BILL ANALYSIS



H.B. 1289
By: Patterson
03-31-95
Committee Report (Unamended)


BACKGROUND

The nature of the financial institution industry has changed over
the past decade.  Consolidations, mergers and federally subsidized
acquisitions have reduced the number of institutions in the
country.  This has resulted in larger institutions moving to this
state and establishing branch operations with out-of-state
management and control.

Due to these changes, information and reporting procedures on the
activities of financial institutions have also become consolidated. 
Out-of-state institutions, which now control a majority of assets
and deposits, only report on a statewide basis, whereas before,
activities were reported in a more diverse and thorough way.

From time to time, the legislature must make policy decisions
regarding certain types of economic activity in diverse geographic
areas.  Because financial institutions do not report on a county,
regional, or geographic region, but rather on a consolidated state-wide basis, the state does not know whether credit needs are being
met on a regional and economic sector basis.

The state legislature has a duty to see that financial institutions
are servicing the communities they are chartered to serve.  Without
specific branch information, the legislature cannot determine if
financial institution branches are adequately servicing their
communities.

PURPOSE

HB 1289 will provide the citizens and public officials of the state
of Texas with sufficient information to enable them to determine
whether depository institutions are fulfilling the needs of the
state and the communities in which they are located. 

RULEMAKING AUTHORITY

It is the opinion of the committee that this bill grants rulemaking
authority to The Finance Commission of Texas in Section 1 of this
bill.

SECTION BY SECTION ANALYSIS

SECTION 1.  Statement amending Title 16, Revised Statutes, adding
Article 352 as follows:

     Sec. 1.  Defines "financial institution" and branch office."

     Sec. 2.  (a)  The Act only applies to a financial institution
or holding company which own or control one or more financial
institutions with deposits of $300 million or more.  (b)  An
institution otherwise covered by this ACT need not report if all
offices, including branch offices as defined herein, are located
within a single county.

     Sec. 3.  Required a financial institution and holding company
to submit its financial activity to their regulating authority each
calendar quarter.  A financial institution having deposits of $300
million or more shall submit a separate report regardless of
whether it is owned by a holding company.   The report required by
this section shall provide the required information segregated on
a branch-by-branch basis provided, however, that branch offices
within a single county may be aggregated.  If a branch is located
in an incorporated city which is situated in more than one county,
then the report may be based on metropolitan statistical area. 
This report shall be public information.

     Sec. 4.  Requires the report include information on loans and
deposits itemized by such categories as may be prescribed by the
Federal Financial Institutions Examinations Council, or its
successor, reports of condition or similar public records, provided
that the information is reported by branch office transaction.

     Sec. 5.  Authorizes the Finance Commission to adopt rules to
establish uniform reporting requirements.

     Sec. 6.  (a)  States that each financial institution and
holding company subject to the provisions of this Act shall submit
the required report no later than thirty days after the close of
each quarter and shall retain a copy for its home office.  If it
has a physical branch in other counties, it shall also make a
statement available in each county.  The statement at a branch
office need only contain data relating to transactions in the
county where that branch office is located.  (c)  An institution
shall make the report available for inspection and copying during
the hours the office is normally open to the public for business. 
It may impose a reasonable charge for photocopying services.  (d) 
A financial institution shall post a general notice about the
availability of the report required by this Act in the lobbies of
its home office and any physical branch offices.  Upon request, it
shall promptly provide the location of the institution's offices
where the report is available.  At its option, an institution may
include the location in its notice.

     Sec. 7.  States that a financial institution which fails to
make the report required by this ACT on or before he date required
herein shall be subject to a fine of up to $500.00 per day for each
day during which such violation continues.  Any penalty imposed
under this section shall be assessed and collected by the Banking
Commissioner in the case of a banking association, the Savings and
Loan Commissioner in the case of a savings association or savings
bank, or the Credit Union Commissioner in the case of a credit
union.  All penalties collected under authority of this section
shall be deposited into the Treasury.  The Finance Commission shall
prescribe regulations establishing such procedures as may be
necessary to carry out this section.

     Sec. 8.  Provides that any part of Article 352 that is ruled
not to apply to any federally chartered financial institution by a
federal regulatory agency will then not apply to state chartered
counterparts of the federally chartered institution.

SECTION 2.  Requires financial institutions that are required to
report under Article 352, Revised Statutes, to file their first
report to cover the first calendar quarter of 1996 and file it
during the second quarter 1996.

SECTION 3.  Emergency clause.

SUMMARY OF COMMITTEE ACTION

The committee considered HB 1289 in a public hearing on April 3,
1995.

The following people testified in favor of the bill:
Karen Neeley; and 
Robert Schneider.

The following person testified against the bill:
John Heasley.

The bill was left pending.

The committee considered HB 1289 in a formal meeting on April 11,
1995.

The motion to report HB 1289 favorably without amendments, with the
recommendation that it do pass and be printed, prevailed by the
following record vote:  6 Ayes, 0 Nays, 0 PNV, 3 Absent.