1-1 By: Grusendorf (Senate Sponsor - Sibley) H.B. No. 1768
1-2 (In the Senate - Received from the House April 19, 2001;
1-3 April 20, 2001, read first time and referred to Committee on
1-4 Business and Commerce; May 3, 2001, reported favorably by the
1-5 following vote: Yeas 7, Nays 0; May 3, 2001, sent to printer.)
1-6 A BILL TO BE ENTITLED
1-7 AN ACT
1-8 relating to clarifications in finance law and regulatory authority
1-9 and efficient administration by the Finance Commission of Texas and
1-10 the Texas Department of Banking; providing penalties.
1-11 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-12 ARTICLE 1. CHANGES TO TITLE 2, FINANCE CODE
1-13 SECTION 1.01. Section 12.102, Finance Code, is amended to
1-14 read as follows:
1-15 Sec. 12.102. DEPUTY BANKING COMMISSIONERS [COMMISSIONER].
1-16 (a) The banking commissioner shall appoint one or more [a] deputy
1-17 banking commissioners as necessary to the efficient operation of
1-18 the department. The banking commissioner shall prescribe [who must
1-19 have] the qualifications and duties of a deputy [required of the]
1-20 banking commissioner.
1-21 (b) During the banking commissioner's absence or inability
1-22 to serve, a [the] deputy banking commissioner has the powers and
1-23 shall perform the duties of the banking commissioner.
1-24 SECTION 1.02. Section 12.104, Finance Code, is amended to
1-25 read as follows:
1-26 Sec. 12.104. OATH OF OFFICE. Before assuming the duties of
1-27 office, each [the] deputy banking commissioner, [each] examiner,
1-28 assistant examiner, conservator, supervisor, and special agent, and
1-29 each other officer or employee specified by the banking
1-30 commissioner, must take an oath of office to:
1-31 (1) discharge faithfully the duties assigned; and
1-32 (2) uphold the constitution and laws of this state and
1-33 of the United States.
1-34 SECTION 1.03. Section 12.106(a), Finance Code, is amended to
1-35 read as follows:
1-36 (a) The banking commissioner, a member of the finance
1-37 commission, a [the] deputy banking commissioner, [or] an examiner,
1-38 assistant examiner, supervisor, conservator, agent, or other
1-39 officer or employee of the department, or an agent of the banking
1-40 commissioner is not personally liable for damages arising from the
1-41 person's official act or omission unless the act or omission is
1-42 corrupt or malicious.
1-43 SECTION 1.04. Section 12.107, Finance Code, is amended to
1-44 read as follows:
1-45 Sec. 12.107. CONFLICT OF INTEREST. (a) In this section,
1-46 "Texas trade association" means a cooperative and voluntarily
1-47 joined association of business or professional competitors in this
1-48 state that:
1-49 (1) is primarily designed to assist its members and
1-50 its industry or profession in dealing with mutual business or
1-51 professional problems and in promoting their common interest; and
1-52 (2) includes business and professional competitors
1-53 located in this state among its members.
1-54 (b) A person may not be a department employee if:
1-55 (1) the person is an officer, employee, or paid
1-56 consultant of a Texas trade association in an industry regulated by
1-57 the department; or
1-58 (2) the person's spouse is an officer, manager, or
1-59 paid consultant of a Texas trade association in an industry
1-60 regulated by the department.
1-61 (c) A person may not act as the general counsel to the
1-62 department if the person is required to register as a lobbyist
1-63 under Chapter 305, Government Code, because of the person's
1-64 activities for compensation on behalf of a profession related to
2-1 the operation of the department.
2-2 (d) A department employee may not:
2-3 (1) purchase an asset owned by a person regulated by
2-4 the department in the possession of the banking commissioner or
2-5 other receiver for purposes of liquidation, unless the asset is
2-6 purchased at public auction or with the approval of the
2-7 receivership court;
2-8 (2) except as provided by Subsection (e), become
2-9 directly or indirectly indebted to a person regulated by the
2-10 department;
2-11 (3) except as provided by Subsection (f), become
2-12 directly or indirectly financially interested in a person regulated
2-13 by the department; or
2-14 (4) obtain a product or service from a person
2-15 regulated by the department, or an affiliate of a person regulated
2-16 by the department, on terms or rates that are more favorable to the
2-17 employee than those prevailing at the time for comparable
2-18 transactions with or involving other similarly situated consumers.
