Category: Open Government

The Argus Leader has a story today on the Division of Banking’s refusal to release applications and complaints on some lenders, despite the records being noted as public documents. But, there’s a curious carve-out that says otherwise:

The applications, according to Bret Afdahl, the director of the South Dakota Division of Banking, are not public documents. Afdahl denied an Argus Leader request for the applications, in part by quoting a law whose title notes that banking division records are “open to public inspection.” In his denial of the records, Afdahl noted that the “division must encourage full and complete disclosure of financial and background information” of those seeking a license under laws regulating money lenders.

Money lenders are a distinct class of business regulated by the division. They are typically associated with high-interest, short-term loans.

The Argus Leader also requested all consumer complaints received by the division since Jan. 1, 2014. Afdahl denied the paper’s request for those records, arguing they aren’t in the public interest and could be used to harm people or banks.

Read it here.

To understand why the Division of Banking is saying no, when the Argus is saying “yes,” you’ve got to go back to the law:

51A-2-35.   Records of division open to public inspection–Exceptions–Court order. The records of the division are open to public inspection. However:

             (1)      The director may withhold from public inspection any record, including any correspondence, for so long as deemed necessary for the protection of a person or bank or to be in the public interest;

             (2)      The director shall withhold from public inspection any record required to be confidential pursuant to federal statutes or rules or regulations of the board of governors of the federal reserve system or the Federal Deposit Insurance Corporation; and

             (3)      Reports of examination shall remain the property of the division and shall be furnished to the bank for its confidential use. Under no circumstances may the report or any supporting documentation be disclosed to anyone, other than directors and officers of the bank or anyone who is acting in a fiduciary capacity for the bank, without written permission from the director.

     Any record of the division shall be made available upon order of a court of competent jurisdiction if cause is shown.

Read the law here.

And that’s an exception that’s pretty wide open.

I have to concur with the state’s largest paper, who adds: “The application also asks whether an applicant or “control person” of the company has been convicted of a felony, been subject of previous regulatory actions, declared bankruptcy or possessed unsatisfied judgments or liens. All of that information is already publicly available.”

In fact, the ownership information of the banks is also going to be largely public through the Secretary of State’s Office corporate filings.

Given the fact that all of that information IS available through public sources in other places, is the “deemed necessary for the protection of a person or bank or to be in the public interest” carve-out from open record laws warranted or needed?