BILL NUMBER: AB 577 CHAPTERED 09/15/99 CHAPTER 385 FILED WITH SECRETARY OF STATE SEPTEMBER 15, 1999 APPROVED BY GOVERNOR SEPTEMBER 15, 1999 PASSED THE ASSEMBLY AUGUST 26, 1999 PASSED THE SENATE AUGUST 24, 1999 AMENDED IN SENATE AUGUST 16, 1999 AMENDED IN ASSEMBLY APRIL 26, 1999 INTRODUCED BY Assembly Member Honda (Coauthors: Assembly Members Alquist, Calderon, and Campbell) (Coauthors: Senators Ortiz and Polanco) FEBRUARY 19, 1999 An act to amend Section 14157 of, and to add and repeal Section 14160 of, the Financial Code, relating to credit unions. LEGISLATIVE COUNSEL'S DIGEST AB 577, Honda. Credit unions. Existing law, the California Credit Union Law, provides for the regulation of credit unions by the Commissioner of Financial Institutions. Existing law provides that a credit union organized and duly qualified as a credit union in another state may become a credit union organized and operating under the laws of this state if in compliance with certain specified requirements. This bill would specifically state that a credit union doing business in this state is not prohibited from expanding or doing business in other states, countries, or foreign jurisdictions. The bill would require the Commissioner of Financial Institutions to submit to the appropriate policy committees in each house of the Legislature on or before January 30, 2000, recommendations for a comprehensive statutory framework to permit foreign credit unions to operate in this state and to provide for the regulation and supervision of foreign credit unions operating in this state. THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS: SECTION 1. Section 14157 of the Financial Code is amended to read: 14157. (a) A credit union organized and duly qualified as a credit union in another state of the United States shall become a credit union organized and operating pursuant to this division if in compliance with each of the following requirements: (1) The credit union has filed a statement with the Secretary of State pursuant to Section 2105 of the Corporations Code. (2) The commissioner has approved an application filed by the credit union that has not been suspended or revoked. (3) The interest rate of the credit union on loans made to members residing in this state does not exceed the maximum interest rate permitted by the jurisdiction under whose laws it is organized. (4) The credit union has obtained bond or insurance coverage as prescribed in Section 14409. (5) The credit union has obtained insurance or guaranty for its members' share accounts as prescribed in Section 14858. (6) The credit union submits an annual audit report to the commissioner as prescribed in Article 2 (commencing with Section 14250) of Chapter 3. (7) The credit union pays the cost of examination or services performed in accordance with Section 14353.5. (8) The credit union pays to the commissioner an annual fee of two hundred fifty dollars ($250). The credit union is not subject to Section 14350, 14351, or 14352. (b) For the purpose of implementing the provisions of this section, the commissioner may cooperate with the administrators of the credit union laws of other states and the commissioner may share with them information received in the administration of this division. (c) The commissioner may disapprove an application filed pursuant to this section, or upon reasonable notice and opportunity for hearing suspend or revoke approval of an application, if the commissioner finds that the standards of organization, operation and regulation of the credit union, including, but not limited to, the laws and regulations of the jurisdiction in which it is organized, do not reasonably conform to the standards of organization, operation and regulation established pursuant to this division, or that 50 percent or more of the members of the credit union are, or are reasonably expected to be, residents of this state. (d) Nothing in this section shall prohibit a credit union doing business in this state pursuant to this division from expanding or doing business in other states, countries, or foreign jurisdictions. SEC. 2. Section 14160 is added to the Financial Code, to read: 14160. (a) It is the intent of the Legislature to enact legislation that would do all of the following: (1) Permit credit unions organized under the laws of a foreign country to conduct the business of a credit union in this state if authorized by the commissioner. (2) Provide for the regulation and supervision by the commissioner of foreign credit unions doing business in this state. (3) Protect the interests of persons living and working in this state who may become members, borrowers, or creditors of foreign credit unions. (4) Provide for foreign credit unions to transact business in this state in a safe and sound manner. (5) Provide for foreign credit unions to transact business in this state in accordance with the laws of this state that are applicable to California state-licensed credit unions, as may be necessary or appropriate. (b) The commissioner shall prepare recommendations for a comprehensive statutory framework to implement the legislative intent of subdivision (a), and shall submit the recommendations to the appropriate policy committees in each house of the Legislature on or before January 30, 2000. (c) This section shall remain in effect only until January 1, 2001, and as of that date is repealed, unless a later enacted statute, that is enacted before January 1, 2001, deletes or extends that date.