D.C. Council member Charlene Drew Jarvis (D-Ward 4) is expected to introduce emergency legislation today that would give the District's banking office the investigative authority that might have prevented Latin Investment Corp. from accepting millions of dollars in uninsured deposits.
The bankruptcy of Latin Investment, which offered savings accounts without a banking charter or deposit insurance, is forcing at least 2,000 customers, mostly Salvadoran immigrants, to face the possibility of losing savings estimated to total between $6 million and $13 million.
The eight-page bill that Jarvis is expected to introduce at the last council meeting of the year is being extracted from a broader bill that would dramatically amend the District's banking law. The last time the banking laws were amended was in 1985, when the D.C. Council passed the legislation that created the Office of Banking and Financial Institutions and allowed banks from outside the District to acquire local institutions.
The emergency bill would give the banking office the authority to audit financial institutions, conduct investigations, issue subpoenas, pursue restraining orders and send out cease and desist orders on businesses that are operating without a city charter.
The measure is being called an emergency step because of the situation surrounding Latin Investment, which closed Nov. 29. Latin Investment catered to Spanish-speaking clients, offering such services as check cashing, savings accounts and international wire transfers to send money to relatives in Central America.
The depositors panicked when they learned of the financial problems that Latin Investment was having and discovered that the deposits could be lost because they were not federally insured.
A committee of depositors was formed last week, at the suggestion of a lawyer from Arnold & Porter, which is offering its legal services free. On Wednesday, those depositors went to court to place Latin Investment in bankruptcy, a move that was not challenged by Latin Investment's president, Fernando Leonzo.
But the revelation shortly after Latin Investment closed that as many as six local and federal agencies knew for two years of Latin Investment's activities and did nothing to intervene prompted Jarvis to hold an interagency hearing Dec. 7 to investigate the case.
The Securities and Exchange Commission, the agency that originally alerted the District to complaints about Latin Investment, began its own investigation last week.
Critics have blamed Jarvis for the lack of authority, pointing to the 1985 banking legislation she introduced as chairman of the Committee on Housing and Economic Development and saying it was designed more for economic development than enforcement.
Jarvis, who could not be reached for comment yesterday, has blamed the mayor and the D.C. Department of Consumer and Regulatory Affairs for the lack of enforcement power. Jarvis said she never blocked attempts by the banking office to broaden its authority.
If the bill passes, it would become law if signed by Mayor Marion Barry.
If Barry vetoes the measure and the council overrides such a veto, the bill would become law at that point. The law would be effective for 90 days.
Two agencies have been collecting contributions to aid the depositors whose money is tied up in Latin Investment Corp.
FOOD AND MONEY: Call the Wilson Community Center at 202-667-0417, or go to its offices at 2401 15th St. NW. The Wilson Center, in Adams-Morgan, has served as a gathering point for many of the worried depositors.
TOYS AND CLOTHING: Go to the Mayor's Office on Latino Affairs, in the Frank D. Reeves Municipal Center, 14th and U streets NW. The office's phone number is 202-939-8765.