BILL NUMBER: SB 537 INTRODUCED
BILL TEXT
INTRODUCED BY Committee on Banking and Financial Institutions
(Senators Hill (Chair), Beall, Berryhill, Calderon, Corbett, Roth,
and Walters)
FEBRUARY 22, 2013
An act to amend Sections 101, 103, 133, 155, 171, 185, 189, 326,
329, 331, 376, 377, 379, 405, 413, 563, 589, 590, 600, 672, 1024,
1026, 1080, 1255, 1331, 1473, 1485, 1495, 1515, 1702, 1805, 1806,
1835, 1858, 4805.01, 4805.02, 4805.05, 4805.10, 4821.5, 4822, 4823,
4824, 4826.5, 4827, 4827.3, 4827.7, 4871.5, 4877.03, 4901.5, 4961.5,
4970, 4982, 4990, 4995, and 18003 of, to amend the heading of Article
4 (commencing with Section 670) of Chapter 7 of Division 1 of, to
add Sections 186, 188, and 190 to, and to repeal and add Section 187
of, the Financial Code, relating to financial institutions.
LEGISLATIVE COUNSEL'S DIGEST
SB 537, as introduced, Committee on Banking and Financial
Institutions. Financial institutions.
Existing law provides for the regulation of specified financial
institutions pursuant to the Financial Institutions Law.
This bill would revise and recast provisions of the Financial
Institutions Law. The bill would, among other things, make changes to
cross-references and definitions that apply to the Financial
Institutions Law, as specified, in accordance with changes made to
the law pursuant to Chapter 243 of the Statutes of 2011. The bill
would make changes to provisions related to foreign (other nation)
banks, as specified.
Vote: majority. Appropriation: no. Fiscal committee: yes.
State-mandated local program: no.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Section 101 of the Financial Code is amended to read:
101. If and to the extent that any provision of this
division the Financial Institutions Law is
preempted by federal law, the provision does not apply and shall not
be enforced.
SEC. 2. Section 103 of the Financial Code is amended to read:
103. The word "bank" as used in this division
the Financial Institutions Law means any incorporated
banking institution that shall have been incorporated to engage in
commercial banking business, industrial banking, or trust business.
SEC. 3. Section 133 of the Financial Code is amended to read:
133. If the articles of a bank provide for more or less than one
vote for any share on any matter, the references in Sections 139 and
141 to a majority or other proportion of shares means, as to such
matter, a majority or other proportion of the votes entitled to be
cast. Whenever, under Division 1 (commencing with Section 100), Title
1 of the Corporations Code or , this
division, or Division 1.1 (commencing with Section 1000),
shares are disqualified from voting on any matter, they shall not be
considered outstanding for the determination of a quorum at any
meeting to act upon, or the required vote to approve action upon,
such matter under any provision of Division 1 (commencing with
Section 100), Title 1 of the Corporations Code, of this division,
Division 1.1 (commencing with Section 1000), or of the
articles or bylaws.
SEC. 4. Section 155 of the Financial Code is amended to read:
155. "Certificate of revocation" means a certificate executed and
filed with the Secretary of State pursuant to the second and third
sentences of subdivision (c) of Section 110 of the Corporations Code,
subject, however, to the provisions of Section 600.12
1106 .
SEC. 5. Section 171 of the Financial Code is amended to read:
171. "Distribution to its shareholders" has the meaning set forth
in Section 166 of the Corporations Code. However, in Division 1
(commencing with Section 100), Title 1 of the Corporations Code
and , in this division, and in
Division 1.1 (commencing with Section 1000), "distribution to
its shareholders" does not include any purchase of shares by a bank
or by a majority-owned subsidiary of a bank which is necessary to
reduce or avoid loss to such bank or to such subsidiary on an
extension of credit previously made in good faith. Also, in this
division and in Division 1.1 (commencing with Section 1000)
, "distribution to its shareholders" includes any distribution
made by a bank or by a majority-owned subsidiary of a bank to the
shareholders of any corporation of which such bank is a
majority-owned subsidiary.
SEC. 6. Section 185 of the Financial Code is amended to read:
185. "Licensee" has the following meanings:
(a) Any bank authorized by the commissioner pursuant to Section
1042 to transact banking or trust business.
(b) Any industrial bank authorized by the commissioner pursuant to
Section 1042 to transact industrial banking business.
(c) Any trust company authorized by the commissioner pursuant to
Section 1042 to transact trust business.
(d) Any foreign (other nation) bank that is licensed under Article
2 (commencing with Section 1780) of Chapter 20 or under Article 3
(commencing with Section 1800) of Chapter 20.
(e) Any corporation person licensed
by the commissioner to transmit as a
money transmitter pursuant to Division 1.2 (commencing
with Section 1920) 2000) .
(f) Any person authorized by the commissioner to conduct the
business of a savings association pursuant to Division 2 (commencing
with Section 5000).
(g) Any credit union authorized by the commissioner to conduct
business pursuant to Section 14154.
(h) Any foreign (other state) credit union licensed by the
commissioner to conduct business pursuant to Chapter 11 (commencing
with Section 16000) of Division 5.
(i) Any foreign (other nation) credit union licensed by the
commissioner to conduct business pursuant to Chapter 12 (commencing
with Section 16500) of Division 5.
(j) Any industrial loan company authorized by the commissioner to
conduct insurance premium finance business pursuant to Division 7
(commencing with Section 18000).
(k) Any corporation licensed by the commissioner as a business and
industrial development corporation pursuant to Section 31154.
SEC. 7. Section 186 is added to the Financial Code, to read:
186. "Majority-owned subsidiary" has the meaning set forth for
"subsidiary" in subdivision (a) of Section 189 of the Corporations
Code.
SEC. 8. Section 187 of the Financial Code is repealed.
187. "Majority-owned subsidiary" has the meaning set forth for
"subsidiary" in subdivision (a) of Section 189 of the Corporations
Code.
SEC. 9. Section 187 is added to the Financial Code, to read:
187. "Member of the public" means any person, except an agent,
officer, or employee of the department acting within the scope of his
or her agency, office, or employment. Member of the public does not
include a director, officer, employee, attorney, accountant, or
consultant of a licensee, provided that the confidential information
in question only pertains to the licensee that employs or utilizes
the director, officer, employee, attorney, accountant, or consultant.
SEC. 10. Section 188 is added to the Financial Code, to read:
188. "Money transmitter" means a person authorized pursuant to
Chapter 3 (commencing with Section 2030) of Division 1.2 to engage in
the business of money transmission.
SEC. 11. Section 189 of the Financial Code is amended to read:
189. (a) "National bank" or "national banking association" means
a national banking association organized under the National Bank Act.
(b) For purposes of this division the
Financial Institutions Law , a national bank is deemed to be a
corporation.
SEC. 12. Section 190 is added to the Financial Code, to read:
190. "Officer" means:
(a) When used with respect to a corporation, any person appointed
or designated as an officer of the corporation by or pursuant to
applicable law or the articles of incorporation or bylaws of the
corporation or any person who performs with respect to the
corporation functions usually performed by an officer of a
corporation.
(b) When used with respect to a specified person other than a
natural person or a corporation, any person who performs with respect
to the specified person, functions usually performed by an officer
of a corporation with respect to the corporation.
SEC. 13. Section 326 of the Financial Code is amended to read:
326. The commissioner is responsible for the performance of all
duties, the exercise of all powers and jurisdiction, and the
assumption and discharge of all responsibilities vested by law in the
department. The commissioner has and may exercise all the powers
necessary or convenient for the administration and enforcement of,
among other laws, the laws described in Section 300
Financial Institutions Law . The commissioner
may issue such rules and regulations consistent with law as he or she
may deem necessary or advisable in executing the powers, duties, and
responsibilities of the department.
SEC. 14. Section 329 of the Financial Code is amended to read:
329. (a) For purposes of this section, the following definitions
apply:
(1) "Applicable law" means:
(A) With respect to any bank, Division 1.6 (commencing with
Section 4800), and any of the following provisions:
(i) Article 6 (commencing with Section 405) of Chapter 3.
(ii) Article 3 (commencing with Section 1130) of Chapter 5 of
Division 1.1.
(iii) Chapter 6 (commencing with Section 1200) of Division 1.1.
(iv) Chapter 10 (commencing with Section 1320) of Division 1.1.
(v) Chapter 14 (commencing with Section 1460) of Division 1.1.
(vi) Article 1 (commencing with Section 1530) of Chapter 15 of
Division 1.1.
(vii) Chapter 16 (commencing with Section 1550) of Division 1.1.
(viii) Chapter 20 (commencing with Section 1750) of Division 1.1.
(ix) Section 456.
(x) Section 457.
(xi) Section 459.
(xii) Section 460.
(xiii) Section 760 461 .
(xiv) Section 1331.
(xiv)
(xv) Chapter 21 (commencing with Section
1850) of Division 1.1.
(xv)
(xvi) Chapter 18 (commencing with Section
1660) of Division 1.1.
(xvi)
(xvii) Chapter 19 (commencing with Section
1670) of Division 1.1.
(B) With respect to any savings association, any provision of
Division 1.6 (commencing with Section 4800) and Division 2
(commencing with Section 5000).
(C) With respect to any issuer of traveler's checks, any provision
of Chapter 7 (commencing with Section 2120) of Division 1.2.
