The heartfelt story of American Samoa’s Public Bank success

Territorial Bank of American Samoa

Territorial Bank of American Samoa

 

The journey to eventual success for American Samoa’s new Public Bank was a long and painstaking one to which any Public Banking advocate can relate. Three and a half years of work brought about a triumph on Oct 3, 2016, when the Territorial Bank of American Samoa opened its doors for business. But the Federal Reserve put the bank in limbo for almost 2 years before they provided the new Public Bank a routing number allowing them access to the U.S payment system — a step that usually takes a couple of weeks according to a new article in the Washington Post.

American Samoa Governor Lolo Matalasi Moliga said in 2016:

“Today is a day our people will remember for a very, very long time, not because we dared to challenge the status quo or that we endeavored to find a banking solution for our people, our businesses and our economy, but more so because the leaders of our Territory have come together to find a common solution and an answer to the crippling challenges affecting the quality of life of the people of American Samoa.”

Now that TBAS is off and running, Washington Post’s Andrew Van Dam says the next one won’t be far behind:

After TBAS, it appears unlikely the United States will have to wait another century to get its next public bank. The post-recession anti-bank backlash continues, and Sen. Bernie Sanders (I-Vt.), New Jersey Gov. Phil Murphy (D) and others have pushed for public banks to help revive marginal rural and urban areas.”

Last year, Rob Blackwell at American Banker covered in detail how American Samoa came to the Public Bank solution: …

“American Samoa officials saw an opportunity in the Bank of North Dakota's model, a way to sidestep the need for an FDIC sign-off while still allowing for a full-fledged banking institution.

"'We wanted to find a model that reflects our uniqueness. The only model that is out there is the Bank of North Dakota,' Robert Ho Chee said, [who runs its new Office of Financial Institution]. 'They are the epitome of what it's like to be a community bank at the state level.' …

"To head off that worry [of government influence on the bank], American Samoa officials have built a Chinese wall between the territory and the bank. Though its board members are nominated by the governor and confirmed by the Fono, the territory's legislature, the relationship stops there.

"'Once that is done, the government has no say in the running of the bank,' Iulogologo J. Pereira, [executive assistant to Gov. Moliga], said.

"The bank cannot lend to its board members or to the government.

"'We built as many buffers as we could to keep the government influence directly or indirectly out of the bank,' Phil Ware, [president of the Territorial Bank of American Samoa,] said. 'We've been very careful to design it like that.' …

"Legislation was approved in February of last year to fund the bank via a bond issue. …

"The bank is backed with more than $12.5 million in capital and has already taken in $1.7 million in deposits, according to its first-quarter financial statement.

"Demand is clearly not a problem. At the bank's opening ceremony — which featured a speech from the governor — the lobby was packed with customers. Even months later, the bank was opening 12 to 15 deposit accounts a day, according to Ware.

"Yet for all that, the bank is missing a crucial piece, and that threatens to doom the entire enterprise unless it is granted soon: access to the payment system. …

"A Fed spokesman declined to comment. …

"It's difficult to overstate just how important this approval is to the bank. In interviews, it is invoked repeatedly by government officials and bank executives, who clearly are waiting on tenterhooks for it to happen. …

"'The bank isn't there to make money. It's there to provide services to the American Samoan people,' [consultant Drew] Roberts said. 'The whole idea is to find the mechanisms so that people in American Samoa can live their lives like people in Portland.'"

[Read the full American Banker article]

[Read the full Washington Post article]

[Read the statements from American Samoan officials]


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