BILL ANALYSIS Ó
AB 268
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Date of Hearing: January 21, 2016
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Jimmy Gomez, Chair
AB
268 (Dababneh) - As Amended January 4, 2016
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|Policy |Banking and Finance |Vote:|10 - 0 |
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Urgency: No State Mandated Local Program: NoReimbursable: No
SUMMARY:
This bill requires the Commissioner of the Department of
Business Oversight (DBO) to examine every person engaged in the
business of a finance lender or broker for compliance with the
California Finance Lenders Law (CFLL) at least every 48 months.
FISCAL EFFECT:
The DBO is expected to incur increased costs for additional
examinations pursuant to this bill. If an additional four
examiners were needed, costs would be in the range of $600,000
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(State Corporations Fund).
The DBO currently has the authority to examine CFLL licensees as
needed, and ten examiners are currently assigned to this
purpose. According to DBO, there are 5,925 CFLL licensees and
license examinations take 15 hour on average. Licensees are
billed for the exact cost of their own examination on a
fee-for-service basis.
COMMENTS:
1)Purpose. This bill aligns the DBO's oversight of finance
lender or brokers licensed by the department with their
existing authority over residential mortgage lenders. This
bill is intended to also be a vehicle for further reforms to
the CFLL as it pertains to small-dollar lending.
2)New Federal Rules. In 2015, the federal Consumer Financial
Protection Bureau released a framework to federally regulate
short-term loan products (generally payday and vehicle title
loan products). According to a brief from the Pew Charitable
Trust, under the proposed guidelines, high-interest,
small-dollar loans would remain available, but revenue would
be constrained by limits, such as on charges, interest, and
repayment periods. The final rules on these loan products are
set to be released in stages, potentially in February and
September 2016. California law may require significant
updates to align with the new federal rules.
3)Related Legislative Activity. Last year, the author brought
together stakeholder groups to discuss revisions to the CFLL,
with the intent to improve transparency and fairness in the
state's consumer loan market. These meetings resulted in
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some potential recommendations for revisions to CFLL. In
addition, the Assembly Banking and Finance Committee held an
oversight hearing on these issues Tuesday, January 12, 2016.
Analysis Prepared by:Lisa Murawski / APPR. / (916) 319-2081