pointed out that Zions Bank, who is the corresponding bank for the Charter Bank is a member of FDIC and because of that partnership, Charter Bank will work in accordance with FDIC rules and regulations. Talauega agreed with comments by Pulelei’ite that there are liabilities and difficulties however the way he sees it, this is a great opportunity for American Samoa.

He said Zions is taking a huge step with agreeing to be the corresponding bank, with the vision that this will benefit ASG and the community as a whole. The AG made it clear that the Charter bank will eventually apply for membership with FDIC, but not now.

Rep Pulelei’ite asked as if the Administration ever discussed adding additional services to the Development Bank, but the AG explained that cannot happen at this time.

He said DBAS gets funding from the Federal government for business and home loans, and at this time they cannot take deposits or savings. However he said that they are looking at combining the DBAS and the Charter bank in the future.

More on the Charter Bank hearing in the House in tomorrow’s edition.