BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                  SB 979
                                                                  Page  1

          Date of Hearing:   August 8, 2012

                        ASSEMBLY COMMITTEE ON APPROPRIATIONS
                                Felipe Fuentes, Chair

                     SB 979 (Vargas) - As Amended:  July 5, 2012 

          Policy Committee:                             Banking and 
          Finance      Vote:                            11-0

          Urgency:     No                   State Mandated Local Program: 
          No     Reimbursable:              

           SUMMARY  

          This bill requires the Commissioner of the Department of 
          Financial Institutions (DFI) to make its formal, final 
          enforcement actions public on their Internet Web site.   
          Specifically, this bill:   

          1)Authorizes the commissioner to delay publication of a final 
            order or decision for a reasonable time, if the commissioner 
            makes a determination in writing that the publication of a 
            final order or decision would seriously threaten the safety or 
            soundness of a regulated institution subject to that order or 
            decision.
           
          2)Authorizes the commissioner to redact from the order, prior to 
            publication, information which would identify a customer of 
            the institution.
           
          3)Makes other technical changes. 

           FISCAL EFFECT  

          Approximately $150,000 annually to the Financial Institutions 
          Fund.  Although the bill only requires publication on the 
          department's web site, it is likely that when formal actions are 
          required to be publicized, more licensees will appeal the 
          decision rather than consenting to the order.  If more appeals 
          result, there would be increased costs to the DFI for 
          administration and hearings.

           COMMENTS  









                                                                  SB 979
                                                                  Page  2

           1)Need for the bill  :  According to the author, this  bill is 
            intended to improve transparency of enforcement action brought 
            by DFI and ensure that California's policies regarding the 
            publication of final, formal enforcement action by our 
            financial regulators is consistent with federal transparency 
            policies in this area.

           2)Background  : DFI regulates California-chartered banks and 
            credit unions, as well as several other types of financial and 
            money services businesses, such as trust companies and money 
            transmitters.  As part of its regulatory duties, DFI conducts 
            regular examinations of its licensees, and takes enforcement 
            actions as necessary to ensure that its licensees are 
            operating in a safe and sound manner, and in accordance with 
            state law.  During its examination process, DFI routinely 
            makes recommendations to licensees regarding enhancements they 
            can make to their policies, procedures, internal routines and 
            controls, and comments on other operational matters, with the 
            aim of ensuring the safety and soundness of the institution 
            and the state's financial services system.  Often, these 
            recommendations are informal.  However, when more serious 
            failings are observed, DFI's actions take the form of formal 
            orders.

            All of the federal depository institution regulators, 
            including the Office of the Comptroller of the Currency, 
            Federal Reserve Board, Federal Deposit Insurance Corporations, 
            and National Credit Union Administration make their final, 
            formal enforcement actions public. 

           3)There is no registered opposition to this bill. 
           

           Analysis Prepared by  :    Roger Dunstan / APPR. / (916) 319-2081