(D)
(C) With respect to any insurance premium
finance company agency , any provision
of Division 7 (commencing with Section 18000).
(E)
(D) With respect to any business and
industrial development corporation, any provision of Division
15 (commencing with Section 31000).
(F)
(E) With respect to any credit union, any of
the following provisions:
(i) Section 14252.
(ii) Section 14253.
(iii) Section 14255.
(iv) Article 4 (commencing with Section 14350) of Chapter 3 of
Division 5.
(v) Section 14401.
(vi) Section 14404.
(vii) Section 14408, only as that section applies to gifts to
directors, volunteers, and employees, and the related family or
business interests of the directors, volunteers, and employees.
(viii) Section 14409.
(ix) Section 14410.
(x) Article 5 (commencing with Section 14600) of Chapter 4 of
Division 5.
(xi) Article 6 (commencing with Section 14650) of Chapter 4 of
Division 5, excluding subdivision (a) of Section 14651.
(xii) Section 14803.
(xiii) Section 14851.
(xiv) Section 14858.
(xv) Section 14860.
(xvi) Section 14861.
(xvii) Section 14863.
(G)
(F) With respect to any person
licensed to transmit money abroad
transmitter , any provision of Chapter 1 (commencing
with Section 2000) of Division 1.2 (commencing with
Section 2000) .
(2) "Licensee" means any bank, savings association, credit union,
trust company, money transmitter of money abroad,
issuer of payment instruments, issuer of traveler's checks
, insurance premium finance agency, or business and industrial
development corporation that is authorized by the commissioner to
conduct business in this state.
(b) Notwithstanding any other provision of this code that applies
to a licensee or a subsidiary of a licensee, after notice and an
opportunity to be heard, the commissioner may, by order that shall
include findings of fact which incorporates a determination made in
accordance with subdivision (e), levy civil penalties against any
licensee or any subsidiary of a licensee who has violated any
provision of applicable law, any order issued by the commissioner,
any written agreement between the commissioner and the licensee or
subsidiary of the licensee, or any condition of any approval issued
by the commissioner. Notwithstanding any other provision of law,
neither the commissioner nor any employee of the department shall
disclose or permit the disclosure of any record, record of any
action, or information contained in a record of any action, taken by
the commissioner under the provisions of this section, unless the
action was taken pursuant to paragraph (2) of subdivision (b), to
persons other than federal or state government employees who are
authorized by statute to obtain the records in the performance of
their official duties, unless the disclosure is authorized or
requested by the affected licensee or the affected subsidiary of the
licensee. The commissioner shall have the sole authority to bring any
action with respect to a violation of applicable law subject to a
penalty imposed under this section.
Except as provided in paragraphs (1) and (2), any penalty imposed
by the commissioner may not exceed one thousand dollars ($1,000) a
day, provided that the aggregate penalty of all offenses in any one
action against any licensee or subsidiary of a licensee shall not
exceed fifty thousand dollars ($50,000).
(1) If the commissioner determines that any licensee or subsidiary
of the licensee has recklessly violated any applicable law, any
order issued by the commissioner, any provision of any written
agreement between the commissioner and the licensee or subsidiary, or
any condition of any approval issued by the commissioner, the
commissioner may impose a penalty not to exceed five thousand dollars
($5,000) per day, provided that the aggregate penalty of all
offenses in an action against any licensee or subsidiary of a
licensee shall not exceed seventy-five thousand dollars ($75,000).
(2) If the commissioner determines that any licensee or subsidiary
of the licensee has knowingly violated any applicable law, any order
issued by the commissioner, any provision of any written agreement
between the commissioner and the licensee or subsidiary, or any
condition of any approval issued by the commissioner, the
commissioner may impose a penalty not to exceed ten thousand dollars
($10,000) per day, provided that the aggregate penalty of all
offenses in an action against any licensee or subsidiary of a
licensee shall not exceed 1 percent of the total assets of the
licensee or subsidiary of a licensee subject to the penalty.
(c) Nothing in this section shall be construed to impair or impede
the commissioner from pursuing any other administrative action
allowed by law.
(d) Nothing in this section shall be construed to impair or impede
the commissioner from bringing an action in court to enforce any law
or order he or she has issued, including orders issued under this
section. Nothing in this section shall be construed to impair or
impede the commissioner from seeking any other damages or injunction
allowed by law.
(e) In determining the amount and the appropriateness of
initiating a civil money penalty under subdivision (b), the
commissioner shall consider all of the following:
(1) Evidence that the violation or practice or breach of duty was
intentional or was committed with a disregard of the law or with a
disregard of the consequences to the institution.
(2) The duration and frequency of the violations, practices, or
breaches of duties.
(3) The continuation of the violations, practices, or breaches of
duty after the licensee or subsidiary of the licensee was notified,
or, alternatively, its immediate cessation and correction.
(4) The failure to cooperate with the commissioner in effecting
early resolution of the problem.
(5) Evidence of concealment of the violation, practice, or breach
of duty or, alternatively, voluntary disclosure of the violation,
practice, or breach of duty.
(6) Any threat of loss, actual loss, or other harm to the
institution, including harm to the public confidence in the
institution, and the degree of that harm.
(7) Evidence that a licensee or subsidiary of a licensee received
financial gain or other benefit as a result of the violation,
practice, or breach of duty.
(8) Evidence of any restitution paid by a licensee or subsidiary
of a licensee of losses resulting from the violation, practice, or
breach of duty.
(9) History of prior violations, practices, or breaches of duty,
particularly where they are similar to the actions under
consideration.
(10) Previous criticism of the institution for similar actions.
(11) Presence or absence of a compliance program and its
effectiveness.
(12) Tendency to engage in violations of law, unsafe or unsound
banking financial institutions
practices, or breaches of duties.
(13) The existence of agreements, commitments, orders, or
conditions imposed in writing intended to prevent the violation,
practice, or breach of duty.
(14) Whether the violation, practice, or breach of duty causes
quantifiable, economic benefit or loss to the licensee or the
subsidiary of the licensee. In those cases, removal of the benefit or
recompense of the loss usually will be insufficient, by itself, to
promote compliance with the applicable law, order, or written
agreement. The penalty amount should reflect a remedial purpose and
should provide a deterrent to future misconduct.
(15) Other factors as the commissioner may, in his or her opinion,
consider relevant to assessing the penalty or establishing the
amount of the penalty.
(f) The amounts collected under this section shall be deposited in
the appropriate fund of the department. For purposes of this
subdivision, the term "appropriate fund" means the fund to which the
annual assessments of fined licensees, or the parent licensee of the
fined subsidiary, are credited.
SEC. 15. Section 331 of the Financial Code is amended to read:
331. Notwithstanding any other provision of law, the commissioner
may adopt and implement any method of accepting electronic filings
of applications, reports, or other matters, which, in the opinion of
the commissioner, is secure. Any method of electronic filing chosen
by the commissioner shall include a method to verify the identity of
the person making the filing. The verification shall be deemed to
satisfy all other verifications required by this division
the Financial Institutions Law , and shall have
the same force and effect as the use of manual signatures.
SEC. 16. Section 376 of the Financial Code is amended to read:
376. At least once each month, the commissioner shall issue and
disseminate as the commissioner deems appropriate a bulletin
containing the following information:
(a) Information regarding any of the following actions taken since
issuance of the previous bulletin:
(1) The filing, approval, or denial under Chapter 1 (commencing
with Section 1000) of Division 1.1 of an application for authority to
organize a California state bank, or the issuance under Chapter 3
(commencing with Section 1040) of Division 1.1 of a certificate of
authority to a California state bank.
(2) The filing, approval, or denial under Article 1 (commencing
with Section 5400) of Chapter 2 of Division 2 of an application for
the issuance of an organizing permit for the organization of a
California savings association, or for the issuance under Article 2
(commencing with Section 5500) of Chapter 2 of Division 2 of a
certificate of authority to a California savings association.
(3) The filing, approval, or denial under Article 2 (commencing
with Section 14150) of Chapter 2 of Division 5 of an application for
a certificate to act as a credit union, or the issuance of a
certificate to engage in the business of a credit union.
(4) The filing, approval, or denial under Division 1.2 (commencing
with Section 2000), Division 7 (commencing with Section 18000), or
Division 15 (commencing with Section 31000) of an application for a
license to engage in business, or the issuance under any of those
laws of a license to engage in business.
(5) The filing, approval, or denial under Chapter 20 (commencing
with Section 1750) of Division 1.1 of an application by a foreign
(other nation) bank to establish its first office of any particular
class (as determined under Section 1753) in this state, or the
issuance under that chapter of a license in connection with the
establishment of such an office.
(6) The filing, approval, or denial under Division 1.6 (commencing
with Section 4800) of an application for approval of a sale, merger,
or conversion.
(7) The filing, approval, or denial under Article 6 (commencing
with Section 5700) of Chapter 2 of Division 2 of an application for
approval of a conversion of a federal savings association into a
state savings association, or the filing of a federal charter of a
state savings association that has converted to a federal savings
association.
(8) The filing, approval, or denial under Article 7 (commencing
with Section 5750) of Chapter 2 of Division 2 of an application for
approval of a reorganization, merger, consolidation, or transfer of
assets of a state savings association.
(9) The filing, approval, or denial under Chapter 9 (commencing
with Section 15200) of Division 5 of an application for approval of a
merger, dissolution, or conversion of a credit union.
