Kansas Legislature isn't being transparent with Office of the State Bank funding

The Capital-Journal
·2 min read
Lawmakers have slashed funding for the state's banking regulator, saying they will address the budget in the end-of-session wrap up in an unusual move.
Lawmakers have slashed funding for the state's banking regulator, saying they will address the budget in the end-of-session wrap up in an unusual move.

The Kansas Legislature slashed funding to the state’s bank regulator until unspecified information is provided to lawmakers.

If that sounds strange, it’s because it is.

The Topeka Capital-Journal’s Andrew Bahl reports the move places the Office of the State Bank commissioner in “uncharted territory.”

Bahl reports a panel of budget negotiators elected to boot consideration of the OSBC budget over what Sen. Rick Billinger, the Goodland Republican who chairs the Senate Ways and Means Committee, said was a desire for more information from the agency.

The move comes amid a national concern over the banking sector, amid high-profile bank failures in California and New York increasing scrutiny.

Lawmakers say they plan to address the funds in the end-of-session wrap-up. But we’d like answers now.

More: 'Uncharted territory': Decision to slash Kansas bank regulator budget raises eyebrows

This isn't the time to play games with bank regulations while the nation deals with concerns about banking security. Lawmakers need to explain their actions and make this a top priority next week. If there’s a legitimate concern, let’s hear and discuss a solution — out loud and in hearings.

Let’s not go searching for a problem that doesn’t exist. That’s a waste of time.

We’re having trouble connecting the dots on what is the problem — it is believed to be related to the agency's regulation of Beneficient, the lone entity operating in Kansas under a novel investment framework created by the Legislature. But we’re not certain because legislators aren't being transparent with their constituents.

Kansas can’t afford to have a banking crisis. This problem is completely avoidable. Fund the agency.

Bahl reports unlike many agencies, the OSBC is not funded with state taxpayer money but rather fees garnered from banks, trusts and other institutions, as well as monies recouped from settlements. The final budget, sent to Gov. Laura Kelly earlier this month, authorizes the OSBC to spend $0 of those funds over the next two fiscal years.

David Herndon, the state banking commissioner, said in an email that he was uncertain of why the move was made.

"The action by the legislature puts us in uncharted territory," Herndon said. "We will work with all parties to restore our budget, especially since 100% of our revenue sources are from fees banks, trust companies, consumer and mortgage lending institutions as well as those businesses involved in consumer and mortgage activities pay to us."

Let’s get the OSBC out of uncharted territory and back to regulating our state’s banks.

This article originally appeared on Topeka Capital-Journal: Kansas Legislature not transparent with Office of State Bank funding