By Ellis, et al. S.B. No. 1599 75R3032 DWS-F A BILL TO BE ENTITLED 1-1 AN ACT 1-2 relating to a checking account for low-income consumers. 1-3 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: 1-4 SECTION 1. The legislature finds that: 1-5 (1) it is in the interest of the residents of this 1-6 state to make checking accounts available to as many residents of 1-7 this state as possible; 1-8 (2) checking accounts provide an efficient way to pay 1-9 bills, a means to protect money from theft, and a way for 1-10 low-income consumers to build experience, credit history, and 1-11 relationships with mainstream financial services; 1-12 (3) without affordable checking accounts, many 1-13 residents of this state must rely on higher-cost, inefficient, and 1-14 unsafe alternatives; 1-15 (4) barriers exist that make checking accounts less 1-16 accessible, including high initial or continuing balance 1-17 requirements and excessive monthly and other fees necessary to 1-18 maintain an account; and 1-19 (5) it is appropriate to require the Finance 1-20 Commission of Texas to establish minimum requirements for financial 1-21 institutions doing business in this state to offer consumer 1-22 checking accounts that will aid low-income consumers to establish 1-23 checking accounts. 1-24 SECTION 2. Title 16, Revised Statutes, is amended by adding 2-1 Article 353 to read as follows: 2-2 Art. 353. CONSUMER CHECKING ACCOUNT 2-3 Sec. 1. DEFINITIONS. In this article: 2-4 (1) "Commission" means the Finance Commission of 2-5 Texas. 2-6 (2) "Commissioner" means the Banking Commissioner of 2-7 Texas. 2-8 (3) "Financial institution" means a state or national 2-9 bank, state or federal savings and loan association, state or 2-10 federal savings bank, or state or federal credit union doing 2-11 business in this state. 2-12 (4) "Regular checking account" means the type of 2-13 checking account held by the most customers at a financial 2-14 institution. 2-15 Sec. 2. CONSUMER CHECKING ACCOUNT REQUIRED. Each financial 2-16 institution that offers a checking account to the public shall 2-17 offer a consumer checking account to the public. 2-18 Sec. 3. FORM OF ACCOUNT. (a) The commission by rule shall 2-19 establish the required terms of a consumer checking account. The 2-20 rules must: 2-21 (1) be designed to make the account available for use 2-22 by low-income persons primarily for personal, family, or household 2-23 purposes; 2-24 (2) establish: 2-25 (A) the initial deposit that may be required to 2-26 open the account; 2-27 (B) the minimum balance that may be required to 3-1 maintain the account; 3-2 (C) the minimum number of checks that the 3-3 financial institution must permit the account holder to draw within 3-4 a certain period without additional charge; 3-5 (D) the minimum number of withdrawals that the 3-6 financial institution must permit the account holder to make by a 3-7 means other than check within a certain period without additional 3-8 charge; 3-9 (E) the minimum number of deposits that the 3-10 financial institution must permit the account holder to make within 3-11 a certain period without additional charge; and 3-12 (F) the maximum amount of any charge relating to 3-13 the account; and 3-14 (3) require the financial institution to provide the 3-15 holder of the account periodic account statements. 3-16 (b) In adopting rules under this section, the commission 3-17 shall ensure that a financial institution is not required to 3-18 receive less gross income from consumer checking accounts than it 3-19 costs the financial institution to provide those accounts. On 3-20 request of the commissioner, a financial institution shall provide 3-21 information necessary to enable the commission to carry out this 3-22 subsection. 3-23 Sec. 4. ALTERNATIVE FORM OF ACCOUNT. (a) On request of a 3-24 financial institution, the commissioner may approve as a consumer 3-25 checking account an account that does not meet the requirements of 3-26 rules adopted under Section 3 if the commissioner determines that 3-27 the account satisfies the purposes of a consumer checking account 4-1 described by Section 3(a)(1). 4-2 (b) Not later than the 30th day after the day on which a 4-3 financial institution submits a request under this section, the 4-4 commissioner shall send to the financial institution a written 4-5 notice that: 4-6 (1) approves the request; or 4-7 (2) disapproves the request and states the reasons for 4-8 the disapproval. 4-9 Sec. 5. CONSIDERATION OF EXISTING ACCOUNTS. The commission, 4-10 in adopting rules under Section 3, and the commissioner, in 4-11 considering a request under Section 4, shall consider the terms of 4-12 existing low-cost personal checking accounts available in this 4-13 state. 4-14 Sec. 6. PARITY WITH OTHER ACCOUNTS. (a) Except as otherwise 4-15 provided by this article or rules adopted under this article, a 4-16 financial institution shall offer each of its products and services 4-17 to a holder of a consumer checking account on the same basis that 4-18 it offers the product or service to a holder of a regular checking 4-19 account. 4-20 (b) A financial institution may not: 4-21 (1) give a holder of a consumer checking account less 4-22 access to mail or electronic banking services, including direct 4-23 deposit services, than it gives to a holder of a regular checking 4-24 account; or 4-25 (2) charge a holder of a consumer checking account an 4-26 amount for a service that is greater than the amount charged for 4-27 the service to a holder of a regular checking account. 5-1 Sec. 7. OPENING ACCOUNT; SERVICES PROVIDED AT EACH LOCATION. 5-2 (a) A financial institution shall: 5-3 (1) provide for the opening of a consumer checking 5-4 account at each location at which it opens a regular checking 5-5 account; and 5-6 (2) provide services related to a consumer checking 5-7 account at each location at which it provides services related to a 5-8 regular savings account. 5-9 (b) The financial institution may require that an applicant 5-10 for a consumer checking account provide the financial institution 5-11 with the same information required of an applicant for a regular 5-12 savings account. 5-13 Sec. 8. GROUNDS FOR CLOSING OR DENYING ACCOUNT. (a) A 5-14 financial institution may: 5-15 (1) close a consumer checking account for fraudulent 5-16 activity or overdrafts under the same standards the financial 5-17 institution applies to a regular checking account; and 5-18 (2) close or refuse to open a consumer checking 5-19 account if the applicant or account holder: 5-20 (A) has a consumer checking account or regular 5-21 checking account at another financial institution; or 5-22 (B) intentionally makes a material 5-23 misrepresentation in information provided to the financial 5-24 institution to open the account. 5-25 (b) A financial institution may not require, as a condition 5-26 of opening or maintaining a consumer checking account, that the 5-27 applicant or account holder hold any other account with that or any 6-1 other financial institution, including a credit card account. 6-2 Sec. 9. PUBLIC NOTICE OF ACCOUNT. Each financial 6-3 institution required to offer a consumer checking account shall 6-4 provide notice at each of its locations of the main features and 6-5 limitations of a consumer checking account by: 6-6 (1) posting a copy of the notice in a conspicuous 6-7 public area of the location; and 6-8 (2) making printed copies of the notice available to 6-9 the public. 6-10 Sec. 10. INJUNCTION. On request of the commissioner, the 6-11 attorney general shall bring an action to enjoin a violation of 6-12 this article. 6-13 SECTION 3. The Finance Commission of Texas shall adopt rules 6-14 under Article 353, Revised Statutes, as added by this Act, before 6-15 January 1, 1998. 6-16 SECTION 4. The importance of this legislation and the 6-17 crowded condition of the calendars in both houses create an 6-18 emergency and an imperative public necessity that the 6-19 constitutional rule requiring bills to be read on three several 6-20 days in each house be suspended, and this rule is hereby suspended, 6-21 and that this Act take effect and be in force from and after its 6-22 passage, and it is so enacted.