(10) The taking of possession of the property and business of a
California state bank, savings association, credit union, or person
licensed by the commissioner under any of the laws cited in paragraph
(2) (4) .
(b) Other information as the commissioner deems appropriate.
SEC. 17. Section 377 of the Financial Code is amended to read:
377. Notwithstanding any other provision of this code, whenever
any provision of this division the Financial
Institutions Law requires the pledge of securities to be
deposited with the Treasurer, to insure the performance of any act or
duty, the securities after first being approved by the commissioner
and upon the written order of the commissioner, shall be deposited
with the Treasurer. The Treasurer, with the consent of the owner of
the securities deposited or to be deposited with the Treasurer, may
place the securities in the custody of a qualified trust company or
bank in the same manner and under the same conditions provided in
Article 3 (commencing with Section 16550) of Chapter 4 of Part 2 of
Division 4 of Title 2 of the Government Code.
SEC. 18. Section 379 of the Financial Code is amended to read:
379. (a) For the purposes of this section the following
definitions shall apply:
(1) "Control" has the meaning set forth in subdivision (b) of
Section 1250. "Control" also means the ownership of a subject person
by means of sole proprietorship, partnership, or by any other similar
means.
(2) "Controlling person" means a person who, directly or
indirectly, controls a subject person.
(3) "Subject person" means any of the following:
(A) A commercial bank, industrial bank, trust company, savings
association, or credit union incorporated under the laws of this
state.
(B) A person licensed by the commissioner under Chapter 1
(commencing with Section 2000) of Division 1.2 to receive money for
transmission to foreign countries.
(C) A person authorized by the commissioner pursuant to Section
2004 to act as an agent of a person licensed by the commissioner to
receive money for transmission to foreign countries.
(D) A person licensed by the commissioner pursuant to Division 7
(commencing with Section 18000) to transact business as a premium
finance agency.
(E) A person licensed by the commissioner pursuant to Division 15
(commencing with Section 31000) to transact business as a business
and industrial development corporation.
(F) A person licensed by the commissioner pursuant to Division 16
(commencing with Section 33000) to engage in the business of selling
payment instruments in this state issued by the licensee.
(G) A corporation incorporated under the laws of this state for
the purpose of engaging in, or that is authorized by the commissioner
to engage in, business pursuant to Article 1 (commencing with
Section 1850) of Chapter 21 of Division 1.1.
(H) A foreign
corporation that is licensed by the commissioner pursuant to Article
1 (commencing with Section 1850) of Chapter 21 of Division 1.1 to
maintain an office in this state and to transact at that office
business pursuant to Article 1 (commencing with Section 1850) of
Chapter 21 of Division 1.1 licensee .
(b) Notwithstanding any other provision of law, and subject to
subdivision (c), the commissioner may deliver, or cause to be
delivered, to local, state, or federal law enforcement agencies
fingerprints taken of any of the following:
(1) An applicant for employment with the department.
(2) A person licensed, or proposed to be licensed, as a subject
person.
(3) A director, officer, or employee of an existing or proposed
subject person.
(4) An existing or proposed controlling person of a subject
person.
(5) A director, officer, or employee of an existing or proposed
controlling person of a subject person.
(6) A director, officer, or employee of an existing or proposed
affiliate of a subject person.
(c) The authorization in subdivision (b) may only be used by the
department for the purpose of obtaining information regarding an
individual as to the existence and nature of the criminal record, if
any, of that individual relating to convictions, and to any arrest
for which the individual is released on bail or on his or her own
recognizance pending trial, for the commission or attempted
commission of a crime involving robbery, burglary, theft,
embezzlement, fraud, forgery, bookmaking, receiving stolen property,
counterfeiting, or involving checks or credit cards or using
computers.
(d) No request shall be submitted pursuant to this section without
the written consent of the person affected.
(e) Any criminal history information obtained pursuant to this
section shall be confidential and no recipient shall disclose its
contents other than for the purpose for which it was acquired.
SEC. 19. Section 405 of the Financial Code is amended to read:
405. (a) The commissioner shall annually collect pro rata from
the banks and trust companies under the supervision of the department
a fund in amount sufficient in the commissioner's judgment to meet
the expenses of the department in administering laws relating to
banks or trust companies or to the banking or trust business that are
not otherwise provided for and to provide a reasonable reserve for
contingencies.
(b) The amount of the annual assessment for the fund on any bank
or trust company shall not be less than five thousand dollars
($5,000). Above that minimum amount, except as otherwise provided
in subdivision (c), the annual assessment shall not exceed
the sum of the products of a base assessment rate, or percentage
thereof, and segregated portions of its total resources, according to
the following table:
Segregated Total Resources Percentage of Base
(In Millions or Fractions
Thereof) Assessment Rate
First $2 100.0
Next $18 50.0
Next $80 12.0
Next $100 6.25
Next $800 6.0
Next $1,000 4.0
Next $4,000 3.5
Next $14,000 3.0
Next $20,000 2.5
Excess over $40,000 1.5
(c) (1) For purposes of determining the annual assessment on banks
and trust companies that have one or more foreign (other state)
branch offices, the resources of foreign (other state) branch offices
shall be excluded from total resources, except that the commissioner
may order the resources of foreign (other state) branch offices to
be included in total resources if and to the extent that it is
necessary in the commissioner's judgment to meet the expenses of the
department on account of foreign (other state) branch offices and a
reasonable reserve for contingencies.
(2) If the commissioner finds that a bank or trust company
allocated any resource to a foreign (other state) branch office for
the purpose, in whole or in part, of reducing its annual assessment,
the commissioner may, for purposes of calculating the annual
assessment on the bank or trust company, reallocate the resource to
the bank's or trust company's head office.
(d) The base assessment rate shall be set by the commissioner from
time to time at the commissioner's discretion, not to exceed two
dollars and twenty cents ($2.20) per one thousand dollars ($1,000) of
total resources.
SEC. 20. Section 413 of the Financial Code is amended to read:
413. (a) In this section, "assessment statute" means any statute
that authorizes the commissioner to make or collect an assessment
(other than a fine) on financial institutions, including the
following:
(1) Sections 405 to 407, inclusive.
(2) Section 2042.
(3) Section 33302.
(4)
(3) Article 2 (commencing with Section 8030)
of Chapter 7 of Division 2.
(5)
(4) Article 4 (commencing with Section
14350) of Chapter 3 of Division 5.
(6)
(5) Section 1532
1533 .
(b) The commissioner may charge to and collect from the Financial
Institutions Fund, the Credit Union Fund, each of the accounts
included in the Financial Institutions Fund, and each of the programs
included in the State Banking Account an amount equal to the fund's,
account's, or program's pro rata share of those expenses of the
department which, in the opinion of the commissioner, it is not
feasible to attribute to any single one of the funds, accounts, or
programs. The fund's, account's, or program's pro rata share shall be
determined and paid in the manner and at the time ordered by the
commissioner.
(c) The provisions of any assessment statute that authorize the
commissioner to make or collect an assessment for the purposes
specified in the assessment statute include authority for the
commissioner to make and collect an assessment for the additional
purpose of providing money in an amount that will, in the
commissioner's judgment, be sufficient to make payments that may be
required under subdivision (b).
SEC. 21. Section 563 of the Financial Code is amended to read:
563. No provision of Section 560, 561, or 562 prohibits any of
the following from transacting any business or performing any
activity if it is authorized by applicable law to transact the
business or perform the activity and is not prohibited by any
applicable law, other than Sections Section
560, 561, or 562, from transacting the business or performing
the activity:
(a) Any California state commercial bank, industrial bank, or
trust company.
(b) Any national bank.
(c) Any insured foreign (other state) state bank.
(d) Any foreign (other state) state bank that is licensed by the
commissioner under Article 4 3
(commencing with Section 3860) 1700) of
Chapter 22 19 of Division 1.1 to
maintain a facility, as defined in Section 3800
1670 , in this state.
(e) Any foreign (other nation) bank that is licensed by the
commissioner under Chapter 20 (commencing with Section 1750) of
Division 1.1 to maintain an office in this state.
(f) Any foreign (other nation) bank that maintains a federal
agency, as defined in subdivision (g) of Section 1750, or federal
branch, as defined in subdivision (h) of Section 1750, in this state.
(g) Any California state corporation that is incorporated for the
purpose of engaging in, and that is authorized by the commissioner to
engage in, business under Article 1 (commencing with Section 1850)
of Chapter 21 of Division 1.1.
(h) Any corporation incorporated under Section 25A of the Federal
Reserve Act (12 U.S.C. Sec. 612 et seq.).
(i) Any foreign corporation that is licensed by the commissioner
under Article 1 (commencing with Section 1850) of Chapter 21 of
Division 1.1 to maintain an office in this state and to transact at
that office business under Article 1 (commencing with Section 1850)
of Chapter 21 of Division 1.1.
(j) Any industrial bank that is organized under the laws of
another state of the United States and is insured by the Federal
Deposit Insurance Corporation.
SEC. 22. Section 589 of the Financial Code is amended to read:
589. (a) In this section, "subject depository
financial institution" means any:
(1) Licensee or any bank or credit union that maintains an office
in this state.
(2) Affiliate of any of the institutions specified in paragraph
(1).
(3) Subsidiary of any of the institutions specified in paragraph
(1).
(4) Holding company of any of the institutions specified in
paragraph (1).
