Breaking with a tradition of focusing mainly on domestic banking issues, the Conference of State Bank Supervisors has launched an international advisory council to represent the interests of foreign banks in the United States.
Officials said the move by the Washington-based supervisors group reflects both the growing role of foreign banks in the economies of several major states and the need to increase coordination with Federal regulators when supervising foreign banks.
An Important Industry Segment
"States have to interact with the Fed on banking regulation to a greater extent than they've ever had to in the past," a spokeswoman for the association said.
"We felt they needed to be more active coordinating states' actions as they dealt with Federal issues."
Foreign banks represent an important segment of the banking industry," said Robert McCormick, head of supervision for foreign banks at the New York State banking department and a member of the advisory council.
Turf Battles
"There's always been an advisory unit on the domestic side, and there was a need to bring states' perspective on a Federal level."
State and Federal regulators have been engaged in a tug-of-war over supervision of the foreign banking community since the Foreign Bank Supervision Act of 1991 required the Fed to examine foreign banks and expanded Fed control over Foreign banks.
More recently, several state banking supervisors have criticized the Fed for failing to expedite applications from foreign banks to enter or expand in this market, thereby jeopardizing local economic growth and prolonging the recession.
To date, foreign banks have no representation on a Federal level and little on state regulatory level.
A Foreign Voice
The New York State Banking Department is the only state regulatory agency to give foreign banks a seat on its board.
Bankers said creation of the advisory unit is an important step toward giving foreign banks a voice in the U.S. regulatory system.
The association spokeswoman, however, noted that foreign banks are playing an increasingly significant role in the U.S. economy and that most are state chartered.
"The states regulate the vast majority of U.S. offices of foreign banks," she noted.
"They are also major backers in five major states - New York, California, Illinois, Florida and Georgia - and are active lenders to local businesses."
Key Players
Members of the Conference of State Bank Supervisors include public officials who charter, regulate, and supervise the 8,300 state-chartered banks and 600 state-licensed foreign branches. agencies, and representative offices.
Founded in 1902, the supervisors group is the main association representing state banking departments around the country and a major supporter of the state-federal dual banking system.
The association has named Derrick Cephas, New York State's superintendent of banks, and Winfried Spaeh, senior general manager and chief executive of Dresdner Bank, as co-chairmen of the newly established International Bankers Advisory Council.
The 41 other members of the advisory unit cover a broad range of state regulatory institutions and foreign banks, including banks from Taiwan, Germany, Ireland, Romania, Brazil, Portugal, Pakistan, Iran, Canada, and France.
On the Agenda
Association officials said they are giving top priority to issues such as Federal Reserve examination charges, background checks, representative offices, and coordination of state and federal examinations.
Other issues on the advisory council's agenda are asset quality standards, community reinvestment requirements, coordination of home country examinations, and accounting and tax treatment.