2-19 (e) Subject to Subsection (d)(4) and except as otherwise
2-20 provided by employment policies adopted by the banking
2-21 commissioner, Subsection (d)(2) does not prohibit indebtedness of:
2-22 (1) a clerical or administrative employee to a person
2-23 regulated by the department, if the employee does not exercise
2-24 discretionary decision-making authority with respect to the person;
2-25 or
2-26 (2) an employee of the department, other than a
2-27 clerical or administrative employee, if the indebtedness was
2-28 permissible when incurred and became prohibited indebtedness under
2-29 Subsection (d)(2) as a result of employment by the department or a
2-30 circumstance over which the employee has no control, including a
2-31 merger, acquisition, purchase or sale of assets, or assumption of
2-32 liabilities involving a regulated person, if the employee:
2-33 (A) repays the indebtedness; or
2-34 (B) does not knowingly participate in or
2-35 consider any matter concerning the person to whom the employee is
2-36 indebted.
2-37 (f) Except as otherwise provided by employment policies
2-38 adopted by the banking commissioner, Subsection (d)(3) does not
2-39 prohibit a financial interest of an employee of the department
2-40 solely because:
2-41 (1) the employee owns publicly traded shares of a
2-42 registered investment company (mutual fund) that owns publicly
2-43 traded equity securities issued by a person regulated by the
2-44 department; or
2-45 (2) the spouse of or other person related to the
2-46 employee is employed by a person regulated by the department and
2-47 receives equity securities of the person through participation in
2-48 an employee benefit plan, including an employee stock option,
2-49 bonus, or ownership plan, if:
2-50 (A) the sole purpose of the plan is to
2-51 compensate employees with an ownership interest in the person for
2-52 services rendered; and
2-53 (B) the employee does not knowingly participate
2-54 in or consider any matter concerning the person until the spouse or
2-55 other related person no longer owns equity securities issued by the
2-56 person.
2-57 (g) The banking commissioner may adopt employment policies
2-58 relating to this section, including policies to:
2-59 (1) require employees to notify the department of
2-60 possible conflicts of interest;
2-61 (2) specify the manner or extent of required recusal;
2-62 (3) define the circumstances under which adverse
2-63 employment action may be taken; and
2-64 (4) impose more restrictive requirements on senior
2-65 officers of the department for whom recusal is not viable or
2-66 consistent with the prudent exercise of the department's
2-67 responsibilities.
2-68 (h) The finance commission may adopt rules to administer
2-69 this section, including rules to:
3-1 (1) codify employment policies of the banking
3-2 commissioner adopted under Subsection (g);
3-3 (2) define or further define terms used by this
3-4 section; and
3-5 (3) establish limits, requirements, or exemptions
3-6 other than those specified by this section, except that an exempted
3-7 employee must be recused from participation in or consideration of
3-8 all regulatory matters specifically concerning the person to whom
3-9 the exempted indebtedness is owed or the financial interest
3-10 relates.
3-11 (i) [An officer or employee of the department may not be:]
3-12 [(1) an officer, employee, or paid consultant of a
3-13 trade association in an industry regulated by the department; or]
3-14 [(2) related within the second degree by affinity or
3-15 consanguinity, as determined under Chapter 573, Government Code, to
3-16 a person who is an officer, employee, or paid consultant of a trade
3-17 association in an industry regulated by the department.]
3-18 [(b)] Before the 11th day after the date on which an
3-19 employee begins employment with the department, the employee shall
3-20 read the conflict-of-interest statutes, rules, and policies
3-21 applicable to employees of the department and sign a notarized
3-22 affidavit stating that the employee has read those statutes, rules,
3-23 and policies.
3-24 SECTION 1.05. Section 12.110, Finance Code, is repealed.
3-25 ARTICLE 2. CHANGES TO SUBTITLE A, TITLE 3, FINANCE CODE
3-26 SECTION 2.01. Section 31.101, Finance Code, is amended to
3-27 read as follows:
3-28 Sec. 31.101. GENERAL DUTIES OF BANKING COMMISSIONER. The
3-29 banking commissioner shall:
3-30 (1) supervise and regulate, as provided by this
3-31 subtitle, Subtitles [Subtitle] F and G, and Chapter 12, state
3-32 banks, trust companies, and state-licensed foreign bank branches,
3-33 agencies, and representative offices;
3-34 (2) administer and enforce this subtitle, Subtitles F
3-35 and G, and Chapter 12 in person, [or] through a [the] deputy
3-36 banking commissioner or another officer or employee of the
3-37 department, or through a [an examiner,] supervisor, conservator, or
3-38 other agent; and
3-39 (3) administer and enforce laws other than this
3-40 subtitle, Subtitles F and G, and Chapter 12 as directed by those
3-41 other laws.
