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Committee Removes 3-Year Reinstatement Clause From Financial Prohibition Rule, Votes Do Pass
Summary
Lawmakers amended House Bill 1127 to remove a three-year reinstatement provision for prohibition orders that bar individuals from working at state-regulated financial institutions; committee approved the amendment and recommended the bill 5-0.
The Industry and Business Committee considered and amended House Bill 1127 to change rules governing prohibition orders that bar individuals from employment at state-supervised banks, credit unions and nonbanks.
Lisa Cruz of the North Dakota Department of Financial Institutions told the committee that the state previously used three-year temporary prohibitions but now seeks a permanent prohibition process and recommended removing a statutory three-year reinstatement provision.
"We would always have the state do it, and then FDIC or the Federal Reserve would also do it, but theirs would take longer," Lisa Cruz said, describing why the department prefers permanent authority and more direct state action for serious licensing and enforcement cases.
Committee members expressed concern about recidivism and public protection. Senators noted that federal standards tend to treat certain financial-prohibition cases as permanent, and multiple lawmakers said they were persuaded that a permanent bar would better protect customers, especially vulnerable account holders.
Senator Klein moved to strike the language that allowed an individual to seek reinstatement after three years; Senator Kessel seconded. The committee recorded a 5-0 roll call in favor of the amendment and then voted 5-0 to recommend a do-pass on House Bill 1127 as amended.
The Department of Financial Institutions provided context during the hearing: North Dakota supervises 58 banks and 15 credit unions; the department said it would continue to apply case-by-case criteria for any future petitions to work in supervised institutions.
Ending: The committee approved the amendment removing the three-year reinstatement provision and issued a unanimous do-pass recommendation on House Bill 1127 as amended; lawmakers said the agency will continue to apply criteria when considering petitions to lift prohibitions.
