BANKING AND FINANCIAL INSTITUTIONS SHARE UPDATE ON ECONOMIC TRENDS, CHALLENGES, AND RISING INTEREST RATES

ST. CROIX- Members of the Committee on Economic Development and Agriculture, chaired by Senator Kenneth L. Gittens, convened in a meeting at the Frits E. Lawaetz Legislative Conference Room on St. Croix, Tuesday.
Lawmakers received testimony on the status of banking and financial institutions and their operations, the ability for the Territory to obtain credit, the impact of global economic trends, rising interest rates, and customer service. The Banking Board recently held its first in-person meeting to address the availability of construction loans and new products and services offered to customers, according to Glendina Matthew, Interim Director of the Division of Banking, Insurance, and Financial within the Office of the Lieutenant Governor. Matthew noted that board members have discussed the ongoing complaints from customers on St. John who had limited access to ATM machines due to closures of several branches, technical issues with the system conversion from Scotiabank to Oriental Bank, and the lack of staff despite the consolidation of bank branches in the Virgin Islands.
Senator Janelle K. Sarauw stated that a common complaint from most consumers is that banking services offered in Puerto Rico are not available in the Virgin Islands. Sarauw said that the public has lost confidence in the banking system, adding that there needs to be a keener look at how to regain that confidence.
Regarding global economic trends and rising interest rates, Matthew shared that the Federal Reserve increased interest rates by 75 base points, or .75 percentage points. To offset inflation, Attalah Bertrand, Regional Manager for Oriental Bank in the Virgin Islands, indicated that the Board of Governors of the Federal Reserve Bank implemented successive interest rate increases in the Federal Funds Rate. However, increased interest rates may adversely impact the real estate market values, consumer loan portfolios, and mortgage loan pricing.
In the second half of the hearing, the committee expected to hear testimony from Department of Tourism on the department’s operations, status of the upcoming cruise ship season, shore excursions, capital projects, and initiatives, however, Commissioner Joseph Boschulte sent correspondence indicating that their entire executive team was unavailable for the discussion. The committee heard from The V.I. Taxicab Commission, V.I. Hotel and Tourism Association, tour operators and taxi associations. Vernice Gumbs, Assistant Executive Director of the Virgin Islands Taxicab Commission (VITCC), mentioned that due to the COVID-19 pandemic, it is very challenging to generate revenues. She added that the lack of staff and funding to hire personnel are two major issues plaguing the commission. Gumbs stated that the short-term goal is to process online applications and to introduce electronic payments on the website. The long-term goal for VITCC is to become paperless to eliminate cash transactions, reduce the cost of mass printing, and ensure rapid collection of money.

Senators attending the meeting: Kenneth L. Gittens, Milton E. Potter, Dwayne M. DeGraff, Javan E. James, Sr., Janelle K. Sarauw, Donna A. Frett-Gregory and Alma Francis Heyliger.