3-42 SECTION 2.02. Section 31.103(a), Finance Code, is amended to
3-43 read as follows:
3-44 (a) In response to a specific request from a member of the
3-45 public or the banking industry, the banking commissioner may issue
3-46 an opinion directly or through a [the] deputy banking commissioner
3-47 or [a] department attorney.
3-48 SECTION 2.03. Section 31.105, Finance Code, is amended by
3-49 amending Subsections (a)-(c) and adding Subsection (f) to read as
3-50 follows:
3-51 (a) The banking commissioner shall examine each state bank
3-52 not less than once during each 12-month period, except that this
3-53 examination is required not less than once during each 18-month
3-54 period if the state bank:
3-55 (1) has total assets of less than $250 million;
3-56 (2) is well capitalized, as defined by Section 38,
3-57 Federal Deposit Insurance Act (12 U.S.C. Section 1831o);
3-58 (3) was found to be well managed at its most recent
3-59 examination, and its composite condition:
3-60 (A) was found to be outstanding; or
3-61 (B) was found to be outstanding or good, in the
3-62 case of a state bank that has total assets of not more than $100
3-63 million;
3-64 (4) is not currently subject to a formal enforcement
3-65 proceeding or order by the banking commissioner or by a federal
3-66 banking agency; and
3-67 (5) was not the subject of a change of control under
3-68 Section 33.001 during the 12-month period in which a full-scope,
3-69 on-site examination would be required but for Subdivisions (1)-(4)
4-1 [annually].
4-2 (b) The banking commissioner may examine a state bank more
4-3 often than required by Subsection (a) [annually] as the
4-4 commissioner considers necessary to:
4-5 (1) safeguard the interests of depositors, creditors,
4-6 shareholders, participants, and participant-transferees; and
4-7 (2) efficiently enforce applicable law [this subtitle
4-8 and Chapter 12].
4-9 (c) The banking commissioner may defer an examination for
4-10 not more than six months if the commissioner considers the
4-11 deferment necessary for the efficient enforcement of applicable law
4-12 [this subtitle or Chapter 12].
4-13 (f) Disclosure of information to the banking commissioner
4-14 pursuant to an examination request does not constitute a waiver of
4-15 or otherwise affect or diminish an evidentiary privilege to which
4-16 the information is otherwise subject. A report of an examination
4-17 under this section is confidential and may be disclosed only under
4-18 the circumstances provided by this subtitle.
4-19 SECTION 2.04. Section 31.201(a), Finance Code, is amended to
4-20 read as follows:
4-21 (a) The banking commissioner may convene a hearing to
4-22 receive evidence and argument regarding any matter within the
4-23 jurisdiction of and before the banking commissioner for decision or
4-24 review [under this subtitle or Chapter 12]. The hearing must be
4-25 conducted under Chapter 2001, Government Code. A matter made
4-26 confidential by law must be considered by the banking commissioner
4-27 in a closed hearing.
4-28 SECTION 2.05. Section 31.301, Finance Code, is amended by
4-29 adding Subsections (c) and (d) to read as follows:
4-30 (c) The banking commissioner or an officer or employee of
4-31 the department commits an offense if the person:
4-32 (1) discloses information or permits access to a file
4-33 or record of the department; and
4-34 (2) knows at the time of disclosure or permission that
4-35 the disclosure or permission violates this subchapter.
4-36 (d) An offense under this section is a Class A misdemeanor.
4-37 SECTION 2.06. Section 31.305, Finance Code, is amended to
4-38 read as follows:
4-39 Sec. 31.305. CIVIL DISCOVERY. Civil discovery [Discovery] of
4-40 confidential information from a person subject to Section 31.304
4-41 [this subchapter] under subpoena or other legal process must comply
4-42 with rules adopted under this subtitle and other applicable law.
4-43 The rules may:
4-44 (1) restrict release of confidential information to
4-45 the portion directly relevant to the legal dispute at issue; and
4-46 (2) require that a protective order, in form and under
4-47 circumstances specified by the rules, be issued by a court before
4-48 release of the confidential information.
