An Article on the Territorial Bank of American Samoa appears in the publication and online website American Banker, April 30 edition.
It says American Samoa is finally getting its own full-service bank — and successfully creating only the second public bank in the United States.
“The Federal Reserve is allowing the Territorial Bank of American Samoa access to the U.S. payments system nearly two years after the bank first applied.
“The decision is a boon to the remote U.S. territory in the South Pacific, where more than half of the households are at, near or below the federal poverty level. Officials across the seven islands that comprise American Samoa have been scrambling for a way to maintain local banking services since the Bank of Hawaii announced in 2012 it was leaving the territory.
TBAS CEO Phil Ware is quoted saying, “It’s a huge deal for the people of American Samoa.”
American Banker says the development is also a significant development for those far away from American Samoa. The chartering of a new public bank may provide momentum for similar efforts elsewhere.
The only still operating public bank in the U.S., the Bank of North Dakota, was created a century ago. States like New Jersey and cities like Seattle and San Francisco are receptive to the idea of forming new public banks as a way to help the local economy.
“It does set a precedent,” said Ellen Brown, founder and president of the Public Banking Institute, which is backing the New Jersey effort. “It definitely will add impetus.”
Though the Territorial Bank, which is backed by the government in American Samoa, technically opened its doors in October 2016, it has been able to offer only a narrow menu of services until now. It lacked access to the U.S. payments system, which is necessary to offer banking basics such as debit cards and checks to customers.
Organizers applied in July 2016 to the American Bankers Association for a transit routing number, which would make the bank part of the payment system. But to get that approval, the Federal Reserve had to sign off that the bank was eligible for central bank services.
That finally happened in early April, when the Federal Reserve Bank of San Francisco authorized the opening of the account. The Territorial Bank subsequently opened a correspondent banking relationship with a U.S. bank.
“This is the first time we’ve had access to the payments system of the United States,” Ware said. “We’ve been able to open checking accounts, but couldn’t give checks. We couldn’t do wire transfers or debit cards. We haven’t had a supply of cash, and American Samoa is basically a cash-based economy.”
“There hasn’t been a commercial loan made on the island in five years or more.”
“With the Fed approval, that all changes,” he said.
