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