4-49 SECTION 2.07. Section 32.004(a), Finance Code, is amended to
4-50 read as follows:
4-51 (a) The [banking commissioner shall notify the organizers
4-52 when the application is complete and accepted for filing and all
4-53 required fees and deposits have been paid. Promptly after this
4-54 notification the] organizers shall solicit comments and protests by
4-55 publishing [publish] notice of the application, its date of filing,
4-56 and the identity of the organizers [and solicit comments and
4-57 protests], in the form and frequency specified by the banking
4-58 commissioner, in a newspaper of general circulation in the county
4-59 in which the bank is to be located, or in another publication or
4-60 location as directed by the banking commissioner.
4-61 SECTION 2.08. Section 32.204(a), Finance Code, is amended to
4-62 read as follows:
4-63 (a) A state bank may establish one or more loan production
4-64 offices [solely] for the purpose of soliciting loans or equivalent
4-65 transactions, accepting loan applications, and performing
4-66 ministerial duties related to consummating a granted loan, such as
4-67 execution of loan documents and dispensation of loan proceeds by
4-68 check or other draft, including a certified or cashier's check, but
4-69 not by cash. A credit decision, commitment to make a loan, and
5-1 preparation of a check or other draft to dispense loan proceeds
5-2 must occur at the bank's home office or a branch office and may not
5-3 occur at a loan production office.
5-4 SECTION 2.09. Section 33.002(d), Finance Code, is amended to
5-5 read as follows:
5-6 (d) The applicant shall publish notice of the application,
5-7 its date of filing, and the identity of the applicant and, if the
5-8 applicant includes a group, the identity of each group member. The
5-9 notice must be published[:]
5-10 [(1) promptly after the banking commissioner notifies
5-11 the applicant that the application is complete and accepted for
5-12 filing;]
5-13 [(2)] in the form and frequency specified by the
5-14 banking commissioner[;] and
5-15 [(3)] in a newspaper of general circulation in the
5-16 county in which the bank's home office is located, or in another
5-17 publication or location as directed by the banking commissioner.
5-18 SECTION 2.10. Section 33.103(b), Finance Code, is amended to
5-19 read as follows:
5-20 (b) Unless the banking commissioner consents otherwise in
5-21 writing, a person may not serve as director, manager, or managing
5-22 participant of a state bank if:
5-23 (1) the bank incurs an unreimbursed loss attributable
5-24 to a charged-off obligation of or holds a judgment against:
5-25 (A) the person; or
5-26 (B) an entity that was controlled by the person
5-27 at the time of funding and at the time of default on the loan that
5-28 gave rise to the judgment or charged-off obligation; [or]
5-29 (2) the person is the subject of an order described by
5-30 Section 35.007(a); or
5-31 (3) the person has been convicted of a felony.
5-32 SECTION 2.11. Section 33.109, Finance Code, is amended to
5-33 read as follows:
5-34 Sec. 33.109. TRANSACTIONS WITH MANAGEMENT AND AFFILIATES.
5-35 (a) Without the prior approval of a disinterested majority of the
5-36 board recorded in the minutes or, if a disinterested majority
5-37 cannot be obtained, the prior written approval of the banking
5-38 commissioner, a state bank may not directly or indirectly:
5-39 (1) sell or lease an asset of the bank to an officer,
5-40 director, manager, managing participant, or principal shareholder
5-41 or participant of the bank or an affiliate of the bank; or
5-42 (2) purchase or lease an asset in which an officer,
5-43 director, manager, managing participant, or principal shareholder
5-44 or participant of the bank or an affiliate of the bank has an
5-45 interest.
5-46 (b) [Notwithstanding Subsection (a), a lease transaction
5-47 described by Subsection (a)(2) involving real property may not be
5-48 consummated, renewed, or extended without the prior written
5-49 approval of the banking commissioner. For purposes of this
5-50 subsection only, an affiliate of the bank does not include a
5-51 subsidiary of the bank.]
5-52 [(c)] An officer, director, manager, or managing participant
5-53 of the bank who knowingly participates in or permits a violation of
5-54 this section commits an offense. An offense under this subsection
5-55 is a felony of the third degree.
