By Sibley S.B. No. 316
77R1065 DWS-D
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to the continuation and functions of the Finance
1-3 Commission of Texas and the regulation of certain financial
1-4 institutions and businesses.
1-5 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-6 SECTION 1. Section 11.001, Finance Code, is amended to read
1-7 as follows:
1-8 Sec. 11.001. DEFINITIONS. (a) The definitions provided by
1-9 Section 31.002 apply to this chapter.
1-10 (b) In this chapter, "finance agency" means:
1-11 (1) the Texas Department of Banking;
1-12 (2) the Savings and Loan Department; or
1-13 (3) the Office of Consumer Credit Commissioner.
1-14 SECTION 2. Subchapter A, Chapter 11, Finance Code, is amended
1-15 by adding Section 11.002 to read as follows:
1-16 Sec. 11.002. PURPOSE OF COMMISSION; STRATEGIC PLAN. (a) The
1-17 finance commission is responsible for overseeing and coordinating
1-18 the Texas Department of Banking, the Savings and Loan Department,
1-19 and the Office of Consumer Credit Commissioner and serves as the
1-20 primary point of accountability for ensuring that state depository
1-21 and lending institutions function as a system, considering the
1-22 broad scope of the financial services industry. The finance
1-23 commission is the policy-making body for those finance agencies and
1-24 is not a separate state agency. The finance commission shall carry
2-1 out its functions in a manner that protects consumer interests,
2-2 maintains a safe and sound banking system, and increases the
2-3 economic prosperity of the state.
2-4 (b) The finance commission shall prepare and periodically
2-5 update a strategic plan for coordination of the state financial
2-6 system. Each finance agency shall cooperate in preparation of the
2-7 plan.
2-8 SECTION 3. Sections 11.102(b), (c), (d), and (e), Finance
2-9 Code, are amended to read as follows:
2-10 (b) One member [Two members] of the finance commission must
2-11 be a banking executive, one member [executives and two members] of
2-12 the finance commission must be a savings executive, one member of
2-13 the finance commission must be a consumer credit executive, and one
2-14 member of the finance commission must be a mortgage broker
2-15 [executives].
2-16 (c) Five members of the finance commission must be
2-17 representatives of the general public [may not be banking
2-18 executives, savings executives, or controlling shareholders in a
2-19 bank, savings association, or savings bank but must be selected by
2-20 the governor on the basis of recognized business ability]. At
2-21 least one of those members must be a certified public accountant.
2-22 (d) A person may not be a public member of the finance
2-23 commission if the person or the person's spouse:
2-24 (1) is registered, certified, or licensed by a
2-25 regulatory agency in an industry regulated by a finance agency;
2-26 (2) is employed by or participates in the management
2-27 of a business entity or other organization regulated by or
3-1 receiving money from a finance agency;
3-2 (3) owns or controls, directly or indirectly, more
3-3 than a 10 percent interest in a business entity or other
3-4 organization regulated by or receiving money from a finance agency;
3-5 or
3-6 (4) uses or receives a substantial amount of tangible
3-7 goods, services, or money from a finance agency other than
3-8 compensation or reimbursement authorized by law for finance
3-9 commission membership, attendance, or expenses. [A member or
3-10 employee of the finance commission may not be:]
3-11 [(1) an officer, employee, or paid consultant of a
3-12 trade association representing an industry regulated by the finance
3-13 commission, the banking commissioner, the savings and loan
3-14 commissioner, or the consumer credit commissioner;]
3-15 [(2) a person required to register as a lobbyist under
3-16 Chapter 305, Government Code, because of activities for a member of
3-17 an industry described by Subdivision (1); or]
3-18 [(3) related within the second degree by affinity or
3-19 consanguinity, as determined under Chapter 573, Government Code, to
3-20 a person who is an officer, employee, or paid consultant of a trade
3-21 association representing an industry described by Subdivision (1).]
3-22 (e) For the purposes of this section:
3-23 (1) "Banking executive" means a person who[:]
3-24 [(A)] has had five years' or more executive
3-25 experience in a bank during the seven-year period preceding the
3-26 person's appointment[; and]
3-27 [(B) at the time of the person's appointment is
4-1 an officer of a state bank].
4-2 (2) "Savings executive" means a person who[:]
4-3 [(A)] has had five years' or more executive
4-4 experience in a savings association or savings bank during the
4-5 seven-year period preceding the person's appointment[; and]
4-6 [(B) at the time of the person's appointment is
4-7 an officer of a state savings association or savings bank].
4-8 (3) "Consumer credit executive" means a person who has
4-9 had five years' or more executive experience in an entity regulated
4-10 by the consumer credit commissioner during the seven-year period
4-11 preceding the person's appointment.
4-12 (4) "Mortgage broker" means a person who has had five
4-13 years' or more experience as a mortgage broker, as defined by
4-14 Section 156.002, during the seven-year period preceding the
4-15 person's appointment.