(b) It is unlawful for any subject person or former subject person
of a subject financial institution to whom an order is
issued under Sections 585 to 587, inclusive, willfully to do,
directly or indirectly, any of the following without the approval of
the commissioner, so long as the order is in effect:
(1) Act as a subject person of any subject depository
financial institution.
(2) Vote any shares or other securities having voting rights for
the election of any person as a director of a subject
depository financial institution.
(3) Solicit, procure, transfer or attempt to transfer, or vote any
proxy, consent, or authorization with respect to any shares or other
securities of a subject depository financial
institution having voting rights.
(4) Otherwise to participate in any manner in the affairs of any
subject depository financial
institution.
SEC. 23. Section 590 of the Financial Code is amended to read:
590. The commissioner may revoke or suspend any license issued
by, or under the authority of, the commissioner, if, after notice and
opportunity to be heard, the commissioner finds any of the
following:
(a) The licensee has violated, is violating, or that there is
reasonable cause to believe that the licensee is about to violate,
any provision of any of the following:
(1) Any division subject to the jurisdiction of the commissioner.
(2) Any regulation promulgated by, or subject to the jurisdiction
of, the commissioner.
(3) A provision of any other applicable law.
(4) A provision of any order issued by the commissioner.
(5) A provision of any written agreement between the licensee and
the commissioner.
(6) A condition imposed on any written approval granted by the
commissioner.
(b) Any fact or condition exists which, if it had existed at the
time of the original application for the license, would be grounds
for denying the application for the license.
(c) The licensee is conducting its business in an unsafe or
unsound manner.
(d) The licensee is in such condition that it is unsafe or unsound
for the licensee to transact appropriate licensee business.
(e) The licensee has inadequate capital or net worth or is
insolvent.
(f) The licensee failed to pay any of its obligations as they came
due or is reasonably expected to be unable to pay its obligations as
they come due.
(g) The licensee is the subject of an order for relief in
bankruptcy, or has sought has applied for an
adjudication of bankruptcy, reorganization, arrangement, or
other relief under any bankruptcy, reorganization, insolvency, or
moratorium law, or that any person has applied for any
such relief under any such law against the licensee and the licensee
has by any affirmative act approved of, or consented to, the action
or the relief has been granted.
(h) The licensee has ceased to transact appropriate
licensee the business the licensee is
authorized to conduct pursuant to it s license .
(i) The licensee refuses to submit its books, papers, and affairs
to the inspection of any examiner.
(j) Any officer of the licensee refuses to be examined upon oath
touching the concerns of the licensee.
(k) The licensee has, with the approval of its board, requested
the commissioner to take possession of its property and business.
SEC. 24. Section 600 of the Financial Code is amended to read:
600. In this article chapter ,
"Federal Insurance Agency" means the Federal Deposit Insurance
Corporation or the National Credit Union Administration, as
appropriate, or their respective successors-in-interest.
SEC. 25. The heading of Article 4 (commencing with Section 670) of
Chapter 7 of Division 1 of the Financial Code is amended to read:
Article 4. Conservatorship and Liquidation of a Bank and
Liquidation of an Uninsured Licensee
SEC. 26. Section 672 of the Financial Code is amended to read:
672. (a) The commissioner may, with the approval of the court,
sell any part or the whole of the business of a licensee to any other
licensee. The purchase and sale shall be approved by the purchasing
licensee, as follows:
(1) If the purchasing licensee is organized under the laws of this
state, by two-thirds of all of its directors.
(2) If the licensee is any licensee other than a licensee
organized under the laws of this state, in accordance with the laws
of the jurisdiction under which the licensee is organized.
(b) (1) Subject to any applicable federal statutes and
regulations, any bank or credit union organized under the laws of
this state may, with the approval of two-thirds of all of its
directors and of the commissioner, purchase from the receiver of a
national banking association or a federal credit union the whole or
any part of the business of the national banking association or
federal credit union.
(2) Subject to any applicable federal statutes and regulations and
any applicable laws of the jurisdiction under which a foreign
corporation is organized, any foreign corporation or any office of a
foreign corporation that is licensed by the commissioner to transact
business in this state and that is authorized to accept shares or
deposits in this state, may, with the approval of the commissioner,
purchase from the receiver of a national banking association or
federal credit union the whole or any part of the business of the
national banking association or federal credit union.
(c) The provisions of Chapter 12 (commencing with Section 1200)
and Chapter 13 (commencing with Section 1300) of Division 1 of Title
1 of the Corporations Code shall not apply to any purchase and sale
of the type described in subdivision (a) or (b).
(d) When a purchase and sale of the type described in subdivision
(a) or (b) becomes effective, the purchasing licensee shall, by
operation of law and without further transfer, substitution, act, or
deed, to the extent provided in the agreement of the purchase and
sale or in the order of the court approving the purchase and sale and
except as withheld or limited by the agreement or by the order:
(1) Succeed to the rights, obligations, properties, assets,
investments, shares, deposits, demands, and agreements of the
licensee whose business is sold, subject to the right of every
customer of the licensee whose shares or deposit is sold to withdraw
his or her shares or deposit in full on demand after the sale,
irrespective of the terms under which the deposit was made.
(2) Succeed to the rights, obligations, properties, assets,
investments, shares, deposits, demands, and agreements of the
licensee whose business is sold under all trusts,
executorships, administrations, guardianships, conservatorships,
agencies, and other fiduciary or representative capacities, to the
same extent as though the purchasing licensee had originally assumed,
acquired, or owned the same, subject to the rights of trustors and
beneficiaries under the trusts so sold to nominate another or
succeeding trustee of the trust so sold after the sale.
(3) Succeed to and be entitled to take and execute the appointment
to executorships, trusteeships, guardianships, conservatorships, and
other fiduciary and representative capacities to which the licensee
whose business is sold is or may be named in wills, whenever
probated, or to which it is or may be named or appointed by any other
instrument.
(e) For purposes of subdivision (d), any purchase and sale of the
type referred to in subdivision (d) shall be deemed to be effective
at the time provided in the agreement of the purchase and sale or in
the order of the court approving the purchase and sale.
SEC. 27. Section 1024 of the Financial Code is amended to read:
1024. (a) In this section:
(1) "Control"
section, "control " has the meaning
set forth in Section 1250.
(2) "Officer" has the meaning set forth in Section 33057.
(b) For purposes of Section 1023, the commissioner may find:
(1) That a proposed officer or director of a proposed bank or
trust company does not have sufficient standing to afford reasonable
promise of successful operation if such person has been convicted of,
or has pleaded nolo contendere to, any crime involving fraud or
dishonesty.
(2) That the establishment of a proposed bank or trust company
will not promote the public convenience and advantage if any person
who is proposed to control the proposed bank or trust company or any
director or officer of such person has been convicted of, or has
pleaded nolo contendere to, any crime involving fraud or dishonesty.
(c) Subdivision (b) shall not be deemed to be the only grounds
upon which the commissioner may find, for purposes of Section 1023,
that a proposed officer or director of a proposed bank or trust
company does not have sufficient standing to afford reasonable
promise of successful operation or that the establishment of a
proposed bank or trust company will not promote the public
convenience and advantage.
SEC. 28. Section 1026 of the Financial Code is amended to read:
1026. The commissioner may, in approving an application to
organize and establish a corporation to engage in the banking or
trust business pursuant to Section 362 1023
, impose any conditions the commissioner deems reasonable or
necessary or advisable in the public interest.
SEC. 29. Section 1080 of the Financial Code is amended to read:
1080. If a bank violates any provision of this chapter or fails
to comply with any order, the commissioner may levy a penalty against
the bank pursuant to Section 216.3 329
.
SEC. 30. Section 1255 of the Financial Code is amended to read:
1255. (a) In this section, "officer" has the meaning set
forth in Section 33057.
(b) For purposes of Section
1254, the commissioner may find:
(1) That the integrity of an acquiring person indicates that it
would not be in the interest of the depositors, creditors, or
shareholders of a bank or controlling person or in the interest of
the public to permit the acquiring person to control the bank or
controlling person if the acquiring person or any director or officer
of the acquiring person has been convicted of, or has pleaded nolo
contendere to, any crime involving fraud or dishonesty.
(2) That a plan to make a major change in the management of a bank
or controlling person is not fair and reasonable to the depositors,
creditors, or shareholders of the bank or controlling person if the
plan provides for a person who has been convicted of, or has pleaded
nolo contendere to, any crime involving fraud or dishonesty to become
a director or officer of the bank or controlling person.
(c)
(b) Subdivision (b)
( a) shall not be deemed to be the only grounds upon
which the commissioner may find, for purposes of Section 1254, that
the integrity of an acquiring person indicates that it would not be
in the interest of the depositors, creditors, or shareholders of a
bank or controlling person or in the interest of the public to permit
the acquiring person to control the bank or controlling person or
that a plan to make a major change in the management of a bank or
controlling person is not fair and reasonable to the depositors,
creditors, or shareholders of the bank or controlling person.
SEC. 31. Section 1331 of the Financial Code is amended to read:
1331. (a) For purposes of this section, the following terms have
the following meanings:
(1) "Carrying a security" means maintaining, reducing, or retiring
indebtedness originally incurred to acquire a security.
(2) "Controlling person" has the same meaning specified in Section
1250.
(3) "Security" has the following meanings:
(A) When used with respect to a bank, "security" has the same
meaning set forth in subdivision (c) of Section 1200.
