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HFSC to vote on Emigrant Bank bill amid scrutiny

Michael Grimm

The House Financial Services Committee will vote today on a hot-button piece of legislation that would amend the Dodd-Frank Act to allow Emigrant Bank to keep preferred securities in its Tier 1 capital level.

Emigrant Bank at present has $10.5 billion in assets, but on Dec. 31, 2009, the bank had more than $15 billion. As a result, it is subject to the Collins Amendment, a Dodd-Frank provision that prohibits banks above the $15 billion threshold from counting trust preferred securities at the Tier 1 capital level, according to American Banker.

The House bill would ultimately push back the Collins Amendment’s enactment date to March 31, 2010, at which point the bank had less than $15 billion in assets.

The controversial issue, however, lies in the politics of the legislation and its sponsors. The chief sponsor is Rep. Michael Grimm (R-N.Y.), who received $2,500 in campaign donations from Emigrant Bank CEO Howard Milstein and his wife Abby, American Banker reports.

The bill has eight co-sponsors, some of which have also received campaign contributions from Milstein and his family. Rep. Carolyn McCarthy (D-N.Y.), Rep. Gregory Meeks (D-N.Y.) and Rep. Carolyn Maloney (D-N.Y.) received a combined total of $9,000 in campaign contributions from Milstein and his family last year.

Republicans from the HFSC asked Democrats on the committee if any members objected to going straight to a House vote on the measure rather than go through the committee stage. Barney Frank, co-sponsor of the 2010 Dodd-Frank Act, objected and said that public discussion of the measure was important.

“The piece of legislation we’re talking about today affects one institution,” Frank said, according to American Banker. “I have no objection to that, but I must be honest and say I was asked if we could do this in a way that would move quickly. And my answer was, ‘Yes, I’d like to move quickly, but I think it’s important that it be done in the light of day.’”

Maloney defended her position on the bill, though she did not address questions related to the campaign donations she received from the Milstein family.

“Emigrant Bank surpassed the $15 billion threshold temporarily during the financial crisis—the time period set by the Collins language—when they did the prudent thing by taking on extra short-term assets to enhance its stability and meet its financial obligations,” Maloney said, American Banker reports. “They have since shed those short-term assets and during normal times, they are a smaller community lender. That’s why I signed on to the H.R. 3128, because I don’t believe the intent of the Collins Amendment was to ‘capture’ a bank of Emigrant’s usual size with the increased capital requirements.”

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