Pubdate: Fri, 30 Jan 2015
Source: Denver Post (CO)
Copyright: 2015 The Denver Post Corp
Contact:  http://www.denverpost.com/
Details: http://www.mapinc.org/media/122
Author: David Migoya

ORE. LAWMAKER: DID FDIC END BANKING DEAL?

A congressman is demanding to know what role a federal banking 
regulator had in the quick withdrawal of Oregon-based MBank's offer 
to take on Colorado-based marijuana businesses.

U. S. Rep. Earl Blumenauer, D- Oregon, said he was "disheartened" to 
read a Denver Post story that described MBank's decision to pull out 
only a week after it had announced it would bank legal pot businesses 
in Colorado.

"The article alluded to pressure from the Federal Deposit Insurance 
Corporation as a factor in MBank's decision," Blumenauer wrote FDIC 
Chairman Martin Gruenberg onThursday. "If this is true, it raises 
serious questions about the application of federal financial oversight."

He said he wants the FDIC to "develop workable guidance" for 
financial institutions to be able to work with marijuana related businesses.

At issue is MBank's decision to work openly with marijuana 
businesses, a process it began in September with medical pot 
dispensaries and is now expanding to recreational-use stores.

Some saw the announcement as brazen because regulators often 
pressured banks to keep quiet about working with legal marijuana businesses.

"Everyone acknowledges the insanity and unfairness of requiring legal 
businesses to pay their taxes with shopping bags full of $ 20 bills," 
Blumenauer wrote, noting that he saw MBank's move as a glimmer of success.

No bank in Colorado openly works with the marijuana industry, and pot 
businesses often keep their banking relationships secret.

The Fourth Corner Credit Union has a state charter to cater 
specifically to the industry but is waiting for a master account from 
the Federal Reserve System to operate.

Blumenauer listed five questions for which he wanted answers, 
including whether the FDIC would issue working guidelines to banks 
wanting to work with marijuana businesses and whether the FDIC 
influenced MBank's decision to back out of Colorado.

"Financial institutions need confidence that they can provide banking 
services to legitimate marijuana businesses without threat that their 
regulators will penalize them, threaten their deposit insurance, 
increase their capital requirements or force them to close accounts 
or stop providing services," Blumenauer wrote.

MBank CEO Jef Baker declined to comment about Blumenauer's letter Thursday.

Blumenauer represents the district in which MBank is located, just 
outside of Portland, Ore.

The U. S. Department of Justice last February issued guidelines that 
would allow banks to work with legal marijuana stores but without 
giving wholesale assurances against prosecution, which has kept many 
institutions from stepping into the market.

MBank pulled out of Colorado after FDIC regulators, who had given 
"tacit approval" to the plan previously, backed away and said the 
move was simply too risky, people familiar with the decision said.

"The allegations in The Denver Post that the FDIC appears to be 
governing by informal fiat runs counter to these steps taken by the 
administration to date," Blumenauer wrote.

Oregon voters recently approved recreational marijuana sales. Its 
northern neighbor, Washington, began legal recreational sales in 
July, seven months after Colorado.

Blumenauer has partnered with U. S. Rep. Jared Polis, D- Boulder, in 
offering federal legislation to remove marijuana from the U. S. Drug 
Enforcement Agency's list of controlled substances and facilitate a 
federal tax on its sales.

It's not the first time U. S. lawmakers have squared off with a 
federal agency over its position regarding marijuana and banking.

In May, the Financial Crimes Enforcement Network-or FinCEN, an arm of 
the Justice Department - had to answer questions about its guidelines 
for banks to work with the pot industry.

Sen. Dianne Feinstein, DCalif., and Sen. Chuck Grassley, R- Iowa, 
said the move appeared to usurp federal laws that keep the possession 
and sale of marijuana illegal even though 23 states and the District 
of Columbia have legalized its sale in some form.

FinCEN said it did not encourage the practice but merely offered 
guidelines to ensure the business relationship was transparent.
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MAP posted-by: Jay Bergstrom