(B) When used with respect to any other person, "security" has the
same meaning set forth in Section 25019 of the Corporations Code.
(b) No bank shall acquire, hold, extend credit on the security of,
or extend credit for the purpose of acquiring or carrying, any
security of the bank or of any controlling person of the bank.
(c) (1) Any bank which acquires or holds securities in violation
of this section shall be liable to the people of this state for twice
the market, book, or face value of the securities, whichever is
greatest.
(2) Any bank which extends credit in violation of this section
shall be liable to the people of this state for twice the amount of
the credit so extended.
(d) This section does not apply to any of the following
transactions:
(1) Any acquisition or extension of credit by a bank which is
necessary to reduce or prevent loss to the bank on debts previously
contracted in good faith.
(2) Any redemption by a bank of any of its redeemable
shares securities in accordance with applicable
provisions of this division and of Division 1 (commencing with
Section 100) of Title 1 of the Corporations Code.
(3) Any acquisition by a bank of any of its shares
securities , other than an acquisition of the
type described in paragraph (1) or (2), if the acquisition is
approved in advance by the commissioner.
(e) The provisions of Section 329 shall not apply to this section.
SEC. 32. Section 1473 of the Financial Code is amended to read:
1473. Sections 1481 and 1510 shall not apply to investments held
by a bank prior to the operative date of this section
January 1, 2009 . All authorizations regarding
investments by a bank issued by the commissioner prior to
the operative date of this section January 1, 2009,
are terminated.
SEC. 33. Section 1485 of the Financial Code is amended to read:
1485. The limitations of Section 1481 shall not apply to the
following and the following shall not be included among the
obligations of a person for the purpose of applying these
limitations:
(a) Loans secured by obligations of the United States or by
obligations unconditionally guaranteed both as to principal and
interest by the United States, having a market value at least 10
percent in excess of the loans secured thereby.
(b) Loans in an amount and of a type or class previously approved
in writing by the commissioner that are secured by not less than a
like amount of obligations of the United States or by obligations
unconditionally guaranteed both as to principal and interest by the
United States.
(c) Loans to the extent that they are covered by guarantees or by
commitments to take over or to purchase without recourse made by (1)
any Federal Reserve bank, (2) the United States, (3) any department,
bureau, board, commission, agency, or establishment of the United
States, including any corporation wholly owned directly or indirectly
by the United States, or (4) any small business development
corporation, urban development corporation, or rural development
corporation incorporated pursuant to the California Job
Creation Law (Part Part 5 (commencing with
Section 14000) of Division 3 of Title 1 of the Corporations
Code) Code .
(d) Drafts or bills of exchange drawn in good faith against actual
existing values with negotiable bills of lading attached, whether or
not accepted by the drawee.
(e) Bankers' acceptances of other banks which are eligible for
rediscount with a Federal Reserve bank.
(f) Obligations resulting from daily clearances through any
clearinghouse association.
(g) Obligations that are fully guaranteed or fully insured or
covered by a commitment to fully guarantee or fully insure by the
Federal Housing Administrator Administration
.
(h) Obligations, including portions thereof, to the extent secured
by a segregated deposit account in the lending bank, provided a
security interest in the deposit has been perfected under applicable
law, and subject to all of the following conditions:
(1) Where the deposit is eligible for withdrawal before the
secured obligation matures, the lending bank shall establish internal
procedures to prevent release of the security without the lending
bank's prior consent.
(2) A deposit that is denominated and payable in a currency other
than that of the obligation that it secures may be eligible for this
exception if the currency is freely convertible to United States
dollars.
(A) This exception applies only to that portion of the obligation
that is covered by the United States dollar value of the deposit.
(B) The lending bank shall establish procedures to periodically
revalue foreign currency deposits to ensure that the loan or
extension of credit remains fully secured at all times.
(i) Obligations described in Section 1510.
SEC. 34. Section 1495 of the Financial Code is amended to read:
1495. (a) A commercial bank may make amortized loans upon the
security of residential real property to finance the purchase and
installation of material or equipment designed to promote energy
conservation or the efficient use of energy in the residential real
property securing the loan, if , all of the
following apply:
(1) The residential real property securing the loan consists of
not more than four dwelling units; units.
(2) The loan is made in connection with a concurrent loan
authorized under Section 1486; and 1486.
(3) The loan is in an amount not to exceed 10 percent of the loan
made under the authority of Section 1486.
(b) A commercial bank may make additional advances, or additional
loans, to an existing borrower in order to finance the purchase and
installation of material and equipment designed to promote energy
conservation or the efficient use of energy in the residential real
property securing the loan, if , all of the
following apply:
(1) The residential real property securing the loan consists of
not more than four dwelling units; and units.
(2) The aggregate of the additional loan or advance and the unpaid
balance of the existing loan will not exceed that percent of the
appraised value of the residential real property securing the loan
permitted by Section 1227 1486
immediately after the purchase and installation of such material and
equipment.
SEC. 35. Section 1515 of the Financial Code is amended to read:
1515. A bank or trust company may acquire stock in settlement or
reduction of a loan or in exchange for an investment previously made
in good faith where the acquisition of the stock is necessary in
order to minimize or avoid loss arising out of the loan or
investment. The limitation in Section 1510 shall not apply to the
stock acquired in accordance with this section. Whenever any stock
that is acquired in accordance with this section can be sold for an
amount sufficient to reimburse the bank or trust company for all loss
arising out of the loan for which the stock was security or arising
out of the original investment by the bank or trust company, the bank
or trust company shall sell the same or shall convert the stock to
an investment subject to Section 1330 1510
.
SEC. 36. Section 1702 of the Financial Code is amended to read:
1702. Not less than 30 days before an insured foreign (other
state) bank establishes a facility, it the
bank shall file with the commissioner a report and the
appointment called for in required pursuant
to Section 3843 1703 .
SEC. 37. Section 1805 of the Financial Code is amended to read:
1805. (a) A foreign (other nation) bank that is licensed to
maintain an agency or branch office may transact commercial banking
business at the office, subject to the following:
(1) In case the office is a nondepositary agency, the bank shall
not transact the business of accepting deposits.
(2) In case the office is a depositary agency, the bank shall not
transact the business of accepting any deposits other than deposits
of (A) a foreign nation, (B) an agency or instrumentality of a
foreign nation, or (C) a person which resides, is domiciled, and
maintains its principal place of business in a foreign nation. For
purposes of this paragraph, "person" means any individual,
proprietorship, joint venture, partnership, trust, business trust,
syndicate, association, joint stock company, corporation, limited
liability company, or any other organization or any branch or
division thereof.
(3) In case the office is a limited branch office, the bank shall
not transact the business of accepting any deposits other than (A)
deposits of the kind described in paragraph (2), or (B) deposits that
a corporation organized under Section 25A of the Federal Reserve Act
(12 U.S.C. Sec. 612 et seq.) is permitted to accept.
(4) In case the office is a wholesale branch office, the bank
shall not transact the business of accepting any deposits other than
(A) deposits of the kind described in paragraph (2), (B) deposits of
one two hundred fifty
thousand dollars ($100,000) ($250,000)
or more, or (C) deposits the acceptance of which the
commissioner determines by
regulation or order do not constitute engaging in domestic retail
deposit activities requiring deposit insurance protection.
(5) In case the office is an agency, limited branch office, or
wholesale branch office, the bank may, subject to any regulations
that the commissioner may prescribe, maintain credit balances.
(6) In any case, the bank shall not transact any business that it
is not authorized to transact or is prohibited from transacting under
the law of its domicile or that commercial banks organized under the
laws of this state are not authorized to transact or are prohibited
from transacting.
(b) No foreign (other nation) bank that is licensed to maintain an
agency or branch office shall transact any trust business at the
office except as permitted under Section 1503
1555 .
SEC. 38. Section 1806 of the Financial Code is amended to read:
1806. (a) In addition to other provisions of this division and
Division 1 (commencing with Section 99) that are otherwise applicable
to or with respect to foreign (other nation) banks licensed to
maintain nondepositary agencies, the following provisions of this
division shall apply to or with respect to each foreign (other
nation) bank licensed to maintain a nondepositary agency with respect
to its business in this state as if the bank were a commercial bank
organized under the laws of this state:
(1) Article 6 (commencing with Section 405) of Chapter 3 of
Division 1.
(2) Chapter 6 (commencing with Section 550) of Division 1.
(3) Chapter 7 (commencing with Section 600) of Division 1.
(4)
(3) Chapter 4.5 (commencing with Section
1090).
(5)
(4) Chapter 17 (commencing with Section
1620).
(6)
(5) Chapter 19 (commencing with Section
1620) 1670) .
(b) In addition to other provisions of this division and Division
1 (commencing with Section 99) which are otherwise applicable to or
with respect to foreign (other nation) banks licensed to maintain
depositary agencies or branch offices, the following provisions of
this division and Division 1 (commencing with Section 99) shall apply
to or with respect to each foreign (other nation) bank licensed to
maintain a depositary agency or branch office with respect to its
business in this state as if the bank were a commercial bank
organized under the laws of this state:
(1) Article 6 (commencing with Section 405) of Chapter 3 of
Division 1.
(2) Chapter 6 (commencing with Section 550) of Division 1.
(3) Chapter 7 (commencing with Section 600) of Division 1.
(4)
(3) Chapter 4.5 (commencing with Section
1090).
