Budget battle may mean fee increase for Illinois banks

Illinois bankers are waiting to assess the impact of budget balancing moves that will affect the Office of Banks and Real Estate. Gov. Rod Blagojevich is trying to resolve a $4.8 billion budget deficit, and has identified up to $16.7 million in savings from the Office of Banks and Real Estate, which

In May, Gov. Blagojevich proposed increasing the fee state chartered banks pay to the state agency by 100 percent. Under the plan a $250 million bank would see its annual assessment double to $88,000, said Linda Koch, executive vice president of the Illinois Bankers Association. Illinois state banks currently pay $2,000, plus 16 cents or less for each $1,000 in assets they have.

The rate increase would put state bank fees higher than the fees national banks pay. Koch said that same $250 million bank with a national charter currently pays about $74,000 in annual supervisory fees.

The IBA and the Community Bankers Association of Illinois have been working with the Governor's office to propose alternatives to the hefty fee increase. Dave Manning, CBAI's senior vice president of government relations, said the rate increase would encourage banks to convert to national charters.

Koch said IBA offered a plan that raises bank exam fees only 8 percent, while proposing cost savings elsewhere. Manning said CBAI did the same, while proposing an increase in bank fees of 20 percent. Koch and Manning said Illinois state officials do not want to see state chartered banks switch their charter, and are working on a compromise.

Because fees are set by a rule-making process rather than the legislative process, Koch and Manning said it is difficult to estimate when the issue will be finalized.

The Governor's budget also holds the Office of Banks and Real Estate's staffing level. At the end of the last fiscal year, the agency had 310 employees. Forty-five positions opened up during the previous 12 months but the proposed budget does not allow for most of those positions to be filled.