Centennial celebration

History of the Department of Financial Institutions

1913:  The Banking Department was created by Public Chapter 20 in the 1913 legislative session.

1914: The Banking Department opened for business. The Department’s first employees were the Superintendent of Banks and 5 examiners.

The first Superintendent of Banks was J. L. Hutton.

401 state banks (including 5 branch banks) reported their condition in Bulletin No. 1 as of the close of business on January 6, 1914. Of the 401 banks reporting, 27 banks had surplus and undivided profits equal to capital and were listed in the “Roll of Honor.”

1923: State-chartered credit unions were created and placed under the supervision of the Superintendent of Banks.

1927:  Legislation passed requiring banks to pay a fee to the state Treasury to be used solely to defray expenses of the Department.

1931: Legislation was passed requiring credit unions to pay an examination fee to the Department.

1941:  Superintendent of Banks authorized to appoint an auditor for credit unions.

1959:  Legislation passed requiring annual examinations of credit unions.

1965:  Licensing and regulation of money order issuers established.

1969:  Public Chapter 36, called the Tennessee Banking Act, completely revised banking laws affecting Tennessee state-chartered banks.

1974:  State Credit Union Share Insurance Corporation was created to guarantee shares held by members in state-chartered credit unions and assist credit unions in liquidation or financial difficulty.

1981:  Bank Customer Dispute Resolution Act was passed, authorizing the Commissioner of Banking to arbitrate or mediate customer complaints against state-chartered banks.  Volunteer State Corporate Central Credit Union was created to provide credit unions and management for mergers and joint ventures of credit unions.

1981:  Bank Customer Dispute Resolution Act was passed, authorizing the Commissioner of Banking to arbitrate or mediate customer complaints against state-chartered banks.  Volunteer State Corporate Central Credit Union was created to provide credit unions and management for mergers and joint ventures of credit unions.

1983:  Legislation was enacted to change the name of the Department of Banking to the Department of Financial Institutions and to provide that the Department would regulate industrial loan and thrift companies.  The regulation of savings and loan companies was also transferred from the Department of Insurance by executive order.

1984:  Legislation was enacted and upheld by the Tennessee Supreme Court eliminating “Industrial Banks” in Tennessee and requiring existing industrial banks to either convert to industrial investment companies or liquidate.  Legislation was also enacted to allow a bank located in any county in the state to purchase the assets and assume the liabilities of a closed bank and operate it as a branch.

1985:  The Regional Reciprocal Interstate Banking Act was passed to permit the interstate acquisition of banks and bank holding companies in a 14-state region.

1988:  The Regional Reciprocal Interstate Banking Act was amended to add Maryland and the District of Columbia to Tennessee’s interstate region, increasing the region from 14 states to 15 states and the District of Columbia. 

Legislation was enacted to place the regulation of mortgage lenders, brokers and servicers under the Department’s jurisdiction.

1989:  State-chartered banks were given the authority, subject to regulation, to engage in certain securities activities.

Business and Industrial Development Corporations (BIDCOS) were created by the General Assembly and placed under the regulatory jurisdiction of the Department.

1990:  Tennessee’s interstate banking region was expanded to include the entire nation, effective January 1, 1991, on a reciprocal basis.  The Department was given the authority to approve/disapprove all interstate and intrastate acquisitions of banks and bank holding companies in Tennessee. Banks and savings and loans were given the statutory authority to branch statewide, subject to regulatory approval.

1994:  The “Tennessee Money Transmitters Act of 1994 was enacted.

1997:  Interstate branching became effective June 1, 1997 permitting banks to operate branches across state lines. 

The “Check Cashing Act of 1997” and the “Deferred Presentment Services Act” were enacted and went into effect on October 1, 1997.

2004:  Consumer Resources Division was created to investigate all consumer complaints to the Department which involve abusive, discriminatory or predatory practices by lenders and to focus on the promotion of and education in financial literacy for Tennessee citizens.

2005:  Legislation was enacted to place the regulation of title pledge lenders under the Department’s jurisdiction.

2006:  The Tennessee Home Loan Protection Act was passed, giving the Department authority to examine high cost home loans.

2009:  Amendments were made to the Tennessee Residential Lending, Brokerage and Servicing Act of 1988 and the Tennessee Industrial Loan and Thrift Companies Act in order to ensure compliance with the federal Secure and Fair Enforcement for Mortgage Licensing Act of 2008.

2014:  Legislation was enacted separating the state trust company formation process from the process for chartering a new state bank and making other statutory changes regarding trust company governance and operations.

            Legislation was enacted combining the licensing and examination fees into a single supervision fee for persons regulated and supervised by the Department’s Compliance Division.

            Legislation passed enacting the Flexible Credit Act.

2015:  Legislation was enacted revising the manner in which the commissioner assesses the annual supervision fee on credit unions.