(5)
(4) Chapter 10 (commencing with Section
1320).
(6)
(5) Chapter 12 (commencing with Section
1400).
(7)
(6) Chapter 13 (commencing with Section
1450).
(8)
(7) Chapter 14 (commencing with Section
1460).
(9)
(8) Chapter 17 (commencing with Section
1630) 1620) .
(10)
(9) Chapter 19 (commencing with Section
1670).
(11)
(10) Section 1864 and Article 2 (commencing
with Section 1900), Article 3 (commencing with Section 1905), and
Article 4 (commencing with Section 1910) of Chapter 21.
(c) Whenever any provision of this chapter or of any regulation or
order issued under this chapter that is applicable to or with
respect to foreign (other nation) banks licensed to transact business
in this state is inconsistent with any provision of any other
chapter of this division and Division 1 (commencing with Section 99)
that is applicable to or with respect to foreign (other nation) banks
licensed to transact business in this state, the former provision
shall apply, and the latter provision shall not apply.
(d) (1) Whenever any provision of this division (other than the
provisions of this chapter) and Division 1 (commencing with Section
99) is applicable to or with respect to foreign (other nation) banks
licensed to transact business in this state, the provision shall be
applied with any changes in points of detail as may be necessary or
appropriate.
(2) Without limiting the provisions of paragraph (1), for purposes
of any provision of this division (other than the provisions of this
chapter) and Division 1 (commencing with Section 99) that is
applicable to or with respect to a foreign (other nation) bank
licensed to transact business in this state:
(A) "Approved by (or approval of) the board" means approved or
ratified by the board of the bank, by a committee of the board
authorized to exercise the powers of the board with respect to the
particular matter, or by an officer of the bank who is assigned to
the head office of the bank and who has authority over the bank's
business in this state, including authority to approve or ratify the
particular matter.
(B) "Head office" means the primary office of the bank.
(C) "Shareholders' equity" means the shareholders' equity of the
bank or, if the bank has no shareholders' equity, the closest
equivalent account or accounts.
(e) Whenever any provision of this division (other than the
provisions of this chapter) and Division 1 (commencing with Section
99) that is applicable to or with respect to a foreign (other nation)
bank licensed to transact business in this state limits the amount
of any assets or liabilities of the bank (including, by way of
example, the amount of borrowings of, obligations to, or investments
of the bank), for purposes of calculating the amount of the assets or
liabilities, only the assets or liabilities of the agencies or
branch offices of the bank shall be included, and the assets and
liabilities of offices of the bank outside this state shall be
excluded.
SEC. 39. Section 1835 of the Financial Code is amended to read:
1835. (a) If the commissioner finds that any of the factors set
forth in Section 1781 1831 is true with
respect to any foreign (other nation) bank which is licensed to
transact business in this state and that it is necessary for the
protection of the interests of the creditors of such bank's business
in this state or for the protection of the public interest that he or
she take immediate possession of the property and business of the
bank, the commissioner may by order forthwith take possession of the
property and business of the bank and retain possession until the
bank resumes business in this state or is finally liquidated. The
bank may, with the consent of the commissioner, resume business in
this state upon such conditions as the commissioner may prescribe.
(b) (1) Whenever the commissioner takes possession of the property
and business of a foreign (other nation) bank pursuant to
subdivision (a), such bank may, within 10 days, apply to the superior
court in the county in which the primary office of the bank is
located to enjoin further proceedings. The court may, after citing
the commissioner to show cause why further proceedings should not be
enjoined and after a hearing, dismiss such application or enjoin the
commissioner from further proceedings and order him or her to
surrender the property and business of the bank to the bank or make
such further order as may be just.
(2) The judgment of the court may be appealed by the commissioner
or by the bank in the manner provided by law for appeals from the
judgment of a superior court to the court of appeal. In case the
commissioner appeals the judgment of the court, such appeal shall
operate as a stay of the judgment, and the commissioner shall not be
required to post any bond.
(c) Whenever the commissioner takes possession of the property and
business of a foreign (other nation) bank pursuant to subdivision
(a), the commissioner shall conserve or liquidate the property and
business of such the bank pursuant
Chapter 6 (commencing with Section 550) and Chapter 7 (commencing
with Section 600) of Division 1, and the provisions of such
those chapters (except Sections 592,
593, and 690) shall apply , except Sections 592, 593,
and 690, as if the bank were a bank organized under the laws of
this state.
(d) When the commissioner has completed the liquidation of the
property and business of a foreign (other nation) bank, the
commissioner shall transfer any remaining assets to such bank in
accordance with such orders as the court may issue. However, in case
the bank has an office in another state of the United States which is
in liquidation and the assets of such office appear to be
insufficient to pay in full the creditors of the office, the court
shall order the commissioner to transfer to the liquidator of the
office such amount of any such remaining assets as appears to be
necessary to cover such insufficiency; if there are two or more such
offices and the amount of remaining assets is less than the aggregate
amount of insufficiencies with respect to the offices, the court
shall order the commissioner to distribute the remaining assets among
the liquidators of such offices in such manner as the court finds
equitable.
SEC. 40. Section 1858 of the Financial Code is amended to read:
1858. Nothing contained in this article shall prevent
corporations from purchasing and holding stock in any corporation
where such purchase shall be necessary to prevent a loss upon a debt
previously contracted in good faith; and stock so purchased or
acquired in corporations shall within six months from such purchase
be sold or disposed of at public or private sale unless the time to
so dispose of same is extended by the commissioner as
provided by Section 1511 .
SEC. 41. Section 4805.01 of the Financial Code is amended to read:
4805.01. Subject to additional definitions contained in this
division that are applicable to specific provisions of this division
and unless the context otherwise requires:
(a) The definitions in this article apply throughout this
division.
(b) The definitions in Chapter 1 (commencing with Section 99) of
Division 1 and in Section 1700 1750
apply throughout this division. For this purpose, "this division," as
used in Sections 123 139 and
124 141 , means:
(1) In the case of a California state bank, Division 1 (commencing
with Section 99) , Division 1.1 (commencing with Section 1000),
and this division.
(2) In the case of a California state savings association, this
division and Division 2 (commencing with Section 5000).
SEC. 42. Section 4805.02 of the Financial Code is amended to read:
4805.02. (a) In this division, "bank" means a commercial bank or
trust company (other than an industrial loan company authorized to
engage in trust business). "Bank" does not include an industrial loan
company.
(b) Notwithstanding subdivision (a), "foreign (other nation) bank"
has the meaning set forth in paragraph (1) of subdivision (b)
of Section 139.4(b)(1) 177 .
SEC. 43. Section 4805.05 of the Financial Code is amended to read:
4805.05. "California state-licensed foreign (other nation) bank,"
when used with respect to a sale or merger, means a foreign (other
nation) bank that is licensed under Article 3 (commencing with
Section 1750) 1800) of Chapter
13.5 20 of Division 1
1.1 to maintain an agency or branch office in this state
immediately before the effective time of the sale or merger in case
it is the selling or disappearing corporation or at the effective
time of the sale or merger in case it is the purchasing or surviving
corporation.
SEC. 44. Section 4805.10 of the Financial Code is amended to read:
4805.10. In this division, "industrial loan company" means an
industrial bank as defined in Section 105.5
111 .
SEC. 45. Section 4821.5 of the Financial Code is amended to read:
4821.5. Any certificate of authority, license, or other
authorization issued under subdivision (b) of Section 4858,
subdivision (b) of Section 4877.13 4879.12
, subdivision (b) of Section 4888, subdivision (b) of Section
4928, or Section 4948 or 4949 is deemed to have been issued under the
provisions of Division 1 1.1
(commencing with Section 99) 1000) or
Division 2 (commencing with Section 5000) that would otherwise apply
to the issuance of the certificate of authority, license, or other
authorization.
SEC. 46. Section 4822 of the Financial Code is amended to read:
4822. (a) References in this division to the voting of the shares
of a California state depository corporation shall be construed in
accordance with Section 111 of the Corporations Code.
(b) If the articles of a California state depository corporation
provide for more or less than one vote for any share on any matter
that is subject to this division, the references in Sections
123 139 and 124 141
(which are made applicable to this division by Section
4805) 4805.01) to a majority or other
proportion of shares mean, as to the matter, a majority or other
proportion of the votes entitled to be cast.
(c) Whenever shares of a California state depository corporation
are disqualified under any applicable law from voting on any matter
that is subject to this division, the shares shall not be considered
outstanding for the determination of a quorum at any meeting to act
upon, or the required vote to approve action upon, the matter.
SEC. 47. Section 4823 of the Financial Code is amended to read:
4823. References in this division to shareholders' equity mean
shareholders' equity determined in accordance with generally accepted
accounting principles, subject (a) in the case of California state
banks or California industrial loan companies, to the provisions of
Section 118 463 , and (b) in the case
of California state savings associations, to the provisions of
Division 2 (commencing with Section 5000).
SEC. 48. Section 4824 of the Financial Code is amended to read:
4824. In determining for purposes of this division whether the
shareholders' equity of a California state depository corporation
will be adequate:
(a) In case the corporation is, or is to convert into, a
California state bank, the commissioner shall consider the factors
specified in Section 660 1150 .
(b) In case the corporation is, or is to convert into, a
California state savings association or a California industrial loan
company, the commissioner shall consider factors equivalent to those
specified in Section 660 1150 .