4-16 SECTION 4. Subchapter B, Chapter 11, Finance Code, is amended
4-17 by adding Section 11.1021 to read as follows:
4-18 Sec. 11.1021. CONFLICT OF INTEREST. (a) In this section,
4-19 "Texas trade association" means a cooperative and voluntarily
4-20 joined association of business or professional competitors in this
4-21 state designed to assist its members and its industry or profession
4-22 in dealing with mutual business or professional problems and in
4-23 promoting their common interest.
4-24 (b) A person may not be a member of the finance commission
4-25 if:
4-26 (1) the person is an officer, employee, or paid
4-27 consultant of a Texas trade association in an industry regulated by
5-1 a finance agency; or
5-2 (2) the person's spouse is an officer, manager, or
5-3 paid consultant of a Texas trade association in an industry
5-4 regulated by a finance agency.
5-5 (c) A person may not be a member of the finance commission
5-6 if the person is required to register as a lobbyist under Chapter
5-7 305, Government Code, because of the person's activities for
5-8 compensation on behalf of a profession related to the operation of
5-9 a finance agency.
5-10 SECTION 5. Section 11.103, Finance Code, is amended to read
5-11 as follows:
5-12 Sec. 11.103. REMOVAL OF MEMBERS[; VACANCIES]. (a) It is a
5-13 ground for removal from the finance commission that a member:
5-14 (1) does not have at the time of taking office the
5-15 qualifications required by Section 11.102;
5-16 (2) does not maintain during service on the finance
5-17 commission the qualifications required by Section 11.102;
5-18 (3) is ineligible for membership under Section 11.102
5-19 or 11.1021;
5-20 (4) cannot, because of illness or disability,
5-21 discharge the member's duties for a substantial part of the
5-22 member's term; or
5-23 (5) is absent from more than half of the regularly
5-24 scheduled finance commission meetings that the member is eligible
5-25 to attend during a calendar year without an excuse approved by a
5-26 majority vote of the finance commission.
5-27 (b) If the banking commissioner, savings and loan
6-1 commissioner, or consumer credit commissioner has knowledge that a
6-2 potential ground for removal exists, the banking commissioner,
6-3 savings and loan commissioner, or consumer credit commissioner
6-4 shall notify the presiding officer of the finance commission of the
6-5 potential ground. The presiding officer shall then notify the
6-6 governor and the attorney general that a potential ground for
6-7 removal exists. If the potential ground for removal involves the
6-8 presiding officer, the banking commissioner, savings and loan
6-9 commissioner, or consumer credit commissioner shall notify the next
6-10 highest ranking officer of the finance commission, who shall then
6-11 notify the governor and the attorney general that a potential
6-12 ground for removal exists.
6-13 (c) [(a) A ground for removal from the finance commission
6-14 exists if a member:]
6-15 [(1) did not have at the time of appointment the
6-16 qualifications required by Section 11.102 for appointment to the
6-17 finance commission;]
6-18 [(2) does not maintain the qualifications required by
6-19 Section 11.102 during service on the finance commission;]
6-20 [(3) violates a prohibition established by Section
6-21 11.105;]
6-22 [(4) cannot discharge the member's duties for a
6-23 substantial part of the term for which the member is appointed
6-24 because of illness or disability; or]
6-25 [(5) is absent from more than half of the regularly
6-26 scheduled finance commission meetings that the member is eligible
6-27 to attend during a calendar year unless the absence is excused by
7-1 majority vote of the finance commission.]
7-2 [(b) The governor shall appoint a qualified person to fill
7-3 any vacancy that occurs on the finance commission for the unexpired
7-4 term.]
7-5 [(c) The executive director of the finance commission shall
7-6 notify the presiding officer of the finance commission of any
7-7 potential ground for removal of which the executive director has
7-8 knowledge. The presiding officer then shall notify the governor
7-9 that a potential ground for removal exists.]
7-10 [(d)] The validity of an action of the finance commission is
7-11 not affected by the fact that it was taken when a ground for
7-12 removal of a member of the finance commission existed.
7-13 SECTION 6. Section 11.108, Finance Code, is amended to read
7-14 as follows:
7-15 Sec. 11.108. SUNSET PROVISION. The finance commission is
7-16 subject to Chapter 325, Government Code (Texas Sunset Act). Unless
7-17 continued in existence as provided by that chapter, the commission
7-18 is abolished September 1, 2013 [2001].
7-19 SECTION 7. Subchapter B, Chapter 11, Finance Code, is amended
7-20 by adding Sections 11.109-11.112 to read as follows:
7-21 Sec. 11.109. STANDARDS OF CONDUCT. The presiding officer of
7-22 the finance commission or the presiding officer's designee shall
7-23 provide to members of the finance commission, as often as
7-24 necessary, information regarding the requirements for office under
7-25 this title, including information regarding a person's
7-26 responsibilities under applicable laws relating to standards of
7-27 conduct for state officers.
8-1 Sec. 11.110. TRAINING. (a) A person who is appointed to and
8-2 qualifies for office as a member of the finance commission may not
8-3 vote, deliberate, or be counted as a member in attendance at a
8-4 meeting of the finance commission until the person completes a
8-5 training program that complies with this section.
