BILL ANALYSIS                                                                                                                                                                                                    



                                                                  AB 33
                                                                  Page  1

          Date of Hearing:   May 13, 2009

                        ASSEMBLY COMMITTEE ON APPROPRIATIONS
                                Kevin De Leon, Chair

                     AB 33 (Nava) - As Amended:  March 24, 2009 

          Policy Committee:                              Banking and  
          Finance      Vote:                            11-0
                       Business and Professions               7-0

          Urgency:     No                   State Mandated Local Program:  
          No     Reimbursable:              

           SUMMARY  

          This bill consolidates the three state financial regulatory and  
          enforcement agencies into a single agency called the Department  
          of Financial Services. Specifically, the bill:

          1)Abolishes the Department of Corporations (DOC), Department of  
            Real Estate (DRE), Department of Financial Institutions (DFI)  
            and Office of Real Estate Appraisers (OREA), and transfers  
            their powers and responsibilities to DFS.

          2)Replaces the commissioners of each agency with a single  
            commissioner of financial services.

          3)Specifies that licensing fees and other revenue sources to  
            existing funds will continued to be used solely for the  
            purposes of each fund.

           FISCAL EFFECT  

          1)Unknown but potentially moderate near-term costs (several  
            hundreds of thousands of dollars) associated with the  
            consolidating agencies, revising regulations, and integrating  
            systems.

          2)Unknown potential long term savings, to the extent the  
            consolidation results in more streamlined services and  
            operating efficiencies. 

           COMMENTS  









                                                                  AB 33
                                                                  Page  2

           1)Background  .  Regulation of the financial industry, and in  
            particular, real estate lending, is divided among four  
            agencies in California: DOC regulates residential mortgage  
            lenders and finance lenders; DFI regulates state chartered  
            banks and credit unions; DRE is responsible for regulating  
            real estate agents and brokers; and OREA regulates appraisers.  
            The author asserts that the present system results in consumer  
            confusion and dilutes regulatory authority and power.

           2)Rationale  . This bill is intended to streamline and simplify  
            the financial regulatory oversight in California, by  
            consolidating operations into a single agency. The author  
            indicates that the bill is generally consistent with  
            recommendations made in 2005 as part of the governor's  
            California Performance Review.

           3)First step.  The bill would be only the first step in a  
            meaningful consolidation of the agencies. It revises  
            references in the code and establishes guidelines regarding  
            the use of licensing fees. However, the impact of the  
            consolidation would depend on the many operational details  
            which would need to follow. 

           Analysis Prepared by  :    Brad Williams / APPR. / (916) 319-2081