BILL ANALYSIS
SENATE COMMITTEE ON BANKING, FINANCE,
AND INSURANCE
Senator Ronald Calderon, Chair
AB 1268 (Gaines) Hearing Date: June 22, 2009
As Amended: May 11, 2009
Fiscal: Yes
Urgency: No
SUMMARY Would reorganize and consolidate provisions of the
Financial Code administered by the Department of Financial
Institutions (DFI), by moving the powers and authority of the
Commissioner of Financial Institutions (Commissioner) into one
chapter of the Financial Code and consolidating other laws that
are applicable to all of DFI's licensees into one body of law.
DIGEST
Existing law
1. Establishes Divisions 1, 2, 5, 7, 15, and 16 of the Financial
Code, and gives the Commissioner jurisdiction over banks,
industrial banks, trust companies, transmitters of money abroad,
traveler's check issuers, savings associations, credit unions,
industrial loan companies, business and development
corporations, and sellers of payment instruments (money orders);
2. Contains numerous code sections that specify the powers of the
Commissioner in relation to his or her regulatory oversight over
state licensees.
This bill would enact numerous technical and nonsubstantive
changes to the provisions of the Financial Code administered by
DFI, by consolidating all of the powers of the Commissioner into
one portion of the Financial Code (Section 220 et seq.);
creating single articles within the Financial Code providing the
rules for enforcement (Article 7), liquidation and conservation
(Article 8), and voluntary liquidation (Article 9); and deleting
provisions of individual licensing laws rendered obsolete by the
aforementioned changes.
COMMENTS
AB 1268 (Gaines), Page 2
1. Purpose of the bill To continue the process of modernizing
the sections of the Financial Code that are administered by
the Commissioner, by moving the powers and authority of the
Commissioner that are applicable to all licensees into one
chapter of the Financial Code and consolidating other laws
that are applicable to all of DFI's licensees into one body
of law.
2. Background The need for this bill, and the two
modernization bills that came before it during the prior
Legislative Session (AB 1301 and AB 2749) stems from the age
of the laws over which the Commissioner has jurisdiction and
the fractured way in which they were enacted and changed
over the years. The Commissioner's powers over each of his
or her licensees are similar in nature, yet each of the six
divisions of the Financial Code administered by the
Commissioner has slightly different provisions, which were
added at different times by different authors. The net
result is a group of laws with similar intent, yet with
different wording and uneven requirements. The powers of
the Commissioner are express in some divisions and implied
in others.
In the background information provided to this Committee, DFI
notes that, common to all of its licensees, the commissioner
may approve or deny an application for licensure, suspend or
revoke a license, examine the books and records of a
licensee, collect assessments and fees, compel corrective
action by a licensee that has been determined by the
Commissioner to be operating in violation of applicable
law(s) or to be in an unsafe and unsound condition, and take
possession of and provide for the orderly liquidation or
conservation of a licensee.
This bill will streamline the Financial Code and provide more
efficient and effective regulatory oversight by
consolidating similar provisions found in licensee laws into
one chapter of the Financial Code and making the provisions
in the chapter applicable to all of the Department's
licensees. This proposal would repeal duplicative language
currently contained in Division 1, Banks; Division 5, Credit
Unions; Division 15, Business and Industrial Loan
Corporations; and Division 16, Payment Instruments.
3. Support . DFI is sponsoring AB 1268 for the reasons stated
above.
AB 1268 (Gaines), Page 3
4. Opposition None received.
5. Prior Legislation
a. AB 1301 (Gaines), Chapter 125, Statutes of
2008: One of the two prior DFI-sponsored bills to
update and modernize sections of the Financial Code
administered by DFI;
b. AB 2749 (Gaines), Chapter 501, Statutes of
2008: The second of two prior DFI-sponsored bills to
update and modernize sections of the Financial Code
administered by DFI.
6. Suggested Amendments
a. AB 1268 amends two sections of the Financial
Code (1889 and 34109) that are also amended by AB 1059
(Silva), a measure which passed the Senate Judiciary
Committee on consent. AB 1059 was moved by its author
to the Senate inactive file, to allow Assemblyman
Silva to resolve conflicts with other bills. Before
AB 1268 is sent to the Governor, it should be amended
to double-joint it with AB 1059.
POSITIONS
Support
Department of Financial Institutions (sponsor)
Oppose
None received
Consultant: Eileen Newhall (916) 651-4102