5-56 SECTION 2.12. Section 34.102(d), Finance Code, is amended to
5-57 read as follows:
5-58 (d) A state bank may make loans on the collateral security
5-59 of securities issued by an affiliate, if the loan is subject to and
5-60 in compliance with the provisions of Sections 23A and 23B, Federal
5-61 Reserve Act (12 U.S.C. Sections 371c and 371c-1), as amended,
5-62 applicable to nonmember insured state banks by virtue of Section
5-63 18(j)(1), Federal Deposit Insurance Act (12 U.S.C. Section
5-64 1828(j)(1)), as amended. [For purposes of this section and except
5-65 as otherwise provided by rules adopted under this subtitle, equity
5-66 securities in a bank holding company that are not publicly held and
5-67 traded on a national securities exchange or automated quotation
5-68 system are considered to be shares or participation shares of each
5-69 of the bank holding company's subsidiary state banks.]
6-1 SECTION 2.13. Section 34.106(a), Finance Code, is amended to
6-2 read as follows:
6-3 (a) A state bank may make investments of a predominantly
6-4 civic, community, or public nature, including investments providing
6-5 housing, services, or jobs or promoting[, that are:]
6-6 [(1) of a predominantly civic, community, or public
6-7 nature; and]
6-8 [(2) designed primarily to promote the public welfare,
6-9 including] the welfare of low-income and moderate-income
6-10 communities or families.
6-11 SECTION 2.14. Section 35.007(a), Finance Code, is amended to
6-12 read as follows:
6-13 (a) Except as otherwise provided by law, without [Without]
6-14 the prior written approval of the banking commissioner, a person
6-15 subject to a final and enforceable removal or prohibition order
6-16 issued by the banking commissioner, or by another state, federal,
6-17 or foreign financial institution regulatory agency, may not:
6-18 (1) serve as a director, officer, or employee of a
6-19 state bank, trust company, or other entity chartered or licensed by
6-20 the banking commissioner under the laws of this state, including an
6-21 interstate branch, trust office, or representative office in this
6-22 state of an out-of-state state bank, trust company, or foreign
6-23 bank;
6-24 (2) directly or indirectly participate in any manner
6-25 in the management of such an entity;
6-26 (3) directly or indirectly vote for a director of such
6-27 an entity; or
6-28 (4) solicit, procure, transfer, attempt to transfer,
6-29 vote, or attempt to vote a proxy, consent, or authorization with
6-30 respect to voting rights in such an entity.
6-31 SECTION 2.15. Section 35.203(c), Finance Code, is amended to
6-32 read as follows:
6-33 (c) The subpoena must be signed and issued by the banking
6-34 commissioner or a [the] deputy banking commissioner.
6-35 SECTION 2.16. Section 59.201(a), Finance Code, is amended to
6-36 read as follows:
6-37 (a) A [Subject to Chapter 153, a] person may install,
6-38 maintain, and operate one or more electronic terminals at any
6-39 location [in this state] for the convenience of customers of
6-40 financial institutions.
6-41 ARTICLE 3. CHANGES TO SUBTITLE F, TITLE 3, FINANCE CODE
6-42 SECTION 3.01. Section 181.102(a), Finance Code, is amended to
6-43 read as follows:
6-44 (a) In response to a specific request from a member of the
6-45 public or industry, the banking commissioner may issue an opinion
6-46 directly or through a [the] deputy banking commissioner or
6-47 department attorney [the department's attorneys].
6-48 SECTION 3.02. Section 181.104(d), Finance Code, is amended to
6-49 read as follows:
6-50 (d) Disclosure of information to the banking commissioner
6-51 pursuant to an examination request does not constitute a waiver of
6-52 or otherwise affect or diminish an evidentiary privilege to which
6-53 the information is otherwise subject. [The banking commissioner
6-54 shall report the results of the examination in writing to the
6-55 officers and directors, managers, or managing participants of the
6-56 state trust company.] A report of an examination under this
6-57 section is confidential and may be disclosed only under the
6-58 circumstances provided by this subtitle [subchapter].
6-59 SECTION 3.03. Section 181.108(a), Finance Code, is amended to
6-60 read as follows:
6-61 (a) The banking commissioner, a member of the finance
6-62 commission, a [the] deputy banking commissioner, [or] an examiner,
6-63 assistant examiner, supervisor, conservator, agent, or other
6-64 officer or employee of the department, or an agent of the banking
6-65 commissioner is not personally liable for damages arising from the
6-66 person's official act or omission[,] unless the act or omission is
6-67 corrupt or malicious.
