DOB: 2001-02 Administrative Report to the Governor

Administrative Report to the Governor
2001-2002

Agency Mission | Improvements/Achievements
Home Financing | Interstate Banking

Department At A Glance:

Commissioner - John P. Burke
Deputy Commissioner
- Alan J. Cicchetti

Established - 1837

Statutory Authority - Titles 36a and 36b,
Connecticut General Statutes, and Related Laws

Central Office -
260 Constitution Plaza
Hartford, CT 06103-1800

Average number of full-time employees - 143

Recurring operating expenses, 2001-02 - $13,476,967

Organization Structure:

  • Administration
  • Bank and Credit Union Regulation
  • Consumer Credit
  • Securities and Business Investments

Agency Mission

The mission of the Department of Banking is to ensure the safety and soundness of the depository institutions it regulates; to administer and enforce the state's banking and related laws; to assist citizens in transactions with financial institutions; and to promote economic growth through capital formation while simultaneously protecting investors against fraudulent practices that undermine the integrity of the securities markets.


Improvements/Achievements 2001-02

Over $2 million was returned to consumers and investors through the department's efforts during the past year.

The Consumer Credit Division's complaint function obtained $1,326,918 in adjustments and reimbursements on behalf of consumers during the fiscal year, while assisting consumers with 2,282 complaints. Securities Division intervention resulted in the return of nearly $700,000 to the investing public.

The Bank Examination Division responded to 3,104 complaints and inquiries. The agency's security deposit investigator resolved 226 landlord tenant disputes during the fiscal year and recovered $75,835 for Connecticut residents who had complained that landlords had unjustly withheld their refundable rental security deposits. 

Commissioner John P. Burke served on the Board of the Conference of State Bank Supervisors (CSBS), and was Chair of the Bylaws Committee and a member of the Planning Committee during 2001-02. CSBS is the professional association of state officials responsible for chartering, regulating and supervising the nation's state-chartered banks and state-licensed branches and agencies of foreign banks.

In his capacity as Banking Commissioner, Mr. Burke served as an Ex officio Member of the Board of the Connecticut Housing Finance Authority. Commissioner Burke also served on the Board of Directors of the Community Economic Development Fund Foundation and as a member of the Connecticut Economic Conference Board.

As a means to provide the public with convenient 24/7 access to information and resources, the department maintains a Web site.  During 2001-02, the agency significantly expanded the Web site's content, while keeping posted information timely and current. Web site usage grew strongly through the year, with nearly 340 thousand user sessions and over 2 million "hits" being recorded. In January 2002, the Web site successfully passed testing to fully comply with the state's strict Internet accessibility policy.

A new, comprehensive emergency response plan was developed to provide for the safety of agency employees and a continuation of critical business functions in the event of a crisis. The plan will be reviewed annually to keep preparations current.

During 2001-02, two new state-chartered banks, The Bank of Southern Connecticut, in New Haven, and The Bank of New Canaan opened for business. Three new state-chartered banks, Connecticut River Community Bank, Wethersfield, Higher One Bank, New Haven, and Customer's Bank, West Haven, were in organization having received temporary certificates of authority. In addition, the Royal Bank of Canada opened a representative office in Greenwich, Abbey National Treasury Services plc, of England and Wales, opened a state branch in Stamford, and Fortis Bank S.A./N.V., Belgium, applied to establish a state branch in Stamford.

The Bank Examination Division adopted the FDIC's merit program resulting in an expedited examination review process for small, well-run, non-complex banks. The division completed the implementation of its domestic off-site monitoring program. It is developing a similar off-site monitoring program for foreign banking offices (FBOs), and actively participates in the Federal Reserve Bank of New York's FBO continuous supervision program.

An Advisory Committee on International Banking met with the Commissioner and senior staff to discuss proposed asset pledge requirements and other key issues facing international bankers.

The Business Office participated in the Core-CT project to ensure the agency's specific financial needs will be met. Core-CT is a new computer system that will collect financial transactions and report budget management information. The agency made continued progress in meeting set-aside purchasing goals with respect to using small and minority contract vendors.

In September 2001, Tamie Erhardt, a mail handler with the Business Office, received the Governor's Customer Service Award. Ms. Erhardt processes nearly 10,000 pieces of mail monthly, serves as a courier, assists in maintaining cash records and performs other duties. Her willingness to always "go the extra mile" epitomizes the program's "customers count" motto.