SEC. 49. Section 4826.5 of the Financial Code is amended to read:
4826.5. Notwithstanding any other provision of this division:
(a) The provisions of Chapter 22 19
(commencing with Section 3800) 1670) of
Division 1 1.1 apply to any
transaction which that is subject to
this division. Whenever any provision of Chapter 22
19 (commencing with Section 3800)
1670) of Division 1 1.1
or of any regulation or order issued under Chapter 22
19 (commencing with Section 3800)
1670) of Division 1 1.1
is inconsistent with any provision of this division or of any
regulation or order issued under this division, the provision of
Chapter 22 19 (commencing with Section
3800) 1670) of Division 1
1.1 or of the regulation or order issued under
Chapter 22 19 (commencing with Section
3800) 1670) of Division 1
1.1 applies, and the provision or this division
or of the regulation or order issued under this division does not
apply.
(b) Nothing in this division authorizes any sale or merger in a
case where the purchasing or surviving depository corporation is a
foreign depository corporation if the sale or merger is prohibited by
Chapter 22 19 (commencing with Section
3800) 1670) of Division 1
1.1 .
(c) Nothing in this division constitutes an election by this state
under federal law to prohibit or permit interstate sales or mergers
between banks or industrial loan companies.
SEC. 50. Section 4827 of the Financial Code is amended to read:
4827. Except as expressly provided otherwise in this division:
(a) (1) No sale of a whole business unit (as defined in Section
4840) or merger in which the selling or disappearing depository
corporation is a California state savings association, in which the
purchasing or surviving depository corporation is a California state
bank, a California industrial loan company, or a California
state-licensed foreign (other nation) bank, and which may be effected
with the approval of the commissioner pursuant to this division is
prohibited or restricted by any provision of Division 2 (commencing
with Section 5000) or requires any approval, consent, or other
authorization of the commissioner pursuant to Division 2 (commencing
with Section 5000).
(2) No conversion in which the converting depository corporation
is a California state savings association in which the resulting
depository corporation is a California state bank or a California
industrial loan company, and which may be effected with the approval
of the commissioner pursuant to this division is prohibited or
restricted by any provision of Division 2 (commencing with Section
5000) or requires any approval, consent, or other authorization of
the commissioner pursuant to Division 2 (commencing with Section
5000).
(b) (1) No sale of a whole business unit (as defined in Section
4840) or merger in which the selling or disappearing depository
corporation is a California state bank, a California state-licensed
foreign (other nation) bank, or a California industrial loan company,
in which the purchasing or surviving depository corporation is a
California state savings association, and which may be effected with
the approval of the commissioner pursuant to this division is
prohibited or restricted by any provision of Division 1
1.1 (commencing with Section 99)
1000) , except the provisions of Chapter
22 19 (commencing with Section
3800) 1670) of Division 1
1.1 , or requires any approval, consent, or other
authorization of the commissioner pursuant to Division 1
1.1 (commencing with Section 1000) , except as
may be required under the provisions of Chapter 22
19 (commencing with Section 3800)
1670) of Division 1 1.1 .
(2) No conversion in which the converting depository corporation
is a California state bank or a California industrial loan company,
in which the resulting depository corporation is a California state
savings association, and which may be effected with the approval of
the commissioner pursuant to this division is prohibited or
restricted by any provision of Division 1 1.1
(commencing with Section 99) 1000)
, except the provisions of Chapter 22
19 (commencing with Section 3800) 1670)
of Division 1 1.1 , or requires
any approval, consent, or other authorization of the commissioner
pursuant to Division 1 1.1 (commencing with
Section 1000) , except as may be required under the provisions
of Chapter 22 19 (commencing with
Section 3800) 1670) of Division
1 1.1 .
SEC. 51. Section 4827.3 of the Financial Code is amended to read:
4827.3. Except as otherwise provided in paragraph (2) of
subdivision (a) of Section 4827.7 in the case of a California
state-licensed foreign (other nation) bank or in federal law in the
case of a federally licensed foreign (other nation) bank, nothing in
this division except subdivision (c) of Section 4879.02 authorizes
any sale or merger in a case where the purchasing or surviving
corporation is a foreign (other nation) bank unless the foreign
(other nation) bank is at the effective time of the sale or merger
licensed under Article 3 (commencing with Section 1750)
1800) of Chapter 13.5 20
of Division 1 1.1 or authorized
under federal law to transact in this state the business to be
acquired in the sale or merger.
SEC. 52. Section 4827.7 of the Financial Code is amended to read:
4827.7. (a) (1) Except as otherwise provided in paragraph (2):
(A) No California state depository corporation may, as the selling
or disappearing depository corporation, make a sale or merger
pursuant to this division in which it would transfer to a California
state-licensed or federally licensed foreign (other nation) bank any
deposit or fiduciary account that the foreign bank is not authorized
to accept.
(B) No California state-licensed foreign (other nation) bank may,
as the purchasing or surviving depository corporation, make a sale or
merger pursuant to this division in which it would acquire any
deposit or fiduciary account that it is not authorized to accept.
(2) Notwithstanding paragraph (1) and Section 1755
1805 , a California state depository corporation
may, as the selling or disappearing depository corporation, make a
sale or merger pursuant to this division in which it transfers to a
California state-licensed or federally licensed foreign (other
nation) bank deposits or fiduciary accounts that the foreign bank is
not authorized to accept, and a California state-licensed foreign
(other nation) bank may, as the purchasing or surviving depository
corporation, make a sale or merger pursuant to this division in which
it acquires deposits or fiduciary accounts that it is not authorized
to accept, if, concurrently with the effective time of the sale or
merger, the foreign bank, pursuant to Article 5 (commencing with
Section 4879.01) of Chapter 3 or other applicable law, sells all
those deposits and fiduciary accounts to a depository corporation
that is authorized to accept them.
(b) (1) Except as otherwise provided in paragraph (2):
(A) No California state bank or industrial loan company may, as
the selling, disappearing, or converting depository corporation, make
a sale, merger, or conversion pursuant to this division in which it
would transfer to a savings association any deposit or fiduciary
account that the savings association is not authorized to accept.
(B) No California state savings association may, as the
purchasing, surviving, or resulting depository corporation, make a
sale, merger, or conversion pursuant to this division in which it
would acquire any deposit or fiduciary account that it is not
authorized to accept.
(2) Notwithstanding paragraph (1) and Division 2 (commencing with
Section 5000), a California state bank or industrial loan company
may, as the selling, disappearing, or converting depository
corporation, make a sale, merger, or conversion pursuant to this
division in which it transfers to a savings association deposits or
fiduciary accounts that the savings association is not authorized to
accept, and a California state savings association may, as the
purchasing, surviving, or resulting depository corporation, make a
sale, merger, or conversion pursuant to this division in which it
acquires deposits or fiduciary accounts that it is not authorized to
accept, if, concurrently with the effective time of the sale, merger,
or conversion, the savings association, pursuant to Article 5
(commencing with Section 4879.01) of Chapter 3 or other applicable
law, sells all those deposits and fiduciary accounts to a depository
corporation that is authorized to accept them.
(c) (1) Except as otherwise provided in paragraph (2):
(A) No California state bank or savings association may, as the
selling, disappearing, or converting depository corporation, make a
sale, merger, or conversion pursuant to this division in which it
would transfer to an industrial loan company any deposit or fiduciary
account that the industrial loan company is not authorized to
accept.
(B) No California industrial loan company may, as the purchasing,
surviving, or resulting depository corporation, make a sale, merger,
or conversion pursuant to this division in which it would acquire any
deposit or fiduciary account that it is not authorized to accept.
(2) Notwithstanding paragraph (1) and Division 1
1.1 (commencing with Section 99)
1000) , a California state bank or savings and
loan association may, as the selling, disappearing, or converting
depository corporation, make a sale, merger, or conversion pursuant
to this division in which it transfers to an industrial loan company
deposits or fiduciary accounts that the industrial loan company is
not authorized to accept, and a California industrial loan company
may, as the purchasing, surviving, or resulting depository
corporation, make a sale, merger, or conversion pursuant to this
division in which it acquires deposits or fiduciary accounts that it
is not authorized to accept, if, concurrently with the effective time
of the sale, merger, or conversion, the industrial loan company,
pursuant to Article 5 (commencing with Section 4879.01) of Chapter 3
or other applicable law, sells all those deposit accounts and
fiduciary accounts to a depository corporation that is authorized to
accept them.
SEC. 53. Section 4871.5 of the Financial Code is amended to read:
4871.5. (a) No provision of Division 1
1.1 (commencing with Section 99) 1000)
, except the provisions of Chapter 22
19 (commencing with Section 3800) 1670)
of Division 1 1.1 , prohibits or
restricts a sale in a case where the seller is a California state
bank or a California industrial loan company.
(b) No provision of Division 2 (commencing with Section 5000)
prohibits or restricts a sale in a case where the seller is a
California state savings and loan association.
SEC. 54. Section 4877.03 of the Financial Code is amended to read:
4877.03. No provision of Division 1 1.1
(commencing with Section 99) 1000)
, except the provisions of Chapter 22 19
(commencing with Section 3800) 1670)
of Division 1 1.1 , prohibits or
restricts a sale in a case where the seller is a California state
bank or a California industrial loan company.
