BILL ANALYSIS Ó
SB 664
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Date of Hearing: July 13, 2011
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Felipe Fuentes, Chair
SB 664 (Committee on Banking and Financial Institutions) - As
Amended: May 19, 2011
Policy Committee: Banking and
Finance Vote: 11-0
Urgency: No State Mandated Local Program:
No Reimbursable:
SUMMARY
This bill conforms California's banking law to Section 613 of
the federal Dodd-Frank Wall Street Reform and Consumer
Protection Act (Dodd-Frank), by authorizing national banks and
foreign (out-of-state) banks to branch into California, as if
those banks were organized in California. Specifically, this
bill:
1)Provides for conforming changes made necessary by Dodd-Frank,
to any bank that establishes a branch office in California in
accordance with the changes made by Dodd-Frank to the National
Bank Act or Federal Deposit Insurance Act, and requires the
bank to notify the Commissioner of Financial Institutions, as
specified, within 10 days of establishing, relocating, or
re-designating that branch office in California.
2)Renumbers the sections of the Financial Code administered by
the Department of Financial Institutions (DFI), to reflect a
multi-year Financial Code reorganization initiated by DFI
beginning in 2008. The contents of the Financial Code
sections remain unchanged; only the code numbers would be
revised, and the code sections reorganized.
FISCAL EFFECT
Negligible.
COMMENTS
1)Code reorganization. In 2008, DFI commenced a multi-year
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effort to update and reorganize the laws over which it has
jurisdiction. This reorganization was intended to update laws
that had fallen far out of date; reflect numerous changes made
to the state General Corporations Law and to federal banking
law since the laws overseen by DFI were originally drafted;
and clean up various inconsistencies, incorrect code
references and obsolete code sections that had crept into the
code over time. DFI sponsored three pieces of previous
chaptered legislation to accomplish this update, including:
AB 1301 (Gaines), Chapter 125, Statutes of 2008, AB 2749
(Gaines), Chapter 501, Statutes of 2008, and AB 1268 (Gaines),
Chapter 532, Statutes of 2010.
This bill finalizes the reorganization process, by renumbering
code sections amended by the earlier bills. This
reorganization makes no substantive changes; it merely orders
the code sections more logically, and is intended to be easier
for licensees to follow and for DFI to administer.
2)Federal law conformance . This bill updates California's
Banking Law to reflect amendments made by Section 613 of
Dodd-Frank to the National Bank Act and the Federal Deposit
Insurance Act. These changes allow state and national banks
to branch into any state, as if the state or national bank is
organized under the laws of the state into which it branches.
Prior federal law had allowed states to prohibit or restrict
national and out-of-state banks from branching into their
states. California law prevented new interstate branching,
unless the national or out-of-state bank acquired a California
bank at least five years old and merged that California bank
into its operations. SB 664 repeals California's interstate
branching restrictions. Because Dodd-Frank does not require
the branching bank to notify the state financial institutions
regulator of the state in which the new branch will be
established, this bill adds a requirement that any bank
branching into California notify the DFI Commissioner.
State banks branching into California will have to follow the
same laws that California-chartered banks must follow (just as
California-chartered banks branching into another state would
have to follow the laws of that other state with respect to
the branches they open in that state). National banks
branching into California will have to follow the National
Bank Act and any California laws that are not pre-empted.
SB 664
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Analysis Prepared by : Roger Dunstan / APPR. / (916) 319-2081