BILL ANALYSIS
AB 1268
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Date of Hearing: April 20, 2009
ASSEMBLY COMMITTEE ON BANKING AND FINANCE
Pedro Nava, Chair
AB 1268 (Gaines & Nava) - As Amended: April 13, 2009
SUBJECT : Financial institutions.
SUMMARY : Updates, organizes, and rearranges the California
Banking Law, to improve the ability of the Department of
Financial Institutions (DFI) to administer the law, and to ease
understanding of, and compliance with, the law by licensees.
Specifically, this bill :
1)Revises and recast Financial Code relating to depository
institutions, more specifically relating to definitions, the
powers of the Commissioner of Financial Institutions, the
Division of Credit Unions in the Department of Financial
Institutions, the Credit Union Advisory Committee, processes
for prosecuting violators, and reorganizations of seized
banks.
EXISTING LAW regulates state chartered banks and credit unions
under the Banking Law and the Credit Union Law. Also, provides
for regulation by DFI.
FISCAL EFFECT : Unknown.
COMMENTS :
According to the author, "Under current law the DFI Commissioner
is responsible for the administration and enforcement of laws
pertaining to state-chartered commercial banks, industrial
banks, trust companies, credit unions, transmitters of money
abroad, issuers of travelers' checks, issuers of payment
instruments, and business and industrial development
corporations. The DFI Commissioner's powers are broad with
respect to each type of licensee. While the DFI Commissioner's
powers are broad with respect to each type of licensee; the
Financial Code is cumbersome and the explicit language with
respect to each type of license is not consistent, which can
cause confusion for licensees as well as Department staff."
The current Banking Law is based essentially on a regulatory
scheme that was enacted in 1951. AB 1301 and AB 2749 are a
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result of the Department review of Banking Law and related
Department processes, with the goal of streamlining oversight to
create a more licensee-friendly Banking Law and at the same time
provide more efficient oversight of licensees by DFI. Two years
ago the Administration approved DFI to introduce a bill that
began the process of removing obsolete provisions of the law,
and to begin the process of modernizing the regulation of banks
and trust companies.
This proposal will further streamline regulatory oversight by
consolidating similar provisions found in licensee laws (banks,
credit unions, transmitters of money abroad, payment
instruments, traveler's checks, building & industrial
development companies) into one chapter of the Financial Code
and making the provisions in the chapter applicable to all
licensees. As an example, enforcement provisions against
licensees and licensee employees are found in each DFI regulated
industry. This bill would consolidate these enforcement
provisions into a uniform law applicable to all licensees. This
will provide for a more streamlined regulatory scheme and
provide for uniform oversight.
PREVIOUS LEGISLATION :
AB 1301 (Gaines, Chapter 125, Statutes of 2008) Revised
provisions of the Banking law and the DFI regulatory oversight.
AB 2749 (Gaines, Chapter 501, Statutes of 2008) Reorganized
sections of the Financial Code relating to the powers of the
Commissioner of the Department of Financial Institutions (DFI),
and makes other technical changes intended to ease
administration of the law by DFI.
REGISTERED SUPPORT / OPPOSITION :
Support
None on file.
Opposition
None on file.
Analysis Prepared by : Kathleen O'Malley / B. & F. / (916)
319-3081
AB 1268
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