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“CSBS 2007 and BEYOND”
Remarks by Jeff Vogel
State Banking Commissioner, State of Wyoming
CSBS Chairman, 2007-2008
CSBS Annual Meeting and Conference
Coeur d’Alene, Idaho
June 1, 2007
Before I start my formal remarks, I’d again like to acknowledge my predecessor Joe Face for his
stewardship of this great organization during the past year. Unfortunately, Joe was not able to
attend this year’s conference for personal reasons.
Unfortunately, Joe was not able to attend this year’s conference for personal reasons. Thanks to
our friends at the Federal Reserve Bank of Richmond for making it possible for Joe to deliver his
message via DVD.
Last fall, Joe and his staff hosted the CSBS Board Meeting in his hometown of Richmond,
Virginia. It was a great meeting and a great place to visit.
So as I assume the chairmanship, I want to again recognize Joe for his long and distinguished
record of service to CSBS and express my sincerest best wishes to Joe and his family.
As I look out across this ballroom, I can’t help but notice the mix of people that are here and am
so impressed by the uniqueness of this gathering. Where else can you find state and federal
regulators, community bankers and international banks all in one place?
Nowhere else – except under the banner of the Conference of State Bank Supervisors - CSBS.
For 105 years, CSBS has truly brought the banking industry and the policy makers together to
ensure the viability of the dual banking system.
It’s a high honor and a privilege to serve as your Chairman for the coming year.
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So as we start our 106 year, our tendency is to look ahead. But before we do, you need to know
that I’m a bit of a history buff, and I believe that in today’s fast-paced world, history, in my opinion,
is under–appreciated.
So I think it’s a good idea to look back and reflect on our history so it may guide us through the
challenges that lie just ahead.
Let me take you back to the beginning of bank time in this country. The year was 1862, when all
banks were state banks. No National Bank Act, no national banks, and no OCC.
As a state banking commissioner, I would like to believe that, with the exception of the Civil War,
those were the good old days.
Then 1863 came along, and with it came the passage of the National Bank Act. The major
motivation of that law was to help finance the Civil War.
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A year later in 1864, Congress voted to tax state bank notes. In less than six years by the end of
the decade, the number of state banks had dwindled from some 1,500 to just 250.
Anyone who is paranoid might think Congress wanted to do away with state banks.
Well, we’re still here, and so is the National Bank Act of 1863. We were reminded of that recently
by the Supreme Court ruling that was just handed down.
But not to worry…
To paraphrase a great author and a historian of sorts, Mark Twain, “the predictions of the demise
of state banks are both premature and greatly exaggerated.”
I should mention here that I’m not the first CSBS chairman from Wyoming.
In 1963 – 100 years after the passage of the National Bank Act, Wyoming Bank Commissioner
Norris E. Hartwell was president of the National Association of Supervisors of State Banks,
CSBS’s predecessor.
In fact, his portrait hangs on the wall outside my office. I often wonder when I look at all of those
old distinguished faces on the wall what it must have been like to be the Commissioner back in
the good old days.
Not a lot has really changed…
After a little reading, I found out that they wrestled with pretty much the same types of issues we
wrestle with today.
For example –
The NASSB newsletter - the equivalent to today’s CSBS Examiner - reported that Mr. Hartwell
had been traveling around the country attending District meetings, telling supervisors and
associate member bankers that they must meet the challenge of federal government control of
their industry by strengthening the stability and power of their own state laws and their state
banking departments.
He said:
“It’s about time we Supervisors and bankers realize that this is not a controversy between
national banks and state banks – nor NASSB and the Comptroller of the Currency. It’s a
question of state laws vs. federal laws…”
Mr. Hartwell went on to strongly encourage all states to put their laws and their banking
departments in order and fight for equality within the dual banking system, saying if we didn’t stay
ever-vigilant and responsive, our valued dual banking system, which is the envy of the world,
might be relegated to economic history.
Forty-four years later his message still rings true.
I for one agree with Mr. Hartwell and strongly encourage all state bank supervisors to modernize
our laws and our departments and work cooperatively with one another -- not only on coordinated
supervision of banks but also on coordinated supervision of other non-depository entities such as
mortgage companies and money transmitters.