8-6 (b) The training program must provide the person with
8-7 information regarding:
8-8 (1) the legislation that created the finance agencies
8-9 and the finance commission;
8-10 (2) the programs operated by the finance agencies;
8-11 (3) the role and functions of the finance agencies;
8-12 (4) the rules of the finance commission with an
8-13 emphasis on the rules that relate to disciplinary and investigatory
8-14 authority;
8-15 (5) the current budget for the finance agencies;
8-16 (6) the results of the most recent formal audit of the
8-17 finance agencies;
8-18 (7) the requirements of:
8-19 (A) the open meetings law, Chapter 551,
8-20 Government Code;
8-21 (B) the public information law, Chapter 552,
8-22 Government Code;
8-23 (C) the administrative procedure law, Chapter
8-24 2001, Government Code; and
8-25 (D) other laws relating to public officials,
8-26 including conflict-of-interest laws; and
8-27 (8) any applicable ethics policies adopted by the
9-1 finance commission or the Texas Ethics Commission.
9-2 (c) A person appointed to the finance commission is entitled
9-3 to reimbursement, as provided by the General Appropriations Act,
9-4 for the travel expenses incurred in attending the training program
9-5 regardless of whether the attendance at the program occurs before
9-6 or after the person qualifies for office.
9-7 Sec. 11.111. SEPARATION OF FUNCTIONS. The finance commission
9-8 shall develop and implement policies that clearly separate the
9-9 policymaking responsibilities of the finance commission and the
9-10 management responsibilities of the banking commissioner, savings
9-11 and loan commissioner, and consumer credit commissioner and staff
9-12 of the finance agencies.
9-13 Sec. 11.112. PUBLIC TESTIMONY. The finance commission shall
9-14 develop and implement policies that provide the public with a
9-15 reasonable opportunity to appear before the finance commission and
9-16 to speak on any issue under the jurisdiction of the finance
9-17 agencies.
9-18 SECTION 8. Section 11.202, Finance Code, is amended to read
9-19 as follows:
9-20 Sec. 11.202. HEARINGS OFFICER AND AUDITOR. (a) The finance
9-21 commission shall direct each finance agency to [may] employ [a
9-22 hearings officer and] an internal auditor to provide services to
9-23 and facilitate commission oversight and control over the finance
9-24 agency [Texas Department of Banking, Savings and Loan Department,
9-25 and Office of Consumer Credit Commissioner].
9-26 (b) The Texas Department of Banking may employ a hearings
9-27 officer to serve the finance agencies as determined by interagency
10-1 agreement. For the purposes of Section 2003.021, Government Code, a
10-2 hearings officer employed under this section is considered to be an
10-3 employee of each agency for which hearing services are provided.
10-4 The hearings officer's only duty is to preside over matters related
10-5 to contested cases before the finance agencies [agency].
10-6 SECTION 9. Section 11.203, Finance Code, is amended to read
10-7 as follows:
10-8 Sec. 11.203. LIMITATION ON DIRECTION OF AUDITOR [STAFF].
10-9 Each [The executive director, hearings officer,] internal auditor
10-10 reports to the finance commission and is[, and any other staff
10-11 employed under this subchapter are] not subject to direction by the
10-12 employing finance agency [Texas Department of Banking, Savings and
10-13 Loan Department, or Office of Consumer Credit Commissioner].
10-14 SECTION 10. Section 11.204, Finance Code, is amended to read
10-15 as follows:
10-16 Sec. 11.204. SHARING OF STAFF, EQUIPMENT, AND FACILITIES;
10-17 ALLOCATION OF COSTS. (a) The finance commission shall use the
10-18 [reduce administrative costs by sharing of support] staff,
10-19 equipment, and facilities of [among] the finance agencies [Texas
10-20 Department of Banking, Savings and Loan Department, and Office of
10-21 Consumer Credit Commissioner] to the extent necessary to carry out
10-22 the finance commission's duties. To reduce administrative costs,
10-23 the finance agencies shall share staff, equipment, and facilities
10-24 to the extent that the sharing contributes to cost efficiency
10-25 without detracting from the staff expertise needed for individual
10-26 areas of agency responsibility. [The finance commission may employ
10-27 staff and purchase equipment and facilities to meet these
11-1 objectives and pay for its activities from appropriations or as
11-2 provided by Chapter 771, Government Code.]
11-3 (b) An interagency agreement [regarding shared staff] must
11-4 provide that the cost of staff used by the finance commission,
11-5 including the internal auditor, [each member of shared staff other
11-6 than the executive director] is to be charged to the finance
11-7 agencies [Texas Department of Banking, Savings and Loan Department,
11-8 or Office of Consumer Credit Commissioner] in proportion to the
11-9 amount of time devoted to each agency's business. All other costs
11-10 of operation of the finance commission are [The cost of the
11-11 executive director and the unallocated cost of operation of the
11-12 finance commission is] to be shared by and included in the budgets
11-13 of the finance agencies [department, Savings and Loan Department,
11-14 and Office of Consumer Credit Commissioner] in proportion to the
11-15 amount of cash receipts of each of those agencies.