6-68 SECTION 3.04. Section 181.201(a), Finance Code, is amended to
6-69 read as follows:
7-1 (a) The banking commissioner may convene a hearing to
7-2 receive evidence and argument regarding any matter within the
7-3 jurisdiction of and before the banking commissioner for decision or
7-4 review [under this subtitle]. The hearing must be conducted under
7-5 Chapter 2001, Government Code. A matter made confidential by law
7-6 must be considered by the banking commissioner in a closed hearing.
7-7 SECTION 3.05. Section 181.301, Finance Code, is amended by
7-8 adding Subsections (c) and (d) to read as follows:
7-9 (c) The banking commissioner or an officer or employee of
7-10 the department commits an offense if the person:
7-11 (1) discloses information or permits access to a file
7-12 or record of the department; and
7-13 (2) knows at the time of disclosure or permission that
7-14 the disclosure or permission violates this subchapter.
7-15 (d) An offense under this section is a Class A misdemeanor.
7-16 SECTION 3.06. Section 181.305, Finance Code, is amended to
7-17 read as follows:
7-18 Sec. 181.305. CIVIL DISCOVERY. Civil discovery [Discovery]
7-19 of confidential information from a person subject to Section
7-20 181.304 [this subchapter] under subpoena or other legal process in
7-21 a civil proceeding must comply with rules adopted under this
7-22 subtitle and other applicable law. The rules may:
7-23 (1) restrict release of confidential information to
7-24 the portion directly relevant to the legal dispute at issue; and
7-25 (2) require that a protective order, in the form and
7-26 under circumstances specified by the rules, be issued by a court
7-27 before release of the confidential information.
7-28 SECTION 3.07. Section 182.004(a), Finance Code, is amended to
7-29 read as follows:
7-30 (a) The [banking commissioner shall notify the organizers
7-31 when the application is complete and accepted for filing and all
7-32 required fees and deposits have been paid. Promptly after the
7-33 notification, the] organizers shall solicit comments and protests
7-34 by publishing [publish] notice of the application, its date of
7-35 filing, and the identity of the organizers [and solicit comments
7-36 and protests], in the form and frequency specified by the banking
7-37 commissioner, in a newspaper of general circulation in the county
7-38 where the initial home office of the proposed state trust company
7-39 is to be located, or in another publication or location as directed
7-40 by the banking commissioner. The banking commissioner may require
7-41 the organizers to publish the notice at other locations reasonably
7-42 necessary to solicit the views of potentially affected persons.
7-43 SECTION 3.08. Section 183.002(d), Finance Code, is amended to
7-44 read as follows:
7-45 (d) The applicant shall publish notice of the application,
7-46 its date of filing, the identity of each applicant, and, if the
7-47 applicant includes a group, the identity of each group member. The
7-48 notice must be published[:]
7-49 [(1) promptly after the banking commissioner notifies
7-50 the applicant that the application is complete and accepted for
7-51 filing;]
7-52 [(2)] in the form and frequency specified by the
7-53 banking commissioner[;] and
7-54 [(3)] in a newspaper of general circulation in the
7-55 county where the state trust company's home office is located, or
7-56 in another publication or location as directed by the banking
7-57 commissioner.
7-58 SECTION 3.09. Section 183.103(b), Finance Code, is amended to
7-59 read as follows:
7-60 (b) Unless the banking commissioner consents otherwise in
7-61 writing, a person may not serve as director, manager, or managing
7-62 participant of a state trust company if:
7-63 (1) the state trust company incurs an unreimbursed
7-64 loss attributable to a charged-off obligation of or holds a
7-65 judgment against:
7-66 (A) the person; or
7-67 (B) an entity that was controlled by the person
7-68 at the time of funding and at the time of default on the loan that
7-69 gave rise to the judgment or charged-off obligation;
8-1 (2) the person is the subject of an order described by
8-2 Section 185.007(a);
8-3 (3) the person has been convicted of a felony; or
8-4 (4) [(3)] the person has violated, with respect to a
8-5 trust under which the state trust company has fiduciary
8-6 responsibility, Section 113.052 or 113.053(a), Property Code,
8-7 relating to loan of trust funds and purchase or sale of trust
8-8 property by the trustee, and the violation has not been corrected.
