Oklahoma Administrative Code Title 85 - State Banking Department
Oklahoma Administrative Code Title 85 – State Banking Department
Purpose and Overview
Title 85 governs the rules and regulations administered by the Oklahoma State Banking Department (now often called the Oklahoma Banking Department), which oversees the regulation, supervision, and examination of banks, trust companies, and other financial institutions operating within Oklahoma.
The primary goal of the Department is to ensure the safety, soundness, and integrity of the state’s banking system while protecting depositors and maintaining public confidence.
Key Functions of the State Banking Department
Chartering and Licensing
The Department is responsible for granting charters to new state banks, trust companies, and other financial institutions. It also issues licenses for various banking-related activities, ensuring applicants meet statutory requirements.
Regulation and Supervision
The Department supervises all state-chartered financial institutions to ensure compliance with state banking laws, regulations, and sound banking practices. This includes on-site examinations, reviewing financial condition, and evaluating risk management policies.
Consumer Protection
Title 85 also includes provisions to protect consumers of banking services. The Department investigates complaints, enforces fair lending practices, and monitors institutions for compliance with consumer protection statutes.
Enforcement and Disciplinary Actions
The Department has authority to enforce banking laws by issuing cease-and-desist orders, imposing fines, or revoking charters or licenses if institutions violate laws or regulations.
Rulemaking and Administrative Procedures
The Department promulgates administrative rules to interpret and implement statutory mandates, such as capital adequacy, loan classifications, and fiduciary duties.
Important Regulations under Title 85
Capital and Reserve Requirements
Banks must maintain minimum capital and reserves to ensure financial stability and protect depositors.
Loan Limits and Classifications
Regulations set maximum lending limits to single borrowers and require banks to classify loans based on risk, ensuring appropriate risk management.
Fiduciary Responsibilities
Trust companies and banks acting as fiduciaries are held to strict standards concerning the management of trust assets and responsibilities.
Consumer Lending Practices
Rules prohibit unfair, deceptive, or discriminatory lending practices and require clear disclosure of terms.
Relevant Case Law
State ex rel. Oklahoma State Banking Department v. City National Bank (1984)
This case affirmed the Department’s broad supervisory authority over state-chartered banks. The Oklahoma Supreme Court upheld the Department's ability to impose corrective actions, including removal of bank officers, to protect the public interest and maintain financial stability.
Oklahoma State Banking Department v. First National Bank (1991)
The court ruled that the Department had authority to revoke a bank’s charter when it found serious violations of banking laws, emphasizing the Department's mandate to ensure safe banking practices and protect depositors.
Consumer Protection in Banking: Johnson v. State Banking Department (1997)
This case involved a consumer complaint against a state-chartered bank for deceptive lending practices. The court upheld the Department’s investigation and enforcement actions, reinforcing the role of the Department in safeguarding consumer rights in the banking sector.
Practical Implications
For Banks and Financial Institutions:
Compliance with Title 85 regulations is mandatory to maintain good standing, avoid penalties, and ensure consumer trust.
For Consumers:
The Department provides a regulatory safeguard, ensuring fair treatment and recourse for complaints related to banking services.
For State Regulators:
The Title provides clear authority and procedures to oversee the banking industry, balance economic development with prudential regulation, and intervene when institutions pose risks to the financial system.
Summary
Oklahoma Administrative Code Title 85 defines the comprehensive regulatory framework within which the State Banking Department operates. It ensures the prudent operation of state-chartered financial institutions through licensing, supervision, enforcement, and consumer protection. Case law confirms and clarifies the Department’s broad regulatory powers and the courts’ support for its mission to maintain a safe, fair, and stable banking environment in Oklahoma.
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