11-16 SECTION 11. Section 11.305, Finance Code, is amended by
11-17 amending Subsections (a) and (b) and adding Subsection (d) to read
11-18 as follows:
11-19 (a) The finance commission shall assign the banking
11-20 commissioner, savings and loan commissioner, or consumer credit
11-21 commissioner to conduct research on:
11-22 (1) the availability, quality, and prices of financial
11-23 services, including lending and depository services, offered in
11-24 this state to agricultural businesses, small businesses, and
11-25 individual consumers in this state; and
11-26 (2) the practices of business entities in this state
11-27 that provide financial services to agricultural businesses, small
12-1 businesses, and individual consumers in this state.
12-2 (b) The banking commissioner, savings and loan commissioner,
12-3 or consumer credit commissioner [finance commission] may:
12-4 (1) apply for and receive public and private grants
12-5 and gifts to conduct the research authorized by this section; and
12-6 (2) contract with public and private entities to carry
12-7 out studies and analyses under this section.
12-8 (d) The Texas Department of Banking and the Savings and Loan
12-9 Department shall jointly conduct a continuing review of the
12-10 condition of the state banking system. The review must include a
12-11 review of all available national and state economic forecasts and
12-12 an analysis of changing banking practices and new banking
12-13 legislation. Periodically the departments shall submit a report to
12-14 the finance commission on the results of the review, including
12-15 information relating to the condition of the state banking system
12-16 at the time of the report and the predicted condition of that
12-17 system in the future.
12-18 SECTION 12. Section 11.306, Finance Code, is amended to read
12-19 as follows:
12-20 Sec. 11.306. MORTGAGE BROKER RULES [BROKERS]. The finance
12-21 commission may adopt mortgage broker rules as provided by[:]
12-22 [(1) review any action or rule adopted by the savings
12-23 and loan commissioner under Chapter 156; and]
12-24 [(2) direct the savings and loan commissioner to
12-25 adopt, repeal, or amend any rule or other action the savings and
12-26 loan commissioner may undertake under] Chapter 156.
12-27 SECTION 13. Subchapter D, Chapter 11, Finance Code, is
13-1 amended by adding Section 11.307 to read as follows:
13-2 Sec. 11.307. RULES RELATING TO CONSUMER COMPLAINTS. (a) The
13-3 finance commission shall adopt rules applicable to each entity
13-4 regulated by the Texas Department of Banking or the Savings and
13-5 Loan Department specifying the manner in which the entity provides
13-6 consumers with information on how to file complaints with the
13-7 appropriate agency.
13-8 (b) The finance commission shall adopt rules applicable to
13-9 each entity regulated by a finance agency requiring the entity to
13-10 include information on how to file complaints with the appropriate
13-11 agency in each privacy notice that the entity is required to
13-12 provide consumers under law, including Pub. L. No. 106-102.
13-13 SECTION 14. Section 12.101(a), Finance Code, is amended to
13-14 read as follows:
13-15 (a) The banking commissioner is the chief executive officer
13-16 of the Texas Department of Banking. The finance commission, by at
13-17 least five affirmative votes, shall appoint the banking
13-18 commissioner. The banking commissioner serves at the will of the
13-19 finance commission[, is an employee of the finance commission,] and
13-20 is subject to the finance commission's orders and directions.
13-21 SECTION 15. Section 13.002(a), Finance Code, is amended to
13-22 read as follows:
13-23 (a) The savings and loan commissioner is the chief executive
13-24 officer of the Savings and Loan Department. The finance
13-25 commission, by at least five affirmative votes, shall appoint the
13-26 savings and loan commissioner. The savings and loan commissioner
13-27 serves at the will of the finance commission[, is an employee of
14-1 the finance commission,] and is subject to the finance commission's
14-2 orders and direction.
14-3 SECTION 16. Section 13.008(a), Finance Code, is amended to
14-4 read as follows:
14-5 (a) The [savings and loan commissioner and the] finance
14-6 commission shall establish reasonable and necessary fees for the
14-7 administration of Subtitles B and C, Title 3, and for the support
14-8 of the finance commission as provided by Subchapter C, Chapter 11.
14-9 SECTION 17. Section 14.051(b), Finance Code, is amended to
14-10 read as follows:
14-11 (b) The commissioner:
14-12 (1) [is an employee of the finance commission;]
14-13 [(2)] serves at the will of the commission; and
14-14 (2) [(3)] is subject to orders and directions of the
14-15 commission.
14-16 SECTION 18. Section 14.107, Finance Code, is amended to read
14-17 as follows:
14-18 Sec. 14.107. FEES. The finance commission [commissioner]
14-19 shall establish reasonable and necessary fees for carrying out the
14-20 commissioner's powers and duties under this chapter, Title 4, and
14-21 Chapters 392 and 394 and under Chapters 38-41, Business & Commerce
14-22 Code.
14-23 SECTION 19. Section 14.157, Finance Code, is amended to read
14-24 as follows:
14-25 Sec. 14.157. RULES. The finance commission [commissioner]
14-26 shall adopt rules governing the custody and use of information
14-27 obtained under this subchapter.
