Neither the House nor Senate was willing to yield their positions on the Fiscal Year 2022 supplemental budget bill.
At a conference committee this morning, which lasted nearly 1 and 1/2 hours, senators argued fervently to give the Territorial Bank of American Samoa (TBAS) $5.9 million, while Representatives were adamant to revert the bill to its original form — as submitted by the Lemanu Talauega Administration.
A vote was eventually held and with representatives outnumbering senators in the conference committee, the House prevailed.
However, when Senators met in their regular session, they rejected the conference committee report to approve what the administration proposed. This means that the supplemental budget bill is not approved.
Today was the second to last day of the final Fono session for the year, and it’s unlikely there’ll be any further action to resurrect the bill as tomorrow—the final day—is expected to be just for holiday wishes and farewells.
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As background ASG has invested $16.3 million in TBAS. Investing an additional $5.9 million would bring this total to $22.2 million.
Meanwhile, continuous losses at the bank have reduced the value of this investment to 47% of the accumulated amount or just $7.7 million at the end of FY2021.
TBAS has yet to turn a profit and has an accumulated loss of $8.1 million, since it opened for business.
Having about $300 million in assets as the bank’s Board Chairman, Sen. Togiola Tulafono has stated that TBAS should have at least $15 million of capital, according to the Federal Reserve Bank (FRB). The FRB requires 5% of asset as capital. TBAS’s own requirement is 9% since it does not have FDIC insurance. At 9% it would have to have $27 million of capital.
Such capital requirements are necessary to ensure that banks and depository institutions are not holding investments that increase the risk of default. They also ensure that banks and depository institutions have enough capital to sustain operation, while still honoring withdrawals.
KHJ News understands that in October, the FRB threatened to pull TBAS’ federal account because of the low capital levels.
TBAS is said to have added more funds to their reserve at the FRB as a temporary solution.
However, permanently low capital levels may force the FRB to revisit the situation.
