BILL ANALYSIS
AB 1268
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Date of Hearing: April 27, 2009
ASSEMBLY COMMITTEE ON JUDICIARY
Mike Feuer, Chair
AB 1268 (Gaines and Nava) - As Amended: April 13, 2009
PROPOSED CONSENT
SUBJECT : Financial Institutions
KEY ISSUE : Should provisions of the Financial Code be recast,
revised, and reorganized in order to streamline regulatory
oversight and enforcement and make the law more understandable
to licensed institutions?
FISCAL EFFECT : As currently in print this bill is keyed fiscal.
SYNOPSIS
This non-controversial bill is part of an on-going effort to
streamline and consolidate provisions of the California
Financial Code so as to improve regulatory oversight of
financial institutions and make the law more understandable to
the licensed and regulated institutions. Last year, AB 1301
(Gaines, Chapter 125, Stats. of 2008) and AB 2749 (Gaines,
Chapter 501, Stat. of 2008) clarified a number of existing
provisions in the Financial Code, updated certain definitions to
reflect changes in other provisions of law, and modernized
procedures in certain ways, such as authorizing banks to receive
electronic filings. This measure continues in that same vein,
except that this bill focuses on streamlining the process of
prosecuting violators, clarifying the powers of the Commissioner
of Financial Institutions, and reorganizing seized banks. There
is no known opposition to this measure. The bill unanimously
passed out of the Assembly Banking and Finance Committee on
consent.
SUMMARY : Revises and reorganizes provisions of the 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.
AB 1268
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EXISTING LAW provides for the regulation and licensure, by the
Department of Financial Institutions (DFI) of state-chartered
savings banks, credit unions, and other financial institutions
doing business in this state. Specifies further various
penalties and procedures for the enforcement of these laws and
regulations.
COMMENTS : This bill is part of on-going efforts to streamline
and consolidate provisions of the California Financial Code so
as to improve regulatory oversight of financial institutions and
make the law more understandable to the licensed and regulated
institutions. Last year, AB 1301 (Gaines, Chapter 125, Stats.
of 2008) and AB 2749 (Gaines, Chapter 501, Stat. of 2008)
clarified a number of existing provisions in the Financial Code,
updated certain definitions to reflect changes in other
provisions of law, and modernized procedures in certain ways,
such as authorizing banks to receive electronic filings. This
measure continues in that same vein, except that this bill
focuses on streamlining the process of prosecuting violators,
clarifying the powers of the Commissioner of Financial
Institutions, and reorganizing seized banks.
ARGUMENTS IN SUPPORT : In support of this bill, the authors
write
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.
Under current law the 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
AB 1268
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payment instruments, and business and industrial
development corporations. The Commissioner's powers
are broad with respect to each type of licensee.
While the 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.
Prior Related 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 DFI, and made 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 : Thomas Clark / JUD. / (916) 319-2334