Department of Financial Institutions Agency Overview — Senate Business, Financial Services, Gaming & Trade
Summary
Agency overview presentation of the Department of Financial Institutions (DFI) to the Senate Business, Financial Services, Gaming & Trade Committee on January 10, 2023, naming Charlie Clark as DFI Director. It states DFI's mission to protect consumers and advance the financial health of Washington State, and lists an approved 21-23 department budget of $61.7 Million and 210.9 FTEs. A workload table shows licensees rising from 178,438 in 2010 to 260,351 in 2022. Overview sections for the credit unions, banks, securities and consumer services divisions follow, and the presentation closes with a 2023 legislative agenda item, the Whistleblower Awards and Protection Act.
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“Department of Financial Institutions Agency Overview — Senate Business, Financial Services, Gaming & Trade.”
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Department of Financial Institutions
Agency Overview
Senate Business, Financial Services,
Gaming & Trade Committee
January 10, 2023
CHARLIE CLARK, DFI DIRECTOR
ABOUT DFI
2
MISSION
DFI’s Mission is to protect consumers and advance the
financial health of Washington State by providing fair
regulation of financial services and educating
consumers to make informed financial decisions.
3
DFI Budget Overview
Approved 21-23 Department Budget
– $61.7 Million
– 210.9 FTEs
• Fund 300 – Financial Service Regulation Account
– Dedicated non-GFS, non-appropriated operating fund
– Self-Supported through fees and assessments.
• Fund 07A – Mortgage Lending Fraud Prosecution Account
– Administered by DFI to fund prosecutions
– Funded by recording fees collected by county auditors, $1 per recording.
• Fund 06J – Securities Prosecution Account
– Administered by DFI to aid local prosecutors in bringing securities and other investment fraud
cases
– Funded by fines collected under the Securities Act.
4
Workload and Staffing
Year 2010 2022 Change
Licensees 178,438 260,351 + 46%
FTEs 188.4 210.9 + 12%
Growth in the financial services sector has
significantly exceeded DFI staffing levels.
5
ROLES OF DFI DIVISIONS
DIVISIONS: Banks Credit Consumer Services Securities Administration
Unions
Core mission: • Safety and • Safety and • Consumer Protection • Consumer • Administrative Support
Soundness Soundness • Compliance Protection
• Compliance • Compliance • Compliance
Jurisdiction: State Chartered State Chartered Non-Depository Financial Securities Legal Affairs
Banks and Trust Credit Unions Institutions: Broker/Dealers
Companies • Consumer Loan Companies Policy and Legislative
• Mortgage Brokers WA Securities
• Mortgage Loan Originators Offerings
Public Records
• Residential Mortgage Loan
Servicers Investment Advisers
and Reps Information Technology
• Check Casher and Sellers
• Payday Lenders
• Escrow Companies and Small business Budget & Accounting
Officers (technical assistance
• Money Transmitters and only) Human Resources
Currency Exchangers
• Providers of TAX Refund Investment Fraud Communications &
Anticipation Loans (RALS) Outreach
Franchises
Facilities
Business
Opportunities
Offerings
Core Activities: • Chartering • Chartering • Licensing • Registration • Agency Management
• Examination • Examination • Examination • Examination Administrative Services
• Enforcement • Enforcement • Enforcement • Enforcement • Education and Outreach
• Education and • Education and • Education and Outreach • Education and
Outreach Outreach Outreach
AMY HUNTER, DIRECTOR OF CREDIT UNIONS
DIVISION OF CREDIT UNIONS –
OVERVIEW
7
DIVISION OF CREDIT UNIONS
Number of Credit Unions: 2012-2022
70 64
60 54
49
50
40
30
20
10
0
Sep-12 Sep-17 Sep-22
8
DIVISION OF CREDIT UNIONS
Aggregate Credit Union Assets: 2012-2022
In Thousands of Dollars
$100,000,000
$79,609,054
$80,000,000
$60,000,000 $47,172,024
$40,000,000 $31,191,348
$20,000,000
$-
Sep-12 Sep-17 Sep-22
9
DIVISION OF CREDIT UNIONS
Status of State Credit Union Charter
• The credit union industry in the state is generally healthy,
emerging challenges include:
• Employee retention and wage pressures
• Uncertain economic conditions
• High inflation & rising interest rates
• Technology is rapidly changing.
• Cybersecurity remains an ongoing concern.
• Consumers are using their credit cards at a higher rate
since pre-pandemic environment.
10
ROBERTA HOLLINSHEAD, DIRECTOR OF BANKS
DIVISION OF BANKS – OVERVIEW
11
DIVISION OF BANKS
Number of Institutions 2021
35
30 29
25
20 18
15
10 8
5 1
0
Commerical Savings Banks Foreign Bank Trust Companies
Banks Branches
6
DIVISION OF BANKS
Aggregate Banks Assets: 2022
In Thousands of Dollars
$115,658,940
$59,764,388
$46,866,627
Dec-12 Dec-17 Sep-22
13
DIVISION OF BANKS
Aggregate Trust Company Assets: 2022
In Thousands of Dollars
$55,672,821
$53,005,585,645
$32,490,153,039
Dec-12 Dec-17 Sep-22
14
DIVISION OF BANKS
High Level Overview
• The banking industry in the state is generally healthy, emerging
challenges include:
• Employee retention and wage pressures
• Uncertain economic conditions
• High inflation & rising interest rates
• New Washington Bank Charters in 2022
• Two Federal Banks Converted to WA State Charters
• Washington Federal – national bank regulated by the OCC
• Portage Bay Bank – Minnesota state chartered bank
• One DeNovo (new bank) Application – Orca Bank in Bellingham
• Cybersecurity remains an ongoing concern.
15
FAITH ANDERSON, CHIEF OF REGISTRATION and REGULATORY AFFAIRS
DIVISION OF SECURITIES – OVERVIEW
16
DIVISION OF SECURITIES
Total Registrants/Licensees as of 12/31/2022
REGISTERED OR EXEMPT SECURITIES ISSUANCES (OFFERINGS) $138 Billion
REGISTRATIONS IN 2022 (NEW, RENEWED & AMENDED) 52,379
ENTITIES REGULATED
• Broker-Dealers 1,713
• Intra-State Broker-Dealers 1
• State-Registered Investment Advisers 691
• Franchise Brokers 652
• Investment Advisers Notice Filings 2,553
REPRESENTATIVES
• Investment Adviser Representatives 14,251
• Issuer Agents 61
• Broker-Dealer Salespersons 211,386
• Representatives with Disclosure Histories 6,534
CINDY FAZIO, DIRECTOR OF CONSUMER SERVICES
DIVISION OF CONSUMER SERVICES –
OVERVIEW
18
DIVISION OF CONSUMER SERVICES
Total Licensee Count as of 12/31/2022
• Consumer Loan Companies 952
Includes Mortgage Loan Servicers
And Student Education Loan Servicers
• Mortgage Brokers 365
• Mortgage Loan Originators 33,800
• Check Cashers & Sellers 86
Includes 12 Small Loan Endorsements (Payday Lenders)
• Escrow Agents 45
• Escrow Officers 76
• Money Transmitters 264
TOTAL LICENSEES: 35,588
DREW BOUTON, DIRECTOR OF POLICY AND LEGISATIVE RELATIONS
2023 LEGISLATIVE AGENDA
20
WHISTLEBLOWER AWARDS AND PROTECTION
ACT
• Awards for whistleblowers providing new information about
possible violations of securities law.
• Protection from retaliation.
• Confidentiality.
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