8-9 SECTION 3.10. Section 185.007(a), Finance Code, is amended to
8-10 read as follows:
8-11 (a) Except as provided by other law, without [Without] the
8-12 prior written approval of the banking commissioner, a person
8-13 subject to a final and enforceable removal or prohibition order
8-14 issued by the banking commissioner, or by another state, federal,
8-15 or foreign financial institution regulatory agency, [under this
8-16 subchapter] may not:
8-17 (1) serve as a director, officer, or employee of a
8-18 state trust company, state bank, or other entity chartered or
8-19 licensed by the banking commissioner under the laws of this state
8-20 while the order is in effect, including an interstate branch, trust
8-21 office, or representative office in this state of an out-of-state
8-22 bank, trust company, or foreign bank;
8-23 (2) directly or indirectly participate in any manner
8-24 in the management of such an entity;
8-25 (3) directly or indirectly vote for a director of such
8-26 an entity; or
8-27 (4) solicit, procure, transfer, attempt to transfer,
8-28 vote, or attempt to vote a proxy, consent, or authorization with
8-29 respect to voting rights in such an entity.
8-30 SECTION 3.11. Section 185.202(c), Finance Code, is amended to
8-31 read as follows:
8-32 (c) The subpoena must be signed and issued by the banking
8-33 commissioner or a [the] deputy banking commissioner.
8-34 SECTION 3.12. Section 186.201(a), Finance Code, is amended to
8-35 read as follows:
8-36 (a) The banking commissioner may by written order close and
8-37 liquidate a state trust company on finding that:
8-38 (1) the interests of its clients and creditors are
8-39 jeopardized by the state trust company's insolvency or imminent
8-40 insolvency; and
8-41 (2) the best interests of clients and creditors would
8-42 be served by requiring that the state trust company be closed and
8-43 its assets liquidated.
8-44 SECTION 3.13. Sections 186.202(a) and (b), Finance Code, are
8-45 amended to read as follows:
8-46 (a) After closing a state trust company under Section
8-47 186.201, the banking commissioner shall attach to or otherwise
8-48 display [place a sign] at its main entrance a copy of the written
8-49 closing order issued under Section 186.201(a) and containing
8-50 [stating that the state trust company has been closed and] the
8-51 findings on which the closing of the state trust company is based.
8-52 A correspondent bank of the closed state trust company may not pay
8-53 an item drawn on the account of the closed state trust company that
8-54 is presented for payment after the correspondent has received
8-55 actual notice of closing unless it previously certified the item
8-56 for payment.
8-57 (b) As soon as practicable after posting the closing order
8-58 [sign] at the state trust company's main entrance, the banking
8-59 commissioner shall tender the state trust company to the Federal
8-60 Deposit Insurance Corporation as provided by Section 186.003 or
8-61 initiate a receivership proceeding by filing a certified copy of
8-62 the closing order [notice contained on the sign] in district court
8-63 in Travis County, subject to Subsection (c) [the county where the
8-64 state trust company's home office is located]. The court in which
8-65 the closing order [notice] is filed shall docket it as a case
8-66 styled, "In re liquidation of ____" (inserting the name of the
8-67 state trust company). When the closing order [notice] is filed,
8-68 the court has constructive custody of all the state trust company's
8-69 assets and any action that seeks to directly or indirectly affect
9-1 state trust company assets is considered an intervention in the
9-2 receivership proceeding and subject to this subchapter and
9-3 Subchapter D.
9-4 SECTION 3.14. Section 187.303(a), Finance Code, as added by
9-5 the Act of the 77th Legislature, Regular Session, 2001, relating to
9-6 nonsubstantive additions to and corrections in enacted codes, is
9-7 amended to read as follows:
9-8 (a) Subject to Subsection (b), to encourage the effective
9-9 coordination and implementation of home state laws and host state
9-10 laws with respect to interstate trust business, the banking
9-11 commissioner, directly or through a [the] deputy banking
9-12 commissioner or [a] department attorney in the manner provided by
9-13 Sections 181.101 and 181.102, and with the effect provided by
9-14 Section 181.103, may issue:
9-15 (1) an interpretive statement for the general guidance
9-16 of trust institutions in this state and the public; or
9-17 (2) an opinion interpreting or determining the
9-18 applicability of the laws of this state to the trust business and
9-19 the operation of a branch, trust office, or another office in this
9-20 state of an out-of-state trust institution, or in other states by
9-21 state trust companies.
