COMMONWEALTH OF PENNSYLVANIA HOUSE OF REPRESENTATIVES HOUSE APPROPRIATIONS COMMITTEE THE MAIN CAPITOL ROOM 140 HARRISBURG, PENNSYLVANIA WEDNESDAY, FEBRUARY 22, 2 012 1:41 P.M. PUBLIC HEARING DEPARTMENT OF BANKING BEFORE: HONORABLE WILLIAM F. ADOLPH, JR., CHAIRMAN HONORABLE JOSEPH F. MARKOSEK HONORABLE JOHN C. BEAR HONORABLE MARTIN T. CAUSER HONORABLE JIM CHRISTIANA HONORABLE GARY DAY HONORABLE GORDON DENLINGER HONORABLE BRIAN L. ELLIS HONORABLE MAUREE GINGRICH HONORABLE GLEN R. GRELL HONORABLE DAVID R. MILLARD HONORABLE T. MARK MUSTIO HONORABLE BERNIE O'NEILL HONORABLE MIKE PEIFER HONORABLE SCOTT A. PETRI CONTINUED: HONORABLE JEFFREY P. PYLE HONORABLE THOMAS QUIGLEY HONORABLE MARIO M. SCAVELLO HONORABLE CURTIS G. SONNEY HONORABLE MATTHEW D. BRADFORD HONORABLE MICHELLE F.BROWNLEE HONORABLE H. SCOTT CONKLIN HONORABLE PAUL COSTA HONORABLE DEBERAH KULA HONORABLE TIM MAHONEY HONORABLE MICHAEL H. O'BRIEN HONORABLE CHERELLE L. PARKER HONORABLE JOHN P. SABATINA, JR. HONORABLE STEVE SAMUELSON HONORABLE MATTHEW SMITH HONORABLE GREG VITALI HONORABLE RONALD G. WATERS ALSO PRESENT: HONORABLE KERRY A. BENNINGHOFF HONORABLE JOHN R. EVANS HONORABLE MARK M. GILLEN HONORABLE PAUL I. CLYMER HONORABLE WILL TALLMAN HONORABLE DICK HESS HONORABLE WILLIAM C. KORTZ, II HONORABLE VANESSA LOWERY BROWN HONORABLE H. WILLIE DeWEESE HONORABLE DAN FRANKEL HONORABLE JAKE WHEATLEY HONORABLE PETER J. DALEY EDWARD NOLAN, MAJORITY EXECUTIVE DIRECTOR MIRIAM FOX, MINORITY EXECUTIVE DIRECTOR BRENDA S. H^ILTON, RPR REPORTER - NOTARY PUBLIC INDEX NAME PAGE GLENN E. MOYER, SECRETARY 9 DEPARTMENT OF BANKING P R O C E E D I N G S CHAIRMAN ADOLPH: Good afternoon, everyone. I'd like to get started on the House Appropriations budget hearing. The next testifier is the Honorable Glenn Moyer, Secretary of the Department of Banking. Good afternoon -¬ SECRETARY MOYER: Good afternoon. CHAIRMAN ADOLPH: — Mr. Secretary. SECRETARY MOYER: Good afternoon. CHAIRMAN ADOLPH: It's my understanding that you'd like to give a brief opening comment. SECRETARY MOYER: I would. And thank you, Chairman Adolph, and thank you, Chairman Markosek, and members of the Committee. Thank you for inviting me here today to discuss the fiscal 2012/2013 appropriation for the new Pennsylvania Department of Banking and Securities. As you are aware, Governor Corbett has announced his support for merging the Department of Banking with the Pennsylvania Securities Commission, agencies with a similar mission, into one state agency. We anticipate this merger will take effect in the 2012/2013 fiscal year. Representatives of the two agencies have just begun to meet. In fact, we've had one initial meeting of the senior staff, at the senior staff level of these areas. We are going to be putting together a merger planning and integration team to really focus on how to combine these two strong organizations into hopefully an even more efficient and effective organization. We're still very much in the discovery stage of this and really have no final details to share with you today. However, throughout the merger process, both of us have dedicated ourselves to not missing a beat as we continue to service our clients while working through the required reorganization activities. And I can assure you that our focus will be forward looking as we explore what might be possible, and I'd simply say thank you, and I'd be happy to take any questions you may have. CHAIRMAN ADOLPH: Thank you, Mr. Secretary. I'd first like to acknowledge the presence of Representative Dick Hess, chairman of the House Banking Committee. Good afternoon, chairman. I'd also like to acknowledge an old friend and former state representative, Tom -¬ MR. MICHLOVIC: Michlovic. CHAIRMAN ADOLPH: Michlovic. I couldn't pronounce it when he was here. Nice to see you Tom. MR. MICHLOVIC: Good to be here. CHAIRMAN ADOLPH: Okay. Mr. Secretary, I was going to ask you some questions regarding the merger; and hearing your opening statement and comment, it sounds like there's not an awful lot of facts that you can give us, you know. I guess my first question is, does this take legislation by the General Assembly? SECRETARY MOYER: Well, we are at this point working with other folks in the Governor's office to look at several aspects of this. But we do believe at this point that it will take some legislative action. And certainly as we work through the budgeting process, we're going to try and make that as streamlined as -- as possible. But it looks like there will be legislative action that will be needed. CHAIRMAN ADOLPH: Okay. With -- with this merger, the purpose of this merger is to streamline and to become more efficient. Is that correct? SECRETARY MOYER: