BILL ANALYSIS



H.B. 3007
By: Giddings
04-06-95
Committee Report (Amended)


BACKGROUND

The Interim Special House Committee on Small business Access to
capital recommended several changes to the banking laws in Texas in
its interim report.  One recommendation was to "require banks to
make certain percentage loans to small businesses in their
community in order to be eligible as a state depository."

PURPOSE

This bill requires state and national banks to loan at least 25
percent of their small business customers in the banks' local
lending areas and sets out consequences if banks fail to do so.

RULEMAKING AUTHORITY

It is the committee's opinion that this bill does not expressly
grant any additional rulemaking authority to a state officer,
department, agency, or institution.

SECTION BY SECTION ANALYSIS

SECTION 1. Chapter V, Banking Code, (Art. 342-501 et. seq.,
V.T.C.S.), is amended by adding Article 15 as follows:

Article 15.  LENDING SERVICES TO SMALL BUSINESSES IN LOCAL AREA. 
(a) Requires that 25 percent of loans made by state and national
banks to small businesses must be made to small businesses in the
bank's local area

     (b) On the complaint of any person, the banking commissioner
     is required to hold hearings to determine whether a bank is in
     violation of Article 15.

     (c) defines banks local areas, provides for the establishment
     of such area, and requires banks to file statements of local
     areas with the banking commissioner.

     (d) defines small business.

           (1) defines intent of business.
           (2) defines ownership.
           (3) sets number of employees and annual gross receipts.

SECTION 2. Section 404.021, is amended by adding Subsection (d).

     (d) establishes how, when and under what conditions the
     Commissioner has the option to withdraw state funds from a
     bank found not to be in compliance of Article 15.

SECTION 3. This act applies only to loans made on or after the 
effective date.  Loans made before the effective date are governed
by the law in effect when the loans were made.

SECTION 4. Effective date.

SECTION 5. Emergency clause.


EXPLANATION OF AMENDMENTS

Committee amendment #1 states that if after the effective date of this Act, a federal regulatory
agency determines that a provision of this bill does not apply to a federally chartered bank, then that
provision does not apply to a state chartered or private bank in this state.

Committee amendment #2 adds language to exclude Federal Small Business Administration loan
from consideration in determining that a bank loans 25% of its small business loans in the bank's
local area.

SUMMARY OF COMMITTEE ACTION

The committee considered HB 3007 in a public hearing on April 10, 1995.

The following person testified in favor of the bill:
Karen Neeley representing the Independent Bankers Association of Texas.

The following person testified against the bill:
John Heasley representing the Texas Bankers Association.

The bill was left pending.

The committee considered HB 3007 in a public hearing on April 19, 1995.

The committee considered two amendments to the bill which were adopted without objection.

The bill was reported favorably as amended, with the recommendation that it do pass and be printed,
by a record vote of:  5 Ayes, 0 Nays, 0 PNV, 4 Absent.