BILL ANALYSIS
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THIRD READING
Bill No: AB 1268
Author: Gaines (R) and Nava (D)
Amended: 8/9/10 in Senate
Vote: 21
SENATE BANKING, FINANCE, AND INS. COMMITTEE : 11-0, 6/22/09
AYES: Calderon, Correa, Cox, Florez, Harman, Kehoe, Liu,
Lowenthal, Padilla, Runner, Wolk
NO VOTE RECORDED: Cogdill
SENATE APPROPRIATIONS COMMITTEE : Senate Rule 28.8
ASSEMBLY FLOOR : 76-0, 5/28/09 (Consent) - See last page
for vote
SUBJECT : Financial institutions
SOURCE : Department of Financial Institutions
DIGEST : This bill reorganizes and consolidates
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 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.
Senate Floor Amendments of 8/9/10 require the officers and
employees of a credit union to exhibit the securities,
books, records, and accounts to the examiners, on request,
CONTINUED
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authorize the Commissioner to take possession of the
property and business of the credit union if the
Commissioner finds that the credit union has inadequate net
worth, as defined, or is insolvent, and authorize the
Commissioner to call a meeting of the board of directors of
a credit union, as specified.
Senate Floor Amendments of 8/17/09 ensure that this bill
does not chapter out provisions of AB 1059 (Silva).
ANALYSIS :
Existing law:
1. Establishes Divisions 1, 2, 5, 7, 15, and 16 of the
Financial Code, and gives the Commissioner of Financial
Institutions (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/her regulatory
oversight over state licensees.
This bill enacts numerous technical and nonsubstantive
changes to the provisions of the Financial Code
administered by DFI, by consolidating all of the powers of
the Commissioner, except for credit unions, 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.
In addition, this bill requires the officers and employees
of a credit union to exhibit the securities, books,
records, and accounts to the examiners, on request,
authorizes the Commissioner to take possession of the
property and business of the credit union if the
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Commissioner finds that the credit union has inadequate net
worth, as defined, or is insolvent, and authorizes the
Commissioner to call a meeting of the board of directors of
a credit union, as specified.
Background
The need for this bill, and the two modernization bills
that came before it during the prior legislative session
[AB 1301 (Gaines) and AB 2749 (Gaines)] 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/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.
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 streamlines the Financial Code and provides 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 DFI's
licensees. This proposal repeals duplicative language
currently contained in Division 1, Banks; Division 5,
Credit Unions; Division 15, Business and Industrial Loan
Corporations; and Division 16, Payment Instruments.
Prior Legislation
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AB 1301 (Gaines), Chapter 125, Statutes of 2008, was one of
the two prior DFI-sponsored bills to update and modernize
sections of the Financial Code administered by DFI.
AB 2749 (Gaines), Chapter 501, Statutes of 2008, was the
second of two prior DFI-sponsored bills to update and
modernize sections of the Financial Code administered by
DFI.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: No
SUPPORT : (Verified 8/18/09)
Department of Financial Institutions (source)
ASSEMBLY FLOOR :
AYES: Adams, Ammiano, Anderson, Arambula, Beall, Bill
Berryhill, Tom Berryhill, Blakeslee, Block, Blumenfield,
Brownley, Buchanan, Caballero, Charles Calderon, Carter,
Chesbro, Conway, Cook, Coto, Davis, De La Torre, De Leon,
DeVore, Emmerson, Eng, Feuer, Fletcher, Fong, Fuentes,
Fuller, Furutani, Gaines, Galgiani, Garrick, Gilmore,
Hagman, Hall, Harkey, Hayashi, Hernandez, Hill, Huber,
Huffman, Jeffries, Jones, Knight, Krekorian, Lieu, Logue,
Bonnie Lowenthal, Ma, Miller, Monning, Nava, Niello,
Nielsen, John A. Perez, V. Manuel Perez, Portantino,
Price, Ruskin, Salas, Saldana, Silva, Skinner, Smyth,
Solorio, Audra Strickland, Swanson, Torlakson, Torres,
Torrico, Tran, Villines, Yamada, Bass
NO VOTE RECORDED: Duvall, Evans, Mendoza, Nestande
JJA:mw 8/10/10 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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