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Ky.gov An Official Website of the Commonwealth of Kentucky

Public Protection Cabinet

History of DFI

DFI traces its origin to the Banking Act of 1912, which established the agency initially as the Department of Banking. Gov. James B. McCreary appointed Thomas J. Smith as the first commissioner, effective July 1, 1912. The department was charged with enforcing laws relating to banks, trust companies, savings banks and combined bank and trust companies doing business under Kentucky law. The first annual report lists six employees – a commissioner, deputy, clerk, and several examiners. Initially the department supervised 466 commercial banks, savings banks, independent trust companies and title companies with total assets of only $110 million.

The legislature mandated supervision of state-chartered savings (building) and loan associations in 1918 and added state-chartered credit unions in 1922. When the agency began oversight of the state’s securities industry in mid-1932, it was renamed the Department of Banking and Securities. The next year, as the Great Depression continued, the Federal Deposit Insurance Corporation (FDIC) was created. In 1933, Kentucky bank closures reached an all-time high when 23 state banks failed.

Over the years, other regulatory responsibilities were added, including consumer and industrial loan companies in 1946, companies that sell money orders in 1966, mortgage loan companies and brokers in 1980 and check-cashing companies in 1992. As the agency’s scope increased over the years to include other types of financial institutions, its organizational structure and name changed as well, from the Department of Financial Institutions in 1984 to the Office of Financial Institutions in 2004. The name was changed back to Department of Financial Institutions with a cabinet reorganization in 2008.