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