Washington State Legislature Likely to Sweep DFI Funds in Special Session
December 14, 2011
December 15, 2011
The Washington State Legislature adjourned sine die yesterday after passing a supplemental budget which closes $480 million of the state’s $2 billion budget gap. Three million of that will likely come from the Financial Services Regulation Fund, as the budget included a provision that allows the sweep. The $3 million figure for the sweep was set in the original proposal from the governor.
In a meeting with the Washington Department of Financial Institutions (DFI), it was announced that the $3 million would be comprised of $2,663,000 from the Consumer Services Division and $337,000 from the Credit Union Division. Those figures were chosen because both divisions have fund balances in excess of the necessary two-month reserve established by the Office of Financial Management. The Bank Division and the Securities Division fund balances are both below the reserve.
The sweep marks the ninth out of the Financial Services Regulation Fund in the past 10 years, representing nearly $20 million in aggregate reserves swept out of the account.
“While up to this point, just 3.49 percent of the funds swept have come from credit unions, they’re essentially a hidden tax when they’re swept out of a dedicated non-appropriated account,” Northwest Credit Union Association Senior Vice President and General Counsel Stacy Augustine said. “Credit unions pay for fair, firm regulation, and lowering a cushion of reserve to just two months seems unwise in today’s unpredictable financial environment.”
Since 2001, a total of $19.8 million has been swept from DFI into the General Fund of the state (that includes the proposed $3 million sweep). From that total, 3.67 percent has come from the bank fund, 3.49 percent from the credit union fund, 40.08 percent from the securities fund, and 52.76 percent from the consumer services fund. The majority of the funds came from fines. In the past five years, the DFI has received over $13.5 million in fines.
The DFI expects to stay at current staffing levels.
Questions? Contact Director of Regulatory Advocacy Jaycee Winn: 503.350.2209, email@example.com.