BILL ANALYSIS
C.S.H.B. 155
By: Romo
03-03-95
Committee Report (Substituted)
BACKGROUND
The State Banking Board (SBB) is primarily responsible for
chartering state bank and trust companies. The board consists of
three members; the Commissioner of Banking, the State Treasurer and
a citizen appointed by the Governor to represent the interests of
the general public.
Prior to the creation to the Finance Commission in 1943, the SBB
also was responsible for regulating and supervising state banks.
Today, the Finance Commission's Department of Banking (DOB), headed
by the Commissioner of Banking, is responsible for these duties.
The SBB does not maintain a staff and has delegated its remaining
duty of investigating and reviewing charter applications to the
staff of the DOB and to hearings examiners who prepare a record of
findings and recommendations for the board's review.
The Banking Commissioner, as director of every phase of banking
regulation, is responsible for all other functions, including the
approval of directors, bylaws, stock transfers, changes of control,
mergers, branching, charter amendments, amendments, amendments to
articles of incorporation and foreign bank agents. Given the
significant participation of the commissioner and the staff of the
DOB in the chartering process, the need for a separate board of
approval mechanism is, at best, questionable.
PURPOSE
As proposed, H.B. 155 abolishes the State Banking Board (SBB) and
transfers its functions to the Banking commissioner. This proposal
provides for a more efficient system of charter application review
and approval. There would be no significant change in the way
statutes involving charters are administered; moreover, this change
would provide a system consistent with that use in a majority of
states, as well as in Texas' own chartering of credit unions and
savings loans.
RULEMAKING AUTHORITY
It is the committee's opinion that this bill expressly grants
additional rulemaking authority to the Banking Commissioner in
Sections 5 and 19 of this bill.
SECTION BY SECTION ANALYSIS
SECTION 1. Amends Section 572.003, Subsection (c) of the Government
Code (Vernon's Texas Civil Statutes Annotated) to delete the State
Banking Board from the definition of an appointed officer of a
major state agency.
SECTION 2. Amends Section 2001.223 of the Government Code to
provide for exceptions from declaratory judgement, court
enforcement, and contested case provisions.
SECTION 3. Amends the chapter heading to Chapter I, The Texas
Banking Code (Article 342-101 et seq., Vernon's Texas Civil
Statutes), to delete reference to the State Banking Board.
SECTION 4. Amends Section 3, Article 6, Chapter I of the Texas
Banking Board (Article 342-106, Vernon's Texas Civil Statutes), to
require that the form of the oath taken by members of the Finance
Commission shall be prescribed by the Banking Commissioner and not
the State Banking Board.
SECTION 5. Amends Article 7, Chapter II, Texas Banking Code (Art.
342-207, Vernon's Texas Civil Statutes), to detail the powers,
duties, and liabilities of the Banking Commissioner currently
belonging to the State Banking Board.
SECTION 6. Amends Article 10, Chapter II, Section (a) of the Texas
Banking Code to delete the powers of the SBB.
SECTION 7. Amends Article 4, Chapter III of the Texas Banking Code
(Article 342-304, Vernon's Texas Civil Statutes), to grant the
power to forfeit charter or cancel applications for charters to the
banking commissioner without judicial action.
SECTION 8. Amends Article 6, Chapter III, the Texas banking Code
(Article 342-306, Vernon's Texas Civil Statutes), to authorize the
Banking Commissioner to grant applications for the incorporation of
state banks.
SECTION 9. Amends Article 10, Chapter III, The Texas Banking Code
(Article 342-310, Vernon's Texas Civil Statutes), to grant the
Banking Commissioner the authority to grant certificates to
incorporated state banks.
SECTION 10. Amends Sections (a) and (b), Article 11, Chapter III,
The Texas Banking Code, (Article 342-311, Vernon's Texas Civil
Statutes) to grant the Banking Commissioner the authority to
receive applications and grant approval to state banks that desire
to change their domiciles.
SECTION 11. Amends Subsections (b), (c), (d) while adding
Subsections (e) and (f) to Article 31, Chapter III, The Texas
Banking Code (Article 342-331, Vernon's Texas Civil Statutes).
Subsection (b) is amended to grant the Banking Commissioner
authority to grant charters and control disclosure of statements.
Subsection (c) is amended to require that the Banking
Commissioner conduct a thorough investigation of applicants for
charters, their personnel and adherence to charter conditions.
Subsection (d) is amended to grant authority to the set the
time and place for public hearing of the application for
charter and the authority to accept or deny the charter application.
Subsection (e) provides a judicial review process for denied
applicants for state charters.
Subsection (f) provides guidelines for judicial review which
are provided for in Section 2001.176 of the Government Code.
(Vernon's Texas Civil Statutes)
SECTION 12. Amends Article 32, Chapter III The Texas Banking Code
(Article 342-332, Vernon's Texas Civil Statutes) requires any state
banking association wishing to amend articles of association to
submit a proposal to the Banking Commissioner for approval or
denial of proposed amendments.