9-22 ARTICLE 4. CHANGES TO TEXAS TRUST COMPANY ACT
9-23 SECTION 4.01. Section 9.303(a), Texas Trust Company Act
9-24 (Article 342a-9.303, Vernon's Texas Civil Statutes), is amended to
9-25 read as follows:
9-26 (a) Subject to Subsection (b), to encourage the effective
9-27 coordination and implementation of home state laws and host state
9-28 laws with respect to interstate trust business, the banking
9-29 commissioner, directly or through a [the] deputy banking
9-30 commissioner or [a] department attorney in the manner provided by
9-31 Sections 2.001 and 2.0011 of this Act, and with the effect provided
9-32 by Section 2.0012 of this Act, may issue:
9-33 (1) an interpretive statement for the general guidance
9-34 of trust institutions in this state and the general public; or
9-35 (2) an opinion interpreting or determining the
9-36 applicability of laws of this state to the trust business and the
9-37 operation of a branch, trust office, or another office in this
9-38 state of an out-of-state trust institution, or in other states by
9-39 state trust companies.
9-40 ARTICLE 5. CHANGES TO SUBTITLE G, TITLE 3, FINANCE CODE
9-41 SECTION 5.01. Section 201.006(a), Finance Code, is amended to
9-42 read as follows:
9-43 (a) To encourage the effective coordination and
9-44 implementation of home state laws and host state laws with respect
9-45 to interstate branching, the commissioner, directly or through a
9-46 [the] deputy commissioner or [a] department attorney, may:
9-47 (1) issue interpretive statements containing matters
9-48 of general policy to guide the public and banks and bank holding
9-49 companies subject to this subtitle;
9-50 (2) amend or repeal a published interpretive statement
9-51 by issuing an amended statement or notice of repeal of a statement
9-52 and publishing the statement or notice;
9-53 (3) issue, in response to specific requests from the
9-54 public or the banking industry, opinions interpreting this subtitle
9-55 or determining the applicability of laws of this state to the
9-56 operation of interstate branches or other offices in this state by
9-57 out-of-state banks or in other states by Texas banks; and
9-58 (4) amend or repeal an opinion by issuing an amended
9-59 opinion or notice of repeal of an opinion, except that the
9-60 requesting party may rely on the original opinion if:
9-61 (A) all material facts were originally disclosed
9-62 to the commissioner;
9-63 (B) the safety and soundness of the affected
9-64 bank or bank holding company will not be affected by further
9-65 reliance on the original opinion; and
9-66 (C) the text and interpretation of relevant,
9-67 governing provisions of applicable home state, host state, and
9-68 federal law have not been changed by legislative or judicial
9-69 action.
10-1 ARTICLE 6. EFFECTIVE DATE; CHANGES FROM 76TH LEGISLATURE
10-2 SECTION 6.01. (a) Except as provided by Subsections (b) and
10-3 (c) of this section, this Act takes effect September 1, 2001.
10-4 (b) Section 3.14 of this Act takes effect only if the Act of
10-5 the 77th Legislature, Regular Session, 2001, relating to
10-6 nonsubstantive additions to and corrections in enacted codes takes
10-7 effect.
10-8 (c) Article 4 of this Act takes effect only if the Act of
10-9 the 77th Legislature, Regular Session, 2001, relating to
10-10 nonsubstantive additions to and corrections in enacted codes, does
10-11 not take effect.
10-12 SECTION 6.02. (a) In accordance with Section 311.031(c),
10-13 Government Code, which gives effect to substantive amendments
10-14 enacted by the same legislature that codifies the amended statute:
10-15 (1) the text of Section 181.102(a), Finance Code, as
10-16 set out in Section 3.01 of this Act, gives effect to changes made
10-17 by Section 4.003, Chapter 344, Acts of the 76th Legislature,
10-18 Regular Session, 1999; and
10-19 (2) the text of Section 185.007(a), Finance Code, as
10-20 set out in Section 3.10 of this Act, gives effect to changes made
10-21 by Section 4.013, Chapter 344, Acts of the 76th Legislature,
10-22 Regular Session, 1999.
10-23 (b) To the extent of any conflict, this Act prevails over
10-24 another Act of the 77th Legislature, Regular Session, 2001,
10-25 relating to nonsubstantive additions to and corrections in enacted
10-26 codes.
10-27 * * * * *