Florida state banks will continue to be regulated by the state's elected comptroller, despite a yearlong effort by that office to cede regulatory powers to another body.
Comptroller Robert F. Milligan - who vowed to depoliticize the state's regulatory structure in his successful campaign to unseat 20-year incumbent Gerald Lewis in the fall of 1994 - said last week he would abandon the attempt for the current legislative session, and would not try again next year.
"The simple fact is that they (state banks) like the system, and they've been able to influence this process because of its politicized nature," said Art Simon, the state's director of the Division of Banking.
A task force assembled by Mr. Milligan shortly after he took office last winter had proposed that regulatory duties be handled by an independent seven-member board made up of people nominated by the comptroller, approved by the governor, and confirmed by the state Senate.
State banks, however, rose up against the idea in recent months, prompting several revisions and, finally, its withdrawal.
"We felt that this wouldn't depoliticize it but actually make it more political," said Rudy E. Schupp, chief executive of Republic Security Bank in West Palm Beach. "We also felt that if it's not broken then what are we trying to fix?"
Florida is the only state whose bank commissioner - in this case called the comptroller - is elected. Mr. Milligan has criticized the structure for giving at least the appearance that its regulator can be influenced by those he regulates through campaign contributions.
Mr. Milligan, a retired Marine Corps lieutenant general, lambasted his predecessor during the campaign, saying Mr. Lewis was too close to the banks he was in charge of regulating. A political unknown, Mr. Milligan surprised many when he defeated the popular Mr. Lewis, though by a slim margin, 50.9% to 49.1%.
He promised to break off the office's regulatory duties from its other primary tasks, overseeing the state's thrifts, credit unions, mortgage brokerages, securities firms, and cemeteries. The comptroller is also the state's chief fiscal officer.
When the task force, which consisted of a number of bankers and current and former banking association presidents, went to work last March it appeared to enjoy the support of the industry.
John E. Milstead, executive vice president of the Florida Bankers Association, said at the time, "I don't know a single banker who is rebelling against it."
Mr. Milligan said he was not surprised by the apparent change of heart by the industry. Despite the opposition, he said he intends to push for a regulator that would oversee all the financial institutions and, most importantly, be an appointed position.
"The other 49 states are not all wrong in having their regulator being a nonelected official," he said.
Bankers and trade group officials said they opposed the plan because it raised the question of accountability, appeared to make the system more political rather than less, and amounted to unnecessary tinkering with a system that already works. They also questioned what sort of banking expertise the board members would have.
"Our big problem with it was 'Who do you go to in times of a crisis?'" said Alex Sanchez, vice president of government relations at the Florida Bankers Association. "Who would the people of Florida look to ask, 'What did you know and when did you know it?'"
Mr. Sanchez said the issue will likely be examined again in 1998 when the state's constitution is reviewed. He said an overhaul of the comptroller's duties should be considered in the broader context of reforming Florida's entire cabinet system, which requires constitutional amendments.
