TALLAHASSEE, Fla. – It took state legislators nearly four years to pass a bill and work out the details of an organizational plan to put into effect a state constitutional amendment that was passed by voters in 1998 to reduce the size of the state Cabinet from six to three members and merge the State Comptroller's and Treasurer's constitutional responsibilities into one Cabinet seat – the Chief Financial Officer. Now that that's been accomplished, the Florida Credit Union League is keeping an eye on the implementation of the provisions of the bill to be sure credit unions get a separate and equal regulatory entity from the banks. "We are tired of being lumped under the Division of Banking, as we have been," said Florida Credit Union League Lobbyist Jim Smith, a partner with the firm Smith, Ballard and Logan, P.A., Attorneys at Law. Mark Landreth, director of legislative development for the League said it's crucial for credit unions and banks to have their own separate and equal regulatory entiry for two reasons: examiners are currently cross-trained to examine both CUs and banks, and they often try to apply banking principals to credit unions. In addition, if the person who's appointed to head up the Office of Financial Institutions & Securities Regulation has a banking background, "there's a chance he or she would not be totally objective" if banks and credit unions are regulated together, said Landreth. Provisions of HB3-E are effective Jan. 7, 2003. Among the provisions of the bill, it combines the Department of Insurance currently headed by state Treasurer and Insurance Commissioner Tom Gallagher and the Department of Banking and Finance, currently headed by Comptroller Bob Milligan, and creates the elected position of CFO. The CFO, one of four elected Cabinet members who will head up the Department of Financial Services, will be responsible for managing the administrative responsibilities of the newly formed Financial Services Commission (the regulatory functions of the commission will be independent of the Department of Financial Services.) Under the Financial Services Commission, there will be the Office of Financial Institutions and Securities Regulation, and the Office of Insurance Regulation. The former will be responsible for regulating banks, credit unions, other financial institutions, finance companies and the securities industry. The CFO spot is up for election in November, as are the other three Cabinet posts – governor, attorney general and agriculture commissioner. At press time, Landreth said Gallagher's name was the only one on the ballot for CFO, so unless that changes, Gallagher will become CFO. In general, the FCUL has no issue with the reorganization of the state's regulatory system. They are watching to see how the logistics of the Office of Financial Institutions and Securities Regulation are worked out. After voters approved Amendment 8 in 1998, Milligan favored what he referred to as "decoupling" the state's regulatory functions from constitutional functions. He advocated having umbrella agency over the financial institutions, insurance and securities industries that would be separate from the CFO. Gallagher preferred merging the responsibilities of the Division of Banking and Finance with the Division of Securities into the CFO's position, and giving that person the responsibility for regulatory affairs as well. Gallagher and Milligan spoke in early 2001 to credit unions at a town hall-style meeting in Orlando, Fla. that was held by the FCUL (CU Times, Feb. 14, 2001). Following the meeting, Landreth said the league took a straw poll among credit unions to discern whose position they favored. The outcome, said Landreth, was 50-50 for Gallagher and Milligan. "The people in Gallagher's and Milligan's office wanted us to take sides," he recalled. "But we couldn't take a position because credit unions didn't overwhelmingly lean towards one position." Instead the league decided to wait things out. In the interim, the state House passed a bill with Milligan's plan, while the state Senate passed a bill supporting Gallagher's. With legislative discussions going nowhere and realizing the plan had to go into effect Jan. 7, 2003, Landreth said Gov. Bush had to do something, and he basically instructed all the parties to sit down and work something out. "Milligan wanted to take the politics out of the regulatory system and have the CFO concentrate solely on constitutional duties, while Gallagher took the position of `it's political, so let's do the best we can.' He wanted the CFO to oversee insurance regulation as well, " said Landreth. " HB3-E is a compromise between what Milligan and Gallagher each wanted." -

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