BILL ANALYSIS Ó
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|SENATE RULES COMMITTEE | AB 1282|
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THIRD READING
Bill No: AB 1282
Author: Bonta (D), et al.
Amended: 4/15/13 in Assembly
Vote: 21
SENATE BANKING & FINANCIAL INSTITUTIONS COMM. : 8-0, 6/5/13
AYES: Correa, Berryhill, Beall, Hill, Hueso, Lara, Roth,
Walters
NO VOTE RECORDED: Calderon
SENATE APPROPRIATIONS COMMITTEE : 7-0, 6/24/13
AYES: De León, Walters, Gaines, Hill, Lara, Padilla, Steinberg
ASSEMBLY FLOOR : 75-0, 5/9/13 (Consent) - See last page for vote
SUBJECT : Financial institutions: credit unions
SOURCE : California Credit Union League
DIGEST : This bill modifies the formula used to calculate
assessments paid annually by state-chartered credit unions to
the Department of Financial Institutions (DFI).
ANALYSIS :
Existing law:
1. Authorizes the DFI Commissioner to annually levy on and
collect from each state-chartered credit union an assessment,
calculated on the basis of total assets, which in the
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Commissioner's opinion is sufficient to meet the expenses of
the DFI in administering the Credit Union Law and provide a
reasonable reserve for contingencies.
2. Provides that the amount of the annual assessment on a
state-chartered credit union is the greater of $1,500 or an
amount derived via a complicated step formula. This step
formula requires credit unions to pay an amount that is based
on their total assets under management.
This bill requires the amount of a state chartered credit
union's annual assessment to be the greater of $2,000 or the sum
of the products determined by multiplying increments of the
credit union's total assets by percentages of the base
assessment rate according to a newly established table with
increments of total assets up to an excess of over $10 billion.
Specifically, this bill implements a new table to determine
annual assessments:
-----------------------------------
| Total Assets |Percentage of |
| | Base |
| | Assessment |
| | Rate |
|--------------------+--------------|
|$0-$3 million | 85.0% |
|--------------------+--------------|
|$3 million - $6 | 25.0% |
|million | |
|--------------------+--------------|
|$6 million - $10 | 13.0% |
|million | |
|--------------------+--------------|
|$10 million - $100 | 12.5% |
|million | |
|--------------------+--------------|
|$100 million - $500 | 12.25% |
|million | |
|--------------------+--------------|
|$500 million - $1 | 12.0% |
|billion | |
|--------------------+--------------|
|$1 billion - $2 | 11.5% |
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|billion | |
|--------------------+--------------|
|$2 billion - $5 | 8.0% |
|billion | |
|--------------------+--------------|
|$5 billion - $10 | 3.5% |
|billion | |
|--------------------+--------------|
|Excess over $10 |3.0% |
|billion | |
-----------------------------------
Background
Under the dual banking system, banks and credit unions can
determine whether or not to establish as a California
state-chartered financial institution regulated by DFI or
establish as a federally-chartered financial institution
regulated by either the Federal Reserve, the Office of the
Comptroller of the Currency or NCUA (National Credit Union
Administration). Recent data shows, credit unions are more
likely to become federally chartered than state chartered
because overall it is more costly to become state chartered.
Existing law requires all state chartered credit unions to pay
assessments based on asset size. These assessments provide
revenue to a special fund agency in order to administer the
division of DFI that regulates and examines state-chartered
credit unions. DFI currently needs $7.2 million a year to
operate the credit union division.
California has 246 federally-chartered credit unions and 151
state-chartered credit unions. State-chartered credit unions
are regulated by DFI. The Commissioner of DFI collects fees
from state-chartered credit unions in an amount sufficient to
meet the expenses for regulating credit unions. Currently, the
minimum annual assessment is $1,500. Because of lower fees,
federal charters have become more attractive. As an example,
the largest state-chartered credit union, the Golden 1 Credit
Union, currently pays $700,000 in DFI assessments. If they held
a federal charter, they would pay $475,000 in federal
assessments. As a state-charted credit union, Golden 1 pays
32.5% more than if they were a federal charter.
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FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: No
According to the Senate Appropriations Committee, no significant
change in annual revenue to the DFI (Special Fund).
SUPPORT : (Verified 6/26/13)
California Credit Union League (source)
ARGUMENTS IN SUPPORT : According to the author's office, the
goal of this bill is to equitably redistribute assessments paid
by state-chartered credit unions to DFI to keep them more
closely aligned with their federally chartered counterparts.
The author's office asserts the new formula will be more
attractive to the largest state-chartered credit unions while
allowing DFI to continue to be adequately funded.
According to the sponsor, the California Credit Union League,
"If the top three state chartered credit unions (as determined
by asset size) were to opt out to move to federal charters, the
DFI would lose approximately $1.7 million out of their current
approximate $7.2 million budget. The loss of the largest credit
unions would severely cut the special fund revenue generated by
their assessments."
ASSEMBLY FLOOR : 75-0, 5/9/13
AYES: Achadjian, Alejo, Allen, Ammiano, Atkins, Bigelow, Bloom,
Blumenfield, Bocanegra, Bonilla, Bonta, Bradford, Brown,
Buchanan, Ian Calderon, Campos, Chau, Chávez, Chesbro, Conway,
Cooley, Dahle, Daly, Dickinson, Eggman, Fong, Fox, Frazier,
Beth Gaines, Garcia, Gatto, Gomez, Gordon, Gorell, Gray,
Grove, Hagman, Hall, Harkey, Roger Hernández, Jones,
Jones-Sawyer, Levine, Linder, Lowenthal, Maienschein, Mansoor,
Medina, Melendez, Mitchell, Morrell, Mullin, Muratsuchi,
Nazarian, Nestande, Olsen, Pan, Patterson, Perea, V. Manuel
Pérez, Quirk, Quirk-Silva, Rendon, Salas, Skinner, Stone,
Ting, Torres, Wagner, Weber, Wieckowski, Wilk, Williams,
Yamada, John A. Pérez
NO VOTE RECORDED: Donnelly, Holden, Logue, Waldron, Vacancy
MW:d 6/26/13 Senate Floor Analyses
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SUPPORT/OPPOSITION: SEE ABOVE
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