SEC. 55. Section 4901.5 of the Financial Code is amended to read:
4901.5. (a) No provision of Division 1
1.1 (commencing with Section 99) 1000)
, except the provisions of Chapter 22
19 (commencing with Section 3800) 1670)
of Division 1 1.1 , prohibits or
restricts the merger of a California state bank or California
industrial loan company.
(b) No provision of Division 2 (commencing with Section 5000)
prohibits or restricts the merger of a California state savings and
loan association.
SEC. 56. Section 4961.5 of the Financial Code is amended to read:
4961.5. (a) No provision of Division 1
1.1 (commencing with Section 99) 1000)
, except the provisions of Chapter 22
19 (commencing with Section 3800) 1670)
of Division 1 1.1 , prohibits or
restricts the conversion of a California state bank.
(b) No provision of Division 2 (commencing with Section 5000)
prohibits or restricts the conversion of a California state savings
and loan association.
(c) No provision of Division 7 (commencing with Section 18000),
except the provisions of Chapter 10 (commencing with Section 18660)
of Division 7, prohibits or restricts the conversion of a California
industrial loan company.
SEC. 57. Section 4970 of the Financial Code is amended to read:
4970. For purposes of this division:
(a) "Annual percentage rate" means the annual percentage rate for
the loan calculated according to the provisions of the federal Truth
in Lending Act and the regulations adopted thereunder by the Federal
Reserve Board.
(b) "Covered loan" means a consumer loan in which the original
principal balance of the loan does not exceed the most current
conforming loan limit for a single-family first mortgage loan
established by the Federal National Mortgage Association in the case
of a mortgage or deed of trust, and where one of the following
conditions are met:
(1) For a mortgage or deed of trust, the annual percentage rate at
consummation of the transaction will exceed by more than eight
percentage points the yield on Treasury securities having comparable
periods of maturity on the 15th day of the month immediately
preceding the month in which the application for the extension of
credit is received by the creditor.
(2) The total points and fees payable by the consumer at or before
closing for a mortgage or deed of trust will exceed 6 percent of the
total loan amount.
(c) "Points and fees" shall include the following:
(1) All items required to be disclosed as finance charges under
Sections 226.4(a) and 226.4(b) of Title 12 of the Code of Federal
Regulations, including the Official Staff Commentary, as amended from
time to time, except interest.
(2) All compensation and fees paid to mortgage brokers in
connection with the loan transaction.
(3) All items listed in Section 226.4(c)(7) of Title 12 of the
Code of Federal Regulations, only if the person originating the
covered loan receives direct compensation in connection with the
charge.
(d) "Consumer loan" means a consumer credit transaction that is
secured by real property located in this state used, or intended to
be used or occupied, as the principal dwelling of the consumer that
is improved by a one-to-four residential unit. "Consumer loan" does
not include a reverse mortgage, an open line of credit as defined in
Part 226 of Title 12 of the Code of Federal Regulations (Regulation
Z), or a consumer credit transaction that is secured by rental
property or second homes. "Consumer loan" does not include a bridge
loan. For purposes of this division, a bridge loan is any temporary
loan, having a maturity of one year or less, for the purpose of
acquisition or construction of a dwelling intended to become the
consumer's principal dwelling.
(e) "Original principal balance" means the total initial amount
the consumer is obligated to repay on the loan.
(f) "Licensing agency" shall mean the Department of Real Estate
for licensed real estate brokers, the Department of Corporations for
licensed residential mortgage lenders and licensed finance lenders
and brokers, and the Department of Financial Institutions for
commercial and industrial banks and savings associations and credit
unions organized in this state.
(g) "Licensed person" means a real estate broker licensed under
the Real Estate Law (Part 1 (commencing with Section 10000) of
Division 4 of the Business and Professions Code), a finance lender or
broker licensed under the California Finance Lenders Law (Division 9
(commencing with Section 22000)), a residential mortgage lender
licensed under the California Residential Mortgage Lending Act
(Division 20 (commencing with Section 50000)), a commercial or
industrial bank organized under the Banking Law (Division 1
1.1 (commencing with Section 99))
1000)) , a savings association organized under
the Savings Association Law (Division 2 (commencing with Section
5000)), and a credit union organized under the California Credit
Union Law (Division 5 (commencing with Section 14000)). Nothing in
this division shall be construed to prevent any enforcement by a
governmental entity against any person who originates a loan and who
is exempt or excluded from licensure by all of the licensing
agencies, based on a violation of any provision of this division.
Nothing in this division shall be construed to prevent the Department
of Real Estate from enforcing this division against a licensed
salesperson employed by a licensed real estate broker as if that
salesperson were a licensed person under this division. A licensed
person includes any person engaged in the practice of consumer
lending, as defined in this division, for which a license is required
under any other provision of law, but whose license is invalid,
suspended or revoked, or where no license has been obtained.
(h) "Originate" means to arrange, negotiate, or make a consumer
loan.
(i) "Servicer" has the same meaning provided in Section 6 (i)(2)
of the Real Estate Settlement Procedures Act of 1974.
SEC. 58. Section 4982 of the Financial Code is amended to read:
4982. Any violation of this division by a bank is a violation of
Division 1 1.1 (commencing with Section
99); 1000); a violation by a savings
association is a violation of Division 2 (commencing with Section
5000); a violation by a credit union is a violation of Division 5
(commencing with Section 14000); and a violation by an industrial
loan company is a violation of Division 7 (commencing with Section
18000).
SEC. 59. Section 4990 of the Financial Code is amended to read:
4990. (a) Any person convicted of a felony violation of any of
the provisions specified in subdivision (b) shall not serve in any
capacity as a director or officer or in any other position involving
any management duties with a financial institution in this state with
accounts insured by an agency or instrumentality of the United
States or a private share insurance or guaranty arrangement. This
subdivision does not, however, apply to any director or officer of a
financial institution, or to persons serving in managerial positions
for financial institutions, whose office or employment with a
financial institution commenced, and whose felony conviction
occurred, prior to January 1, 1991.
(b) Subdivision (a) applies to felony convictions of offenses
specified in Chapter 18 10 (commencing
with Section 3350) 1320) of Division
1 1.1 , Article 4 (commencing with
Section 5300) of Chapter 1 of Division 2, Article 8 (commencing with
Section 14750) of Chapter 4 of Division 5, and Chapter 6 (commencing
with Section 18435) of Division 7. Subdivision (a) also applies to
felony convictions of offenses specified in provisions of the laws of
the United States added or amended by the federal Financial
Institutions Reform, Recovery, and Enforcement Act of 1989 (Public
Law 101-73).
(c) On and after January 1, 1991, any person who seeks employment
by, or a controlling interest in, a financial institution specified
in subdivision (a) shall, as a condition to obtaining that employment
or controlling interest, permit the financial institution, its
regulatory agency, or both to have access to that person's state
summary criminal history information, as defined in Section 11105 of
the Penal Code, for purposes of determining whether the person has a
prior conviction of a felony offense specified in subdivision (b) or
any theft offense.
(d) Any state summary criminal history information obtained
pursuant to this subdivision shall be kept confidential and no
recipient under this subdivision shall disclose the contents other
than for the purpose of determining eligibility for employment by, or
acquisition of a controlling interest in, a financial institution
specified in subdivision (a).
(e) The authority granted by this section to the
Commissioner of Financial Institutions commissioner
and other regulatory agencies shall be in addition to any other
authority granted by law to obtain information about the background
of any person. Nothing in this section shall be construed to limit
any authority of the Commissioner of Financial Institutions
commissioner or any regulatory agency otherwise
provided by law.
SEC. 60. Section 4995 of the Financial Code is amended to read:
4995. The following definitions shall apply for purposes of this
division:
(a) "Higher-priced mortgage loan" has the meaning set forth in
Part 226 of Title 12 of the Code of Federal Regulations.
(b) "Licensed person" means a real estate broker licensed under
the Real Estate Law (Part 1 (commencing with Section 10000) of
Division 4 of the Business and Professions Code), a finance lender or
broker licensed under the California Finance Lenders Law (Division 9
(commencing with Section 22000)), a residential mortgage lender
licensed under the California Residential Mortgage Lending Act
(Division 20 (commencing with Section 50000)), a commercial or
industrial bank organized under the Banking Law (Division 1
1.1 (commencing with Section 99))
1000)) , a savings association organized under
the Savings Association Law (Division 2 (commencing with Section
5000)), and a credit union organized under the California Credit
Union Law (Division 5 (commencing with Section 14000)).
(c) "Mortgage broker" means a licensed person who provides
mortgage brokerage services. For purposes of this division, a
licensed person who makes home loans is a "mortgage broker," and
subject to the requirements of this division applicable to mortgage
brokers, only with respect to transactions in which the licensed
person provides mortgage brokerage services.
(d) "Mortgage brokerage services" means arranging or attempting to
arrange, as exclusive agent for the borrower or as dual agent for
the borrower and lender, for compensation or in expectation of
compensation, paid directly or indirectly, a higher-priced mortgage
loan made by an unaffiliated third party.
SEC. 61. Section 18003 of the Financial Code is amended to read:
18003. "Industrial loan company," "thrift and loan company," or
"company" as used in this division means a premium finance agency as
defined in Section 18560. Notwithstanding any other provision of this
chapter, these terms and this division do not apply to an industrial
bank subject to , and governed by , Chapter
11 15 (commencing with Section
1400) 1530) of Division 1
1.1 .