During 2001-02, four credit unions, Stamford Credit Union, Mutual Security Credit Union, in Wilton, Fairfield County Credit Union, in Stamford, and Members Credit Union, in Riverside, converted from federal charters to Connecticut state charters. In addition, applications by Middlesex Federal Credit Union, Middletown, and Southern New England Federal Credit Union, New Haven, to convert from federal credit unions to Connecticut state-chartered credit unions were pending.

The Credit Union Division, with assistance from the Legal Division, completed a thorough review of all Connecticut statutes relating to credit unions to ensure that they adequately reflect current industry practices, technological advances and federal law development. As a result of this process, the department drafted an omnibus Credit Union Modernization Act.

With the coordination of the Government Relations and Communications Division, the comprehensive Credit Union Modernization Act and four other department proposals were enacted into law during the 2002 legislative session. The other proposals concerned prepaid finance charges; assessments and reports filed with the Commissioner; consumer credit and money transmitter licensees; and bank powers and transactions.

In an effort to improve customer service and the agency's research capability, the Legal Division summarized and categorized by subject all securities opinions from 1981 to the present in order to make the index available on the Internet.

The agency's affirmative action plan was approved by the Commission on Human Rights and Opportunities.

The Securities and Business Investments Division serves Connecticut citizens by providing a local enforcement presence to protect investors from securities fraud. During 2001-02, the division imposed almost $500,000 in fines for violations of the state's securities laws. Division enforcement efforts focused on promissory note sales, FOREX investments, bogus investment vehicles and misappropriation of investor monies. The division also scrutinized the brokerage practice of preventing investors from transferring their accounts to other firms because of pending disputes between the original firm and a departing agent.

The division emphasized outreach through individualized pre-registration meetings with in-state applicants for broker-dealer and investment adviser registration; informal discussions with Connecticut small businesses seeking to raise capital via securities offerings; the publication of a Securities Bulletin; speaking engagements; and expansion of the agency's Web site. To make it easier for the public to check on an investment adviser, a listing of all registered investment advisers was posted on the Web. A simplified synopsis of filing requirements affecting investment advisers registered with the SEC was also published. A free, convenient email listserv was established to provide the securities industry with timely regulatory news.

Leveraging technology, the division "transitioned" the records of thousands of investment advisers and their agents to the nationwide on-line Investment Adviser Registration Depository ("IARD") administered by the NASD.

By actively participating in the North American Securities Administrators Association ("NASAA"), an association of state securities regulators, the division kept abreast of model rules and policies promoting uniform standards and procedures.

The tragic events of September 11, 2001 caused the agency to cancel its fall Securities Forum, which annually draws participants and attendees from throughout the tri-state region. In support of the war on terrorism, the division announced a waiver of securities licensing fees for Connecticut residents called to active military duty.

The division is assisted by a Securities Advisory Council, comprised of industry representatives, academics and members of the bar, all of whom serve without compensation, that offers the Commissioner and staff insight on new regulatory initiatives.


Home Financing

Since 1992, state-chartered banks have submitted Home Mortgage Disclosure Act (HMDA) information to their primary federal regulator, usually the Federal Deposit Insurance Corporation (FDIC). That agency examines banks once every two years for compliance with HMDA and other regulations. The Department of Banking receives and reviews copies of all of these confidential compliance examination reports. Based on the department's review of the reports during 2001-2002, no evidence of discriminatory practices by state-chartered institutions was disclosed.


Interstate Banking

Five banks headquartered in Connecticut currently operate 36 branches or limited branches located outside of the state or country. Correspondingly, as of December 31, 2001, 17 out-of-state banks operated 432 branches located in Connecticut. In addition, six foreign banks operate branches, agencies or representative offices in the state.

During 2001-2002, three mergers were announced involving out-of-state institutions and banks headquartered in Connecticut. In September, 2001, Cargill Bank, a state-chartered savings and loan association in Putnam, merged with and into Park West Bank and Trust Company, a Massachusetts chartered trust company, with the resulting entity named Westbank and headquartered in West Springfield, MA. In April, Westport National Bank applied to its federal regulator to merge Middlesex Bank & Trust Company, Newton, MA, with and into Westport National Bank. In May, Banknorth Group, Inc., a holding company located in Portland, ME, and its subsidiary, Banknorth, N.A., filed an application with the department for Banknorth Group, Inc. to acquire Bancorp Connecticut, Inc., and its subsidiary, Southington Savings Bank, a state-chartered bank and trust company, and for the subsequent merger of Southington Savings Bank with and into Banknorth, N.A.