Date: 01/27/2010
Final
DORA Briefing
COMMITTEE ON JOINT BUSINESS AFFAIRS & LABOR
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01:56 PM -- Briefing by the Department of Regulatory Agencies
Barbara Kelley, Executive Director of the Department of Regulatory Agencies (DORA), came to the table to make the department's annual briefing to the committee. DORA provided a packet of handouts (Attachment A). Ms. Kelley introduced herself and described her background. She listed the divisions housed within DORA, which include:
- Division of Banking;
- Division of Civil Rights;
- Office of Consumer Counsel;
- Division of Financial Services;
- Division of Insurance;
- Public Utilities Commission;
- Division of Real Estate;
- Division of Registrations;
- Division of Securities; and
- Executive Director's Office.
Ms. Kelley introduced the division directors and thanked them for their work.
02:01 PM
Ms. Kelley talked about the consumer protection mission of DORA and the department's strategic plan. She spoke about maximizing efficiency in the department to better serve consumers. Ms. Kelley explained that DORA is predominately cash funded, with the exception of the Civil Rights Division, and is obligated to assess and adjust fees to cover program costs. She talked about the importance of using fee revenues as efficiently as possible to serve the consumers of the state.
02:08 PM
Ms. Kelley continued, talking about cuts to the budget for the Civil Rights Division, which is the only division in the department funded with state general fund dollars. She spoke about the sunrise review process, in which the Executive Director's Office uses statutory criteria to evaluate the need to regulate a previously unregulated occupation or profession. Next, Ms. Kelley described the sunset review process, in which state agencies are reviewed according to a statutory review schedule and according to statutory criteria. A sunset review, she explained, discusses whether an agency under review should be continued without changes, continued with changes, or terminated.
Ms. Kelly spoke next about the Expedited Settlement Program (ESP), which saves valuable time and legal fees in negotiating settlements.
02:13 PM
Ms. Kelley continued her presentation, talking about the Division of Banking, which has been authorized to add six additional staff members. She explained that three have been hired and the division is seeking to hire for the three remaining positions. She also said two additional staff were authorized for the Division of Securities and have been hired. She next spoke about the failure of New Frontier Bank and findings related to the bank's failure. Ms. Kelley talked about continuing investigations related to the bank's failure, but said there is no indication that the failure was due to lack of state regulatory oversight.
02:19 PM
Ms. Kelley responded to committee comments and questions. Senator Williams commented that the department is more accessible than in the past. She then asked about fines collected in the last fiscal year, specifically the amount of fines collected by the Division of Insurance, which have increased a great deal since FY 2007-08. Marcy Morrison, Insurance Commissioner, came to the table to respond to Senator Williams' question.
02:24 PM
Committee questions for Commissioner Morrison continued, with Representative Soper asking for further clarification of the amount of fines collected and from which types of companies they were collected. Representative Rice asked for further clarification around the issue of fines. Senator Harvey asked if the division has a good relationship with the industry, or whether the relationship is more adversarial. Discussion on this topic between Senator Harvey and Commissioner Morrison ensued, with Senator Harvey making comments about regulation during good economic times versus bad times. Ms. Kelley also responded to Senator Harvey's comments.
02:32 PM
Representative Rice thanked the department for new efficiencies, specifically around the sunset process. Representative Rice asked Ms. Kelley to try to identify where FTE shortages are counterproductive and asked to be kept abreast of the implementation of a centralized call center as mentioned by Ms. Kelley earlier in her presentation. Ms. Kelley invited legislators to DORA's legislative open house which is being held the afternoon of Friday, February 5.
Representative Balmer commented that Chris Lines, the department's legislative liaison, is very responsive to legislators. Representative Balmer then expressed concerns about the $200,000 appropriated to DORA for consumer outreach, saying he believes the money should be redirected elsewhere. Ms. Kelley responded to Representative Balmer's comments and talked about the consumer outreach program, expressing her support for the program. She reminded the committee that the program is funded through fine revenue and she described the program's goals. She also spoke to earlier comments from Representative Balmer about a DORA calendar.
02:43 PM
Fred Joseph, Securities Commissioner and Acting State Bank Commissioner, came to the table to respond to committee questions. Representative Rice asked if there were failures in regulation related to the failure of New Frontier Bank and asked what could be done differently to avoid situations such as these in the future. Mr. Joseph responded, saying that six additional FTE were authorized and three were hired, and they are currently looking to hire three more. He said there is difficulty in finding qualified applicants to be examiners. He next spoke about lessons learned from what happened at New Frontier. Dialogue on the issue between Representative Rice and Mr. Joseph ensued.
02:50 PM
Mr. Joseph continued, speaking next about surprise examinations. He explained why surprise examinations are so rarely used. Conversation on this issue between Representative Rice and Mr. Joseph ensued, with Representative Rice asking whether regular audits uncover the fraud that a surprise examination might. Representative Rice asked about records retention and the release of documents related to regulatory duties. Ms. Kelley responded, explaining that a private company that is regulated by the state is not a public company by virtue of the regulation and thus the records are not public records. Discussion in this area between Ms. Kelley and Representative Rice ensued. Mr. Joseph weighed in on the issue as well.
03:00 PM
Senator Johnston commented on an article in the Denver Post reporting that the Accountancy Board will not be investigating the failure of New Frontier Bank. Ms. Kelley responded, saying there is no credible information on any CPA or CPA firm with ties to New Frontier that provides a basis to believe that fraud has occurred. She clarified that the Board of Accountancy has oversight only over CPAs and CPA firms. Senator Harvey thanked Ms. Kelley for her position about private companies and not releasing their information. Senator Harvey asked Mr. Joseph about protecting consumers and working with institutions. Conversation between Senator Harvey and Mr. Joseph ensued.