D.C. Council Member Charlene Drew Jarvis, chairwoman of the council committee that oversees bank licensing, said for the first time publicly yesterday that she is likely to ask the comptroller of the currency to deny requests by 11 companies seeking to form new District-chartered banks.
Jarvis (D-Ward 4) said she agrees with many of the arguments made by the D.C. Bankers Association against allowing the 11 companies to open banks here. The arguments were presented to Jarvis by the association in a meeting Monday and in a letter dated June 3.
Local bankers argue that the applications undermine the intent of a newly enacted D.C. banking law, which took effect in two steps in October and April. The law boosts the value of existing D.C. banks by permitting outside banks to enter the District only by buying a local bank, rather than by setting up new institutions.
A spokesman for Jarvis said she "is leaning toward" opposing the applications but will take an official position Friday, when she gives the council recommendations for action it should take on the issue Tuesday.
Four major bank-holding companies and seven other companies have applied to the comptroller for charters in the District. The companies filed their applications before April 11, when an amendment to last fall's banking bill transferred to the council the right to issue local charters.
In addition, the amendment permitted bank companies from outside the 11-state region surrounding D.C. to enter the District by buying a local bank and making substantial community investments.
The 11 applicants say they are not bound by the community investment requirement because they filed their applications before the amendment took effect. They have told the council they intend to invest in the community, but that the banks they propose opening will not be large enough to justify an investment of the magnitude prescribed by the new law.
In her first official indication of what she will recommend to the comptroller, Jarvis said she agrees with much of the reasoning behind the D.C. bankers' opposition.
"I find many of their arguments compelling and have reached some of the same conclusions myself," Jarvis said in a statement released by her office.
The comptroller is not bound by the council's recommendation but generally takes local opinion into account when granting charters.
Tuesday, Mayor Marion Barry sent his own letter asking the comptroller to delay action on requests until the applicants agree to submit community investment plans that comply with D.C. law.
"Our clients are good corporate citizens," said Dennis Gingold, a lawyer for Squire, Sanders & Dempsey, which is representing the 11 companies in their applications for District banks. "A recommendation against the applicants would be inconsistent with the economic interests of the District in favor of the interest of a few who own stock in D.C. banks."
All 11 applicants have submitted community development plans that are "significantly greater" than plans submitted by regional bank holding companies when they bought banks in the District, Gingold said. The council approved the earlier plans and the acquisitions.