Allen takes top role at DFI with major agency changes on horizon

After 18 years at the state Department of Financial Institutions, including the last four as deputy director, Ray Allen hit the ground running in February when he was named secretary of the agency by Gov. Scott Walker. Allen replaced Peter Bildsten, who served in the post four years.

“So far, so good,” Allen said, a native of Milwaukee. “It’s quite an honor and a privilege to take over as secretary of DFI. Serving as deputy gets you exposed to almost everything that secretaries do. We’ve had a very good transition. We have a good team here. Instead of internal operations, I’ll spend a lot more ‘facetime’ out with stakeholders.”

Allen, who is African-American, served three terms on the Madison School Board and is a former owner of The Madison Times, a weekly newspaper that focuses on the city’s black community. He was also a member of the Madison Area Technical College board for six years. He began work at the DFI in 1997, the year after the agency was created.

If a proposal by Gov. Scott Walker in the state budget goes through, Allen’s agency would be merged with the Department of Safety and Professional Services in January, meaning Allen’s tenure could be short-lived.

The DSPS was created as part of the 2011-2013 state budget, when Walker combined the Department of Regulation and Licensing with parts of the former Commerce Department. Walker also has proposed merging the Wisconsin Economic Development Corp. and the Wisconsin Housing and Economic Development Authority.

“The choice of who runs (the combined DFI and DSPS) is certainly the call of the governor,” he said. “Both DSPS Secretary (David) Ross and I are working very hard with the governor’s committee to make sure that if the merger occurs, it occurs in an orderly manner with minimal disruption to our staff and stakeholders.”

Allen said he believes the combination of his agency and DSPS would be a good idea because it would create a “one-stop shop for constituents and stakeholders.

“There are some efficiencies to be gained,” he said. “It brings, I think, the philosophy of how we regulate and how we do licensure all under one roof. It gives us a singular philosophy of how we interact with the public.”

He said the new agency would have all the core functions of the old departments, but would be housed under a “different umbrella.” Allen said the combined agency would continue to emphasize the safety and soundness of depository institutions while reducing the regulatory burden on them.

He said there would be some staff and cost and savings the first year, “but the greater savings will come in year two and three as we build in efficiencies in technology and how we interact with our stakeholders.”

Looking at his agency’s current responsibilities, Allen said Wisconsin banks, credit unions, and savings and loan institutions are doing well. In 2014, he said lending by state-chartered banks grew by 6.3 percent, while the figure for credit unions was up 11.2 percent.”

“Bank capital ratios were very healthy,” he said. “Past-due ratios were very low. Credit unions were doing very good, (with) their net worth up 10 percent and their delinquent ratio was way, way down so we are trending in a very positive manner. Both credit unions and banks are very sound, have capital and are ready to lend.”

Though banks and credit unions have been at odds in the past over what bankers have said are unfair tax breaks for credit unions, Allen said the lenders’ differences “are all in good sport.

“They still have their fair competitiveness and are both important pieces of our economy and important to our citizens of Wisconsin,” he said. “They have more in common than they have apart. They are two separate industries, obviously constructed a little different. We have very good relationships with both and they have reasonable relationships with each other. “

Allen said he thinks Wisconsin’s economy is improving after suffering during the recent recession.

“People are gaining equity back in their homes, unemployment is down and our banks are and credit unions are becoming more healthy,” he said. “Wisconsin traditionally trails the nation a little bit and we might be a little bit behind the rest of the curve. I’m not an economist, but all the indicators from our point are positive.”

Allen said his department continues to work on improving financial literacy in the state, with an office in DFI specifically dedicated to that effort. He said it would remain if a new department is created.

“We place a high interest in financial literacy,” he said. “For the last four years, we’ve worked with (the Department of Public Instruction) and issued about $600,000 in grants to school districts throughout the state to have financial literacy as a graduation requirement.

“Getting to young people in the front end is equally important as all the regulatory things we do to protect people from bad things happening to them on the back end. Our Division of Securities also has been working with the AARP to educate seniors. All the money we’ve used for the grants and our other financial literacy efforts are not tax dollars, they are money that we obtained from settlements we get from people we regulate who have done bad things.”

On a more somber note, Allen said there is deep concern in Madison’s black community following the shooting death of Tony Robinson, a bi-racial 19-year-old, by a Madison police officer in March.

“There are concerns over breaks in trust… particularly over African-American males who end up dealing with the justice system,” he said. “There is deep concern about the safety of children. But I am very optimistic that those bridges that have fallen will be rebuilt.

“Madison is a very resilient community. It’s a great community and a changing community. I think the police chief and the community will work together to bridge those bridges and bring us back to a point where we will be a top-rated community for everyone who lives here.”

— By Brian E. Clark