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June 26, 2001
Banking Code Change Upgrades And Strengthens District's Financial Regulatory Agency
WASHINGTON, DC - The most sweeping banking law reform in 66 years passed all of its legislative hurdles to elevate the Office of Banking and Financial Institutions (OBFI) to a full-fledged District Government Department. The law, known as the 21st Century Financial Modernization Act of 2000, puts the District on a course to become a major national financial center. New authority vested in the Department of Banking and Financial Institutions (DBFI) expands the financial services available to District businesses and residents by increasing the availability of capital and credit.
"Today we are sending a message to financial institutions throughout this country that 'This is where you belong and we are open for business'," said Mayor Anthony Williams. "This legislation gives our economic development initiatives a great boost."
The legislation grants additional chartering authority to DBFI, by permitting the agency to issue both Universal Bank and Merchant Bank Charters. These charters provide district-chartered financial institutions with the ability to upgrade their powers and flexibility to meet the changing market demand, and to utilize new technology for the delivery of financial services.
Under the Universal Bank Charter, a financial institution would be able to purchase, sell and underwrite investments; engage in venture capital; and invest in equity securities among other transactions, in addition to providing traditional banking services. The Merchant Bank Charter would be available to financial institutions that are primarily engaged in lending and investing. A merchant bank while having the privileges of a universal bank would not have the authority to solicit or receive deposits.
Passage of the Financial Modernization Act allows district-chartered financial institutions to engage in financial transactions that previously only Federal and a few other state banks were sanctioned to offer to consumers and businesses. In effect, the new law makes it more attractive for a bank to convert to a district-chartered financial institution and build its competitive edge.
"Washington, D. C. needed to keep pace with the changes occurring in the banking and the financial services industry. The name change reflects the Administration's and the City Council's determination to increase the number of economic opportunities in the District that benefit residents and businesses," said S. Kathryn Allen, whose title changed from Superintendent to Banking Commissioner with the passage of the new legislation. Page 1 of 2  1 2  |
