John P. Burke (left), who retired last week as commissioner of the Connecticut Department of Banking, is shown above with Howard Pitkin, who has been named acting commissioner.
Since John P. Burke took the helm of the Connecticut Department of Banking 12 years ago, consolidation has transformed the world of banking, waves of small start-ups have entered (and sometimes left) the scene and federal preemption of state regulation has become a huge concern. But all in all, Burke is leaving a healthier banking industry than the one he inherited in 1994, industry experts say.
Burke, 74, officially retired last week.
“It’s time for me to go. Twelve years is long enough,” he said.
Burke, whose tenure as banking commissioner was the longest in known history, added, “We maybe need some fresh thinking.”
That fresh thinking will come in the form of Howard Pitkin, who has been named acting commissioner and could serve as Burke’s permanent successor pending confirmation hearings during the next legislative session. Pitkin has been a part of the DOB for 30 years, experience that will allow for continuity between the tenures of the two commissioners, according to Gerald Noonan, president of the Connecticut Bankers Association. He added that Pitkin will end up dealing with many of the same challenges Burke faced.
John Carusone, president of the Bank Analysis Center in Hartford, said of the retired commissioner’s tenure, “I think that Jack Burke presided over a transitional era in Connecticut banking.”
The early 1990s saw many complications in the industry, which were characterized by bank failures and a weakening of the system. When Burke took the reins of the DOB in 1994, the industry was fragile.
“His was an interesting time,” Carusone said.
But during his time as commissioner, Burke and the department watched major acquisitions with national competitive implications, and regulated at a time when more and more start-ups were looking for unserved niches in the industry.
“The decade of his administration represented a resurgence to economic strength in the banking system,” Carusone said. “He leaves the banking environment much stronger than when he inherited it Â… I think he accomplished a lot and he ingratiated himself to the banking community while maintaining an appropriate regulatory aloofness.”
‘On the Horizon’
But Burke said the biggest challenge he has faced – and one that will be passed on to the new commissioner – has to do with the federal preemption of state regulation. Since banks were first able to choose either a state or a federal charter, it has been a problem for regulators in almost every state in the country, he noted.
“That’s been a major concern,” Burke said.
For the DOB, federally chartered banks in Connecticut represent less consumer access.
“I think it weakens the system,” he said.
Nevertheless, Noonan noted, it has been good for banks. Burke said he recognizes that, adding that it is an incentive to keep Connecticut’s state charter a good option for banks.
“We’ve been fighting that battle, keeping the state charter attractive,” he said.
Burke added that he also is proud of a program he started that has the money from fines working for the people of Connecticut. The DOB regulates securities and consumer credit in addition to banks, and up until recently, any money made when an institution or person was fined went back into the department. But Burke’s program provides options for the company or person who has been fined, so they can choose a program to benefit from the fine money. Ameriquest did that and put its fine money into a fund that helps first-time homebuyers.
“I think it’s helped the citizens of Connecticut,” Burke said.
Burke said he believes Pitkin will continue to deal with the challenges of federal preemption. With increased competition from big, national banks, more state-chartered banks are electing to expand outside of state lines, a move that makes sense in a relatively small state like Connecticut. Bridgeport-based People’s Bank recently switched from a state to a federal charter so it could expand.
The state charter does not allow banks to open de novo branches in other states, Burke said, but does allow them to acquire banks, as New Haven-based NewAlliance Bank recently did in Massachusetts.
Pitkin, who most recently was the chief of administration for the DOB, is well equipped for such challenges and has tremendous knowledge of Connecticut’s banking industry, according to Carusone.
“No one is paying for Howard Pitkin’s tuition,” he said.
In addition to the challenges of federal preemption, Pitkin may face the challenge of consolidation at the DOB itself. Because there are two-thirds fewer state-chartered banks now than a decade ago, it is possible that, to save money, the state might consolidate the banking and insurance departments, like Rhode Island’s government has done.
“That might be on the horizon during the next commissioner’s watch,” Carusone said.
The next commissioner also might have to deal with the recodification of banking statutes, which happens about once a decade.
“Howard will have some of the same challenges Jack has found,” Noonan said. Burke always kept an open dialogue with the banking community, he added, and it appears Pitkin will do the same.
“I think he’s the same type of person,” Noonan said.
Even so, he will not entirely replace Burke.
“Obviously Jack was a great commissioner,” Noonan said. “We’re going to miss [him].”
Before Burke became commissioner, he was president and chief executive officer of Bristol Savings Bank. Prior to that post, he worked for two Waterbury-based banks. He was president and CEO of Security Savings and Loan Association during the early 1990s and previously had started his banking career with Centerbank, where he worked for 26 years.