If we want equality, we have to work for it – I should know – I’m from the Equality State –
Wyoming.
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Well, I’m pleased to say that dual banking is still with us, and state banking is alive and very well.
Perhaps it’s because the Conference of State Bank Supervisors has been there to protect and
defend the state charter for the past 105 years.
During my year as Chair-elect, one of my duties was to chair the CSBS Planning Committee. Last
July, that annual rite of passage took place.
For one full, hot and muggy D.C. day, we focused on our history before laying the ground work for
our future. Dr. Ron Olson, who facilitated the process, took us on his time machine back to 1902
when CSBS – then known as the National Association of Supervisors of State Banks -- came into
being.
That year…
Only 6 percent of all Americans graduated from high school.
90% of all U.S. physicians had no college education.
The average life expectancy in the U.S. was 47.
The average wage was 22 cents an hour.
The American flag had only 45 stars.
There were 3,722 banks in the U.S. with total deposits just short of $500 million.
By 1929, before the stock market crash, there were more than 26,000 banks.
In 1934 -- the year the FDIC came into being -- there were still more than 14,000 banks
And in 2002, when CSBS celebrated its centennial, there were 7,888 banks with $4.7 trillion in
deposits. Nearly 75 percent of the banks were state-chartered, a number that has dwindled only
slightly since.
I think I can say that, as charterers, defenders, advocates and regulators, we have state bank
supervision well in hand.
While state banks are still our foundation, our authority has, by necessity, expanded into the
much broader financial services arena.
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As we enter our 106 year, CSBS continues to evolve. At last count, we still oversee nearly 70
percent of the banks nationwide. But more and more of our time is spent dealing with non-bank
matters, largely with the mortgage lending business.
That is why CSBS and AARMR have partnered to move forward on developing a nationwide
mortgage licensing system to enhance consumer protection and streamline the licensing process
for both regulators and the industry.
That is why CSBS has expanded its educational offerings and added new examiner certifications.
That is why CSBS has beefed up its regulatory division and taken on a higher profile before
Congress.
I don’t know what the coming year will bring, but CSBS is ready.
Projects and initiatives currently in the pipeline include:
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The development of a more coordinated approach to de novo bank applications and
supervision, which is being spearheaded by the State-Federal Working Group’s De Novo
Task Force.
An action plan in response to the Supreme Court decision in the Watters v. Wachovia
case, from the CSBS Preemption Task Force.
We are taking a more proactive approach and devoting more staff resources to state-
federal coordination now that state financial regulators have an official voting seat on the
FFIEC.
We are also working towards the official launch of the Nationwide Mortgage Licensing
System, scheduled for January 1, 2008 – a system that will help us in the regulation and
supervision of mortgage lenders.
And a host of new educational offerings for non-depository professionals.
The reality is that we live in a much more complex financial world, and CSBS has stepped up to
the plate to play an even greater role in financial services supervision.
As banking commissioners:
1. We rely on each other at the supervisory level to work together as a team in addressing
and fending off inappropriate and unnecessary federal encroachments.
2. We rely on our colleagues to work together to resolve disagreements and achieve new
levels of cooperation, particularly in this era of interstate expansion.
3. And, at the root of things, we recognize that fundamentally, our commitment to
cooperation is still the best option.
While our activities as commissioners represent the state chartering powers, we rely heavily upon
our banker members to bring their expertise and their political clout to the table. We encourage
your participation and involvement in CSBS.
For the bankers who are here, the Conference of State Bank Supervisors thanks you and salutes
you for the support you give to your respective state banking departments, and for your
membership in CSBS.
For our friends from the Federal Reserve and the FDIC, we respect and appreciate the good
working relationship we have with you. We truly believe our nation's banking industry is
strengthened by the dual supervision that takes place.
The fact that the United States has a banking system that offers a choice of charter, a choice in
regulators, and more than 8,000 banks -- mostly community banks -- serving the needs of
consumers, small businesses and industry’s truly what makes our country the economic
superpower that it is.
I call upon each and every one of you to maintain and accelerate your personal involvement in
and commitment to CSBS. We have a great tradition to uphold and a bright future ahead.
I look forward to working with you in the coming year.
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