15-1 SECTION 20. Section 14.206(b), Finance Code, is amended to
15-2 read as follows:
15-3 (b) A witness required to attend a hearing before the
15-4 commissioner shall receive for each day's attendance a fee and a
15-5 travel and transportation allowance as authorized by law or a rule
15-6 adopted by the finance commission [commissioner].
15-7 SECTION 21. Section 33.007(a), Finance Code, is amended to
15-8 read as follows:
15-9 (a) If the banking commissioner believes that a person has
15-10 violated or is about to violate this subchapter or a rule of the
15-11 finance commission or order of the banking commissioner pertaining
15-12 to this subchapter, the attorney general on behalf of the banking
15-13 commissioner may apply to a district court of Travis County for an
15-14 order enjoining the violation and for other equitable relief the
15-15 nature of the case requires.
15-16 SECTION 22. Section 61.007, Finance Code, is amended to read
15-17 as follows:
15-18 Sec. 61.007. FEES. The [commissioner and] finance commission
15-19 by rule shall:
15-20 (1) set the amount of fees the commissioner charges
15-21 for:
15-22 (A) supervision and examination of associations;
15-23 (B) filing an application or other documents;
15-24 and
15-25 (C) other services the commissioner performs;
15-26 and
15-27 (2) specify the time and manner of payment of the
16-1 fees.
16-2 SECTION 23. Section 62.001(b), Finance Code, is amended to
16-3 read as follows:
16-4 (b) An application must contain:
16-5 (1) two copies of the association's articles of
16-6 incorporation identifying:
16-7 (A) the name of the association;
16-8 (B) the location of the principal office; and
16-9 (C) the names and addresses of the initial
16-10 directors;
16-11 (2) two copies of the association's bylaws;
16-12 (3) data sufficiently detailed and comprehensive to
16-13 enable the commissioner to make a determination under Section
16-14 62.007, including statements, exhibits, and maps;
16-15 (4) other information relating to the association and
16-16 its operation that the [commissioner and the] finance commission by
16-17 rule requires [require]; and
16-18 (5) financial information about each applicant,
16-19 incorporator, director, or shareholder that the finance commission
16-20 by rule requires.
16-21 SECTION 24. Section 62.052(b), Finance Code, is amended to
16-22 read as follows:
16-23 (b) The application must include information required by
16-24 [the commissioner or by] rule of the [commissioner and the] finance
16-25 commission.
16-26 SECTION 25. Section 62.152, Finance Code, is amended to read
16-27 as follows:
17-1 Sec. 62.152. MINIMUM NET WORTH REQUIREMENT. An association
17-2 shall meet minimum net worth requirements prescribed by rule of the
17-3 [commissioner and the] finance commission.
17-4 SECTION 26. Section 62.553(c), Finance Code, is amended to
17-5 read as follows:
17-6 (c) Unless the commissioner expressly waives a requirement
17-7 of this subsection, the application must contain:
17-8 (1) the identity, personal history, business
17-9 background and experience, and financial condition of each person
17-10 by whom or on whose behalf the acquisition is to be made, including
17-11 a description of:
17-12 (A) the managerial resources and future
17-13 prospects of each acquiring party; and
17-14 (B) any material pending legal or administrative
17-15 proceedings to which the person is a party;
17-16 (2) the terms of any proposed acquisition and the
17-17 manner in which the acquisition is to be made;
17-18 (3) the identity, source, and amount of the money or
17-19 other consideration used or to be used in making the acquisition
17-20 and, if any part of the money or other consideration has been or
17-21 will be borrowed or otherwise obtained for the purpose of making
17-22 the acquisition, a description of the transaction, the names of the
17-23 parties, and arrangements, agreements, or understandings with the
17-24 parties;
17-25 (4) any plan or proposal of an acquiring party to
17-26 liquidate the association, sell the association's assets, merge the
17-27 association with another company, or make other major changes in
18-1 the association's business or corporate structure or management;
18-2 (5) the terms of any offer, invitation, agreement, or
18-3 arrangement under which a voting security will be acquired and any
18-4 contract affecting that security or its financing after it is
18-5 acquired;
18-6 (6) information establishing that the requirements
18-7 under Section 62.555(b) are satisfied; and
18-8 (7) other information [the commissioner]:
18-9 (A) the finance commission by rule requires to
18-10 be furnished in an application; or
18-11 (B) the commissioner orders to be included in a
18-12 particular application.
18-13 SECTION 27. Section 62.560(a), Finance Code, is amended to
18-14 read as follows:
18-15 (a) The attorney general on behalf of the commissioner may
18-16 apply for equitable relief, including an order enjoining a
18-17 violation, if the commissioner believes a person has violated or is
18-18 about to violate this subchapter or a rule of the finance
18-19 commission or order of the commissioner adopted under this
18-20 subchapter.
18-21 SECTION 28. Section 64.001(a), Finance Code, is amended to
18-22 read as follows:
18-23 (a) The [commissioner and the] finance commission shall
18-24 adopt rules relating to the power of associations operating under
18-25 this subtitle to make loans and investments.
