HARRISBURG, Pa. - Just five months into the job, Pennsylvania Banking Commissioner Bill Schenck is making good use of his bully pulpit.
The career banker has made consumer protection a top priority, bluntly demanding that payday lenders and check-cashing firms stop abusive practices.
This month, for instance, he sprang into action after learning that some check cashers were taking advantage of a loophole in state law to charge fees as high as 10% for cashing tax refund checks. He could have just asked the Legislature to close the loophole, but Mr. Schenck, 60, did not want to wait for the political process to get going. Instead, he fired off a letter to every check casher in the state, asking them to limit voluntarily the fees they charge for cashing government-issued checks to 2.5%.
He followed up the June 11 letter with a press conference on Monday to let the public know what he had done - and put check cashers on notice that he would be watching closely to see how they responded.
"I feel an urgency with regard to trying to solve issues," said Mr. Schenck, a longtime PNC Financial Services Group Inc. executive. He also said that a bill addressing the check-cashing issue could have languished in the Legislature for months. "I do not want people to get the notion that we do not have laws in place to help consumers. My view is: What can we do with the tools we have in place?"
One veteran of the Department of Banking said none of Mr. Schenck's recent predecessors paid as much attention to consumer issues.
"I worked here for 15 years, and he is the most consumer protective secretary I've worked under," said Michael A. Wishnow, who managed the department's consumer affairs division before quitting last week. "He is clearly a consumer advocate. I think the others wanted to be viewed as more neutral arbiters."
Mr. Schenck said his primary job is safeguarding the safety and soundness of state-chartered banks and credit unions. He is also playing a prominent role in promoting Gov. Edward G. Rendell's $7 billion economic development plan, but it is in consumer protection where he has made the biggest splash.
It was not one of the areas he planned to focus on when he was named the commissioner by Gov. Rendell, a Democrat who took office in January, but it quickly became a priority after he read some of the hundreds of complaint letters consumers have sent to the department.
"I was not aware of the extent to which consumers have been abused" by some lenders, said Mr. Schenck. "In here, you can see that."
He entered state government after a 34-year banking career. He started with Pittsburgh National Bank, a precursor to PNC, in 1969, where he stayed until 1994, eventually becoming the executive vice president in charge of consumer and small-business banking.
In 1995 he joined Great Western Financial Corp. of Chatsworth, Calif., working there as the chief operating officer until 1997, when he became the chief executive officer of Fleet Mortgage, a Columbia, S.C., subsidiary of FleetBoston Financial Corp.
Mr. Schenck spent three years at Fleet, where he was credited with turning an underperforming unit around. During his tenure its annual earnings increased more than 200%, to $80 million.
Next came Mr. Schenck's first and only nonbanking job: the president and CEO of I-Escrow Inc., a San Diego provider of escrow services to online auction companies such as eBay Inc. After it was sold in December 2001, he did some consulting part-time but found he was not ready to stop working full-time.
An unlikely intermediary brought Mr. Schenck to the attention of Gov. Rendell - Martin G. McGuinn, the chairman and CEO of Mellon Financial Corp. of Pittsburgh, which was one of PNC's biggest rivals during Mr. Schenck's time there.
"Pittsburgh is a big city and a small town," Mr. McGuinn said. "I saw him in the community and socially, and I admired his accomplishments and experience professionally, so I thought he would make an excellent choice" for the banking commissioner job.
Mr. Schenck has wasted no time turning his concerns about consumer protection into policy. In April he wrote a letter to Pennsylvania's 155 state-chartered banks and thrifts warning them against partnering with payday lenders.
In this case, he is following up his letter with legislation, which he said he hopes will be introduced this year. The bill would bar the holders of payday loans - short-term loans typically secured by a check postdated until the borrower's next payday - from rolling them over more than once.
Mr. Schenck says he is not opposed to payday lending. "There is an apparent need for it, or it would not be in place." But it becomes abusive in his eyes if lenders encourage rollovers. "That is what needs to be prohibited, these continuous rollovers."
Last month he also ordered the state's check cashers to comply with a law requiring them to post their fees. The law has been on Pennsylvania's books since 1998, but his predecessors did not enforce it systematically because of concerns with the wording of the state code, he said. "We took another look and decided to tell the check cashers to post their rates."
Another of his concerns is the growing use of overdraft protection programs. "Some of these programs create fees that are outlandish," he said. "They encourage people to overdraw and then overcharge them. … If a small bank begins to get a disproportionate amount of its income from this type of program, it could get hooked and build it into its revenue stream."
Neil Milner, the president and CEO of the Conference of State Bank Supervisors, said a growing number of state banking officials share his feelings about overdraft protection plans, not to mention payday lending and check cashing. Indeed Mr. Milner said consumer issues are becoming an increasingly hot topic in a number of states.
"It think these things are coming to the fore because there are abuses that are coming to the fore," he said. "People in a number of states are talking about strengthening state laws or enacting them if none exist."
