BILL ANALYSIS ------------------------------------------------------------ |SENATE RULES COMMITTEE | AB 1268| |Office of Senate Floor Analyses | | |1020 N Street, Suite 524 | | |(916) 651-1520 Fax: (916) | | |327-4478 | | ------------------------------------------------------------ THIRD READING Bill No: AB 1268 Author: Gaines (R) and Nava (D) Amended: 5/11/09 in Assembly Vote: 21 SENATE BANKING, FINANCE, AND INS. COMMITTEE : 11-0, 6/22/09 AYES: Calderon, Correa, Cox, Florez, Harman, Kehoe, Liu, Lowenthal, Padilla, Runner, Wolk NO VOTE RECORDED: Cogdill SENATE APPROPRIATIONS COMMITTEE : Senate Rule 28.8 ASSEMBLY FLOOR : 76-0, 5/28/09 (Consent) - See last page for vote SUBJECT : Financial institutions SOURCE : Department of Financial Institutions DIGEST : This bill reorganizes and consolidates provisions of the Financial Code administered by the Department of Financial Institutions (DFI), by moving the powers and authority of the Commissioner of Financial Institutions (Commissioner) into one chapter of the Financial Code and consolidating other laws that are applicable to all of DFI's licensees into one body of law. ANALYSIS : Existing law: CONTINUED AB 1268 Page 2 1. Establishes Divisions 1, 2, 5, 7, 15, and 16 of the Financial Code, and gives the Commissioner jurisdiction over banks, industrial banks, trust companies, transmitters of money abroad, traveler's check issuers, savings associations, credit unions, industrial loan companies, business and development corporations, and sellers of payment instruments (money orders). 2. Contains numerous code sections that specify the powers of the Commissioner in relation to his/her regulatory oversight over state licensees. This bill enacts numerous technical and nonsubstantive changes to the provisions of the Financial Code administered by DFI, by consolidating all of the powers of the Commissioner into one portion of the Financial Code (Section 220 et seq.); creating single articles within the Financial Code providing the rules for enforcement (Article 7), liquidation and conservation (Article 8), and voluntary liquidation (Article 9); and deleting provisions of individual licensing laws rendered obsolete by the aforementioned changes. Background The need for this bill, and the two modernization bills that came before it during the prior legislative session [AB 1301 (Gaines) and AB 2749 (Gaines)] stems from the age of the laws over which the Commissioner has jurisdiction and the fractured way in which they were enacted and changed over the years. The Commissioner's powers over each of his/her licensees are similar in nature, yet each of the six divisions of the Financial Code administered by the Commissioner has slightly different provisions, which were added at different times by different authors. The net result is a group of laws with similar intent, yet with different wording and uneven requirements. The powers of the Commissioner are express in some divisions and implied in others. DFI notes that, common to all of its licensees, the commissioner may approve or deny an application for licensure, suspend or revoke a license, examine the books AB 1268 Page 3 and records of a licensee, collect assessments and fees, compel corrective action by a licensee that has been determined by the Commissioner to be operating in violation of applicable law(s) or to be in an unsafe and unsound condition, and take possession of and provide for the orderly liquidation or conservation of a licensee. This bill streamlines the Financial Code and provides more efficient and effective regulatory oversight by consolidating similar provisions found in licensee laws into one chapter of the Financial Code and making the provisions in the chapter applicable to all of the DFI's licensees. This proposal repeals duplicative language currently contained in Division 1, Banks; Division 5, Credit Unions; Division 15, Business and Industrial Loan Corporations; and Division 16, Payment Instruments. Prior Legislation AB 1301 (Gaines), Chapter 125, Statutes of 2008, was one of the two prior DFI-sponsored bills to update and modernize sections of the Financial Code administered by DFI. AB 2749 (Gaines), Chapter 501, Statutes of 2008, was the second of two prior DFI-sponsored bills to update and modernize sections of the Financial Code administered by DFI. FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes Local: No SUPPORT : (Verified 7/7/09) Department of Financial Institutions (source) ASSEMBLY FLOOR : AYES: Adams, Ammiano, Anderson, Arambula, Beall, Bill Berryhill, Tom Berryhill, Blakeslee, Block, Blumenfield, Brownley, Buchanan, Caballero, Charles Calderon, Carter, Chesbro, Conway, Cook, Coto, Davis, De La Torre, De Leon, DeVore, Emmerson, Eng, Feuer, Fletcher, Fong, Fuentes, Fuller, Furutani, Gaines, Galgiani, Garrick, Gilmore, Hagman, Hall, Harkey, Hayashi, Hernandez, Hill, Huber, AB 1268 Page 4 Huffman, Jeffries, Jones, Knight, Krekorian, Lieu, Logue, Bonnie Lowenthal, Ma, Miller, Monning, Nava, Niello, Nielsen, John A. Perez, V. Manuel Perez, Portantino, Price, Ruskin, Salas, Saldana, Silva, Skinner, Smyth, Solorio, Audra Strickland, Swanson, Torlakson, Torres, Torrico, Tran, Villines, Yamada, Bass NO VOTE RECORDED: Duvall, Evans, Mendoza, Nestande JJA:mw 7/7/09 Senate Floor Analyses SUPPORT/OPPOSITION: SEE ABOVE **** END ****