Absolutely. This is one of several actions that the Governor has decided to undertake. They are focused on efficiency, both now, in the shorter term, but also as we go forward and we look at how together we would do our business. So efficient but not efficient to the point that we don't serve our clients well, given the core mission that each of us has and I know feel very strongly about. So we're trying to do this in a -- in a comprehensive, proactive, open setting and try and get the best of both. CHAIRMAN ADOLPH: Okay. Well, as you gather your information regarding exactly what this merger will look like and -- I would appreciate if you would share that with -- with our committee. SECRETARY MOYER: Okay. CHAIRMAN ADOLPH: Okay. So we can see. Because obviously it's involved in this year's budget. SECRETARY MOYER: Uh-huh. CHAIRMAN ADOLPH: So as soon as you have that information, if you would forward that to us. Okay? SECRETARY MOYER: We will do that. We look forward to that. CHAIRMAN ADOLPH: Okay. Representative Mario Scavello. REP. SCAVELLO: Thank you, Mr. Chairman. Just to go back to the merger just briefly, your -- your present complement in banking is 175, your securities is 75 positions? SECRETARY MOYER: 73 to 75, yes. REP. SCAVELLO: Okay. And with the merger, the authorized complement is 269. Why would you be going up? That is the numbers that I looked at. Wouldn't you reduce? SECRETARY MOYER: Let me just look here a second. The authorized complement is going to be 269. REP. SCAVELLO: Right. SECRETARY MOYER: Currently, the authorized at the state -- at the Department of Banking is 196, but we have 175 filled. REP. SCAVELLO: Okay. That's what I'm looking -- so you are authorized for 196? SECRETARY MOYER: Yes. REP. SCAVELLO: You only have 175 filled. SECRETARY MOYER: Right. REP. SCAVELLO: So it's possible that that 269 won't be -- you won't be filled -- it's possible that you won't be filling that? SECRETARY MOYER: We — we may. But I -- I think we're going to make every effort, obviously, to keep the staffing as lean as we can. REP. SCAVELLO: Okay. I want to talk about the National Mortgage Settlement, the 25 billion foreclosure settlement announced with the five national mortgage services. The Commonwealth's share of that settlement is approximately 266 million. One of the programs that, you know, it's been very successful in my area is that HEMAP program, and I'm wondering, I know that there's about -- approximately 69 million that might be available, that -- that there's no strings, that it can go into that program, and I'd like to know what is your views on that? Is that a possibility or -¬ SECRETARY MOYER: Well, thank you for your question about that. Clearly this has been on a national scene coming out of the pressure that's occurred in the mortgage market. A major undertaking. I will certainly tell you that nothing is finalized at this point, but an agreement in principle, as you saw the press release, and I believe the numbers that you're referring to are what Attorney General Linda Kelly -¬ REP. SCAVELLO: Uh-huh. SECRETARY MOYER: -- said would be Pennsylvania's share of the settlement if it's finalized as -- as projected a week or two ago. And there is included in that $266 million $69 million of what's projected to be a direct payment to the Commonwealth of Pennsylvania, the Office of the Attorney General. We have been working with the Attorney General on this settlement for over a year. As you know, following it in the paper, it was going to be settled, it wasn't settled, it was going to be settled, it wasn't settled. I think we're there now but, of course, anything can tilt -- still take -- turn the other way. While it's not final, it needs to be approved by the Federal District Court in the District of Columbia, and hopefully that's going to occur sometime over the next week or so. Discussions within the administration have been focused on the majority of funds to be received by Pennsylvania going to the HEMAP program administered by PHFA. REP. SCAVELLO: That's great. SECRETARY MOYER: As this matter is being finalized, I've got to say it's good to hear that others agree with this approach and want to be supportive of that. And certainly we look forward to finalizing this matter over the coming weeks. We would like to get -- and I'll now put my hat on, in addition to being Secretary of Banking, I also serve as the chair of the Pennsylvania Housing Finance Authority Board. And certainly one of the things that board has talked about, and Brian Hudson in his leadership has advocated, is trying to find a way to get HEMAP restarted. The banking industry wants it. It seems to be a universal agreement.