SECTION 13. Amends Subsections (b), (c), (d); while adding
Subsections (e) and (f), to Article 63, Chapter III, The Texas
Banking Code (Article 342-363, Vernon's Texas Civil Statutes)
Subsection (b) is amended to grant authority to the Banking
Commissioner to approve limited banking association charters and
control disclosure of statements of applicant.
Subsection (c) requires that the Banking Commissioner conduct
thorough investigations of applicants for limited banking
association charters, their personnel and adherence to charter
conditions.
Subsection (d) grants authority to the Banking commissioner to
set the time and place for public hearing of the application for
the limited banking association charter and the authority to
approve or deny said charter.
Subsection (e) provides a judicial review process for denied
applicants for state charters.
Subsection (f) provides guidelines for judicial review which
are provided for in Section 2001.176 of the Government Code.
SECTION 14. Section (b), Article 68, Chapter III, The Texas Banking
Code (Article 342-368, Vernon's Texas Civil Statutes) requires that
any limited banking association wishing to amend their charter must
submit a proposal to the Banking Commissioner for approval or
denial.
SECTION 15. Sections 5-8, and 12, Article 3a, Chapter IX, The Texas
Banking Code (Article 342-903a, Vernon's Texas Civil Statutes)
delegates authority to the Banking Commissioner regarding the
decision of banks to continue use, discontinue use and monitor
safety provisions of unmanned teller machines.
SECTION 16. Section 6, Article 3c, Chapter IX, The Texas Banking
Code (Article 342-903c, Vernon's Texas Civil Statutes) provides
that the Banking Commissioner shall have jurisdiction to determine
whether or not the financial institution has been denied the right
to utilize the system.
SECTION 17. Article 11.1, Chapter IX, The Texas Banking Code
(Article 342-911.1, Vernon's Texas Civil Statutes), deletes the SBB
from the appellate procedure for orders given to the SBB and
Finance Commission.
SECTION 18. Section 1, Article 1, Chapter XI, The Texas Banking
Code (Article 342-1101, Vernon's Texas Civil Statutes) amends
Subsection (b) and adds Subsection (c) and (d).
Subsection (b) is amended to grant authority to the Banking
Commissioner to hear and determine applications for state
trust company charters.
Subsections (c) and (d) provide for the appeal process for
those applicants denied a charter.
SECTION 19. Section (a), Article 6, Chapter XI, The Texas Banking
Code (Article 342-1106, Vernon's Texas civil Statutes) provides
that the Banking Commissioner will adopt rules and regulations to
provide for facilitate fair hearings for charter applications.
SECTION 20. Section 3, Chapter 496, Acts of the 44th Legislature,
3rd Called Session, 1936 (Article 6243-23. Vernon's Texas Civil
Statutes) requires that the Banking Commissioner determine rates of
interest on warrants and sets limitations.
SECTION 21. Section 3, Chapter 1, page 536, General Laws, Acts of
the 46th Legislature, 1939 (Article 6243-24, Vernon's Texas Civil
Statute's) Revised Statutes, to allow the Banking Commissioner, and
not the SBB, to determine the interest rate to be paid on accounts
by the Old Age Commission (not to exceed 2 1/2 per centum per
annum).
SECTION 22. Chapter 551, Government Code, does not require the
Banking Commissioner, in carrying out a power or duty of the State
Banking Board transferred to the commissioner by this Act, to
conduct an open meeting to deliberate a matter made confidential by
law.
SECTION 23. Article 15, Chapter I, The Texas Banking Code (Article
342-115, Vernon's Texas Civil Statutes), is repealed.
SECTION 24. Provides that on the date of enactment all powers,
duties, obligations, property, records as well as rules, forms,
policies and orders of the State Banking Board be transferred to
the Banking Commissioner and an employee of the SBB becomes an
employee of the Texas Department of Banking.
SECTION 25. Effective Date.
SECTION 26. Provides that this Act does not take place if the
Legislature enacts the Texas Banking Act.
SECTION 27. Emergency clause.
COMPARISON OF ORIGINAL TO SUBSTITUTE
The Texas Banking Act of 1995 also abolishes the State Banking
Board.
The committee substitute contains a section which states that this
bill would not go in to effect if the Legislature passes the
Banking Act. This is the only difference between the bills.
SUMMARY OF COMMITTEE ACTION
The committee convened in a public hearing on March 6, 1995 to
consider HB 155. The Chair laid out HB 155 and recognized Rep.
Romo to explain the bill.
The following person testified in favor of the bill:
Karen Neeley.
The following person testified neutrally on the bill:
Catherine A. Ghiglieri.
HB 155 was left pending.
The committee convened in a public hearing on March 20, 1995 to
consider HB 155. The Chair called up HB 155 which was pending
before the committee. The Chair offered a complete committee
substitute for the bill which was adopted without objection. The
motion to report HB 155 favorably as substituted with the
recommendation that it do pass and be printed prevailed by the
following record vote: 5 Ayes, 0 Nays, 0 PNV, 4 Absent.