18-26 SECTION 29. Section 64.083, Finance Code, is amended to read
18-27 as follows:
19-1 Sec. 64.083. RULES. The [commissioner and the] finance
19-2 commission shall adopt rules to implement this subchapter,
19-3 including rules that define the categories of loans and investments
19-4 described by Section 64.081.
19-5 SECTION 30. Section 65.009(c), Finance Code, is amended to
19-6 read as follows:
19-7 (c) An association shall compute and pay interest and
19-8 dividends according to rules of the [commissioner and the] finance
19-9 commission.
19-10 SECTION 31. Section 66.002, Finance Code, is amended to read
19-11 as follows:
19-12 Sec. 66.002. ADOPTION OF RULES. The [commissioner and the]
19-13 finance commission may adopt rules relating to:
19-14 (1) the minimum amounts of capital stock and paid-in
19-15 surplus required for incorporation as a capital stock association;
19-16 (2) the minimum amounts of savings liability and
19-17 expense funds required for incorporation as a mutual association;
19-18 (3) the fees and procedures for processing, hearing,
19-19 and deciding applications filed with the commissioner or the
19-20 Savings and Loan Department under this subtitle;
19-21 (4) the books and records that an association is
19-22 required to keep and the location at which the books and records
19-23 are required to be maintained;
19-24 (5) the accounting principles and practices that an
19-25 association is required to observe;
19-26 (6) the conditions under which records may be copied
19-27 or reproduced for permanent storage before the original records are
20-1 destroyed;
20-2 (7) the form, contents, and time of publication of
20-3 statements of condition;
20-4 (8) the form and contents of annual reports and other
20-5 reports that an association is required to prepare and publish or
20-6 file;
20-7 (9) the manner in which assets, liabilities, and
20-8 transactions in general are to be described when entered in the
20-9 books of an association, so that the entry accurately describes the
20-10 subject matter of the entry; and
20-11 (10) the conditions under which the commissioner may
20-12 require an asset to be charged off or reserves established by
20-13 transfer from surplus or paid-in capital because of the
20-14 depreciation of or overstated value of the asset.
20-15 SECTION 32. Section 89.004, Finance Code, is amended to read
20-16 as follows:
20-17 Sec. 89.004. INITIATION OF RULEMAKING BY ASSOCIATIONS. The
20-18 finance commission [commissioner] shall initiate rulemaking
20-19 proceedings if at least 20 percent of the associations petition the
20-20 finance commission [commissioner] in writing requesting the
20-21 adoption, amendment, or repeal of a rule.
20-22 SECTION 33. Section 91.002(20), Finance Code, is amended to
20-23 read as follows:
20-24 (20) "Regulatory capital" means a common stockholders'
20-25 equity, including retained earnings, noncumulative perpetual
20-26 preferred stock and related earnings, minority interests in the
20-27 equity accounts of fully consolidated subsidiaries, and other
21-1 elements established by rules of the [commissioner and the] finance
21-2 commission.
21-3 SECTION 34. Section 91.007, Finance Code, is amended to read
21-4 as follows:
21-5 Sec. 91.007. FEES. The [commissioner and the] finance
21-6 commission by rule shall:
21-7 (1) set the amount of fees the commissioner charges
21-8 for:
21-9 (A) supervision and examination of savings
21-10 banks;
21-11 (B) filing an application or other documents;
21-12 (C) conducting a hearing; and
21-13 (D) other services the commissioner performs;
21-14 and
21-15 (2) specify the time and manner of payment of the
21-16 fees.
21-17 SECTION 35. Section 92.051(b), Finance Code, is amended to
21-18 read as follows:
21-19 (b) An application must contain:
21-20 (1) two copies of the savings bank's articles of
21-21 incorporation identifying:
21-22 (A) the name of the savings bank;
21-23 (B) the location of the principal office; and
21-24 (C) the names and addresses of the initial
21-25 directors;
21-26 (2) two copies of the savings bank's bylaws;
21-27 (3) data sufficiently detailed and comprehensive to
22-1 enable the commissioner to make findings under Section 92.058,
22-2 including statements, exhibits, and maps;
22-3 (4) other information relating to the savings bank and
22-4 its operation that the [commissioner and the] finance commission by
22-5 rule requires [require]; and
22-6 (5) financial information about each applicant,
22-7 incorporator, director, officer, or shareholder that the
22-8 [commissioner and the] finance commission by rule requires
22-9 [require].
22-10 SECTION 36. Section 92.052(b), Finance Code, is amended to
22-11 read as follows:
22-12 (b) Before approving the application of a capital stock
22-13 savings bank, the commissioner shall require the savings bank to
22-14 have an aggregate amount of capital in the form of stock and
22-15 paid-in surplus the [commissioner and the] finance commission by
22-16 rule specifies [specify].
