OBL Scores Key Victory on Ohio Public Depository Disqualification Issue

07/03/24

OBL scored key victories benefiting the industry in a whirlwind of legislative activity prior to the summer recess. After significant legislative stagnation this year, OBL successfully advocated for several fixes to issues brought forward by members including addressing an important issue impacting public deposit eligibility. The General Assembly is now out for recess and will likely not return until likely after the November election.

Statutory language disqualifying any institution subject to a cease-and-desist or consent order mentioning safety and soundness from ANY regulator from holding public deposits in Ohio, located in ORC 135.032, was brought to light following the increased use of these orders impacting member across the size spectrum. This increased usage by the Biden Administration and weaponization of some regulatory agencies was causing significant concerns that some banks would be disqualified for issues that do not impact the actual health or liquidity of the bank, the key "red flag" issues the statute was meant to draw attention to.

OBL worked extensively with the Ohio Treasurer of State's office as well as legislative leaders to address this issue by raising the bar for disqualification from a consent order or cease-and-desist order to a prompt corrective action (PCA) directive which is a higher bar and only issued for capital or liquidity issues. Additionally, the new language provides a waiver method for the government entity placing the public deposit to continue with the banking relationship if it is in the public interest or if there needs to be a transition period to move the accounts. This was a big win and needed to be handled expeditiously to fix the issue prior to the December application process to hold state funds.

A copy of the bill, Senate Bill 94, can be found HEREwith the key language on this issue beginning on page 2.