22-17 SECTION 37. Section 92.053(b), Finance Code, is amended to
22-18 read as follows:
22-19 (b) Before approving the articles of incorporation of a
22-20 mutual savings bank, the commissioner shall require the savings
22-21 bank to have subscriptions for an aggregate amount of deposit
22-22 accounts and an expense fund in an aggregate amount the
22-23 [commissioner and the] finance commission by rule establishes
22-24 [establish] as necessary for the successful operation of a mutual
22-25 savings bank.
22-26 SECTION 38. Section 92.054(a), Finance Code, is amended to
22-27 read as follows:
23-1 (a) The [commissioner and the] finance commission by rule
23-2 shall set the minimum initial capital of a savings bank in an
23-3 amount not less than the greater of:
23-4 (1) the amount required to obtain insurance of deposit
23-5 accounts by the Federal Deposit Insurance Corporation; or
23-6 (2) the amount required of a national bank.
23-7 SECTION 39. Section 92.057(a), Finance Code, is amended to
23-8 read as follows:
23-9 (a) On the filing of a complete application to incorporate,
23-10 as defined by rules adopted by the [commissioner and the] finance
23-11 commission, the commissioner shall:
23-12 (1) issue public notice of the application; and
23-13 (2) give any interested person an opportunity to
23-14 appear, present evidence, and be heard for or against the
23-15 application.
23-16 SECTION 40. Sections 92.063(a) and (b), Finance Code, are
23-17 amended to read as follows:
23-18 (a) Only with the prior approval of the commissioner given
23-19 in accordance with rules of the [commissioner and the] finance
23-20 commission may a savings bank:
23-21 (1) establish an office other than the principal
23-22 office stated in the savings bank's articles of incorporation;
23-23 (2) move an office from its immediate vicinity; or
23-24 (3) change the savings bank's name.
23-25 (b) The commissioner may permit a savings bank to establish
23-26 additional offices in this state or another state in accordance
23-27 with rules of the [commissioner and the] finance commission.
24-1 SECTION 41. Section 92.102(b), Finance Code, is amended to
24-2 read as follows:
24-3 (b) The application must include information required by the
24-4 commissioner or by rule of the [commissioner and the] finance
24-5 commission.
24-6 SECTION 42. Sections 92.155(a) and (b), Finance Code, are
24-7 amended to read as follows:
24-8 (a) Except as the [commissioner and the] finance commission
24-9 by rule provides [provide], a director or officer may not:
24-10 (1) receive directly or indirectly a commission on or
24-11 benefit from a loan made by the savings bank;
24-12 (2) pay for services rendered to a borrower from the
24-13 savings bank in connection with a loan;
24-14 (3) direct or require a borrower on a mortgage to
24-15 negotiate an insurance policy on the mortgage property through a
24-16 particular insurance company;
24-17 (4) attempt to divert to a particular insurance broker
24-18 the business of borrowers from the savings bank;
24-19 (5) refuse to accept an insurance policy on the
24-20 mortgaged property because the policy was not negotiated through a
24-21 particular insurance broker;
24-22 (6) become an obligor, including an endorser, surety,
24-23 or guarantor, on a loan made by the savings bank;
24-24 (7) borrow or use, individually or as agent or partner
24-25 of another, directly or indirectly, money of the savings bank;
24-26 (8) become the owner of real property on which the
24-27 savings bank holds a mortgage unless the loan is fully secured by:
25-1 (A) a first-lien mortgage on property that:
25-2 (i) is to be occupied as the director's or
25-3 officer's primary residence; and
25-4 (ii) is specifically approved in writing
25-5 by the board; or
25-6 (B) a deposit maintained by the officer or
25-7 director with the savings bank; or
25-8 (9) engage in any other activity [the commissioner
25-9 and] the finance commission by rule prohibits [prohibit].
25-10 (b) Except as the [commissioner and the] finance commission
25-11 by rule provides [provide], a savings bank may not make a loan to a
25-12 corporation in which:
25-13 (1) a director or officer of the savings bank holds
25-14 stock, options, or warrants to purchase stock in the amount of five
25-15 percent or more of the outstanding stock; or
25-16 (2) the directors of the savings bank together hold
25-17 stock, options, or warrants to purchase stock in the amount of five
25-18 percent or more of the outstanding stock.
25-19 SECTION 43. Section 92.201, Finance Code, is amended to read
25-20 as follows:
25-21 Sec. 92.201. BOOKS AND RECORDS. A savings bank shall
25-22 maintain its books and records according to generally accepted
25-23 accounting principles and to rules adopted by the [commissioner and
25-24 the] finance commission.
25-25 SECTION 44. Section 92.202, Finance Code, is amended to read
25-26 as follows:
25-27 Sec. 92.202. LIQUIDITY. Unless approved in advance by the
26-1 commissioner, a savings bank shall maintain an amount equal to at
26-2 least 10 percent of its average daily deposits for the most
26-3 recently completed calendar quarter in:
26-4 (1) cash;
26-5 (2) balances in a federal reserve bank or passed
26-6 through a federal home loan bank or another depository institution
26-7 to a federal reserve bank under the Federal Reserve Act (12 U.S.C.
26-8 Section 221 et seq.); or
26-9 (3) other readily marketable investments, including
26-10 unencumbered federal government sponsored enterprises securities,
26-11 as allowed by rules adopted by the [commissioner and the] finance
26-12 commission.
26-13 SECTION 45. Section 92.203, Finance Code, is amended to read
26-14 as follows:
26-15 Sec. 92.203. REGULATORY CAPITAL. A savings bank shall
26-16 maintain regulatory capital in the amount prescribed by rule of the
26-17 [commissioner and the] finance commission. The amount may not be
26-18 less than the amount of regulatory capital required for a
26-19 corresponding national bank.
26-20 SECTION 46. Section 92.209(d), Finance Code, is amended to
26-21 read as follows:
26-22 (d) The extent to which preferred stock may be included as
26-23 regulatory capital of a savings bank is subject to the rules
26-24 adopted by the [commissioner and the] finance commission.
26-25 SECTION 47. Section 92.303(b), Finance Code, is amended to
26-26 read as follows:
26-27 (b) After the examination, the commissioner shall approve
27-1 the conversion without a hearing if the commissioner determines
27-2 that the converting financial institution is in sound condition and
27-3 meets all requirements of Subchapter B and relevant rules of the
27-4 [commissioner and the] finance commission.
27-5 SECTION 48. Section 92.553(c), Finance Code, is amended to
27-6 read as follows:
27-7 (c) Unless the commissioner expressly waives a requirement
27-8 of this subsection, the application must contain:
27-9 (1) the identity, history, business background and
27-10 experience, and financial condition of each person by whom or on
27-11 whose behalf the acquisition is to be made, including a description
27-12 of:
27-13 (A) the managerial resources and future
27-14 prospects of each acquiring party; and
27-15 (B) any material pending legal or administrative
27-16 proceedings to which the applicant is a party;
27-17 (2) the terms of any proposed acquisition and the
27-18 manner in which the acquisition is to be made;
27-19 (3) the identity, source, and amount of the money or
27-20 other consideration used or to be used in making the acquisition
27-21 and, if any part of the money or other consideration was or is to
27-22 be borrowed or otherwise obtained for the purpose of making the
27-23 acquisition, a description of the transaction, the names of the
27-24 parties, and arrangements, agreements, or understandings with those
27-25 parties;
27-26 (4) any plan or proposal of an acquiring party to
27-27 liquidate the savings bank, sell the savings bank's assets, merge
28-1 the savings bank with another company, or make other major changes
28-2 in the savings bank's business, corporate structure, or management;
28-3 (5) the terms of any offer, invitation, agreement, or
28-4 arrangement under which a voting security of the savings bank will
28-5 be acquired and any contract affecting that security or its
28-6 financing after it is acquired;
28-7 (6) information establishing that the requirements
28-8 under Section 92.556(a) are satisfied; and
28-9 (7) other information that [the commissioner]:
28-10 (A) the finance commission by rule requires; or
28-11 (B) the commissioner orders to be included in a
28-12 particular application.
28-13 SECTION 49. Section 92.560(a), Finance Code, is amended to
28-14 read as follows:
28-15 (a) The attorney general on behalf of the commissioner may
28-16 apply for equitable relief as the case may require, including an
28-17 order prohibiting the violation, if it appears to the commissioner
28-18 that a person has violated or is about to violate this subchapter
28-19 or a rule of the finance commission or order of the commissioner
28-20 adopted under this subchapter.
28-21 SECTION 50. Section 93.001(c), Finance Code, is amended to
28-22 read as follows:
28-23 (c) A savings bank may:
28-24 (1) sue and be sued in its corporate name;
28-25 (2) adopt and operate a reasonable bonus plan,
28-26 profit-sharing plan, stock bonus plan, stock option plan, pension
28-27 plan, or similar incentive plan for its directors, officers, or
29-1 employees, subject to any limitations under this subtitle or rules
29-2 adopted under this subtitle;
29-3 (3) make reasonable donations for the public welfare
29-4 or for a charitable, scientific, religious, or educational purpose;
29-5 (4) pledge its assets to secure deposits of public
29-6 money of the United States, if required by the United States,
29-7 including revenue and money the deposit of which is subject to
29-8 control or regulation of the United States;
29-9 (5) pledge its assets to secure deposits of public
29-10 money of any state or of a political corporation or political
29-11 subdivision of any state;
29-12 (6) become a member of or deal with any corporation or
29-13 agency of the United States or this state, to the extent that the
29-14 corporation or agency assists in furthering the purposes or powers
29-15 of savings banks, and for that purpose may purchase stock or
29-16 securities of the corporation or agency or deposit money with the
29-17 corporation or agency and may comply with any other condition of
29-18 membership credit;
29-19 (7) become a member of a federal home loan bank or the
29-20 Federal Reserve System;
29-21 (8) hold title to any assets acquired because of the
29-22 collection or liquidation of a loan, investment, or discount and
29-23 may administer those assets as necessary;
29-24 (9) receive and repay any deposit or account in
29-25 accordance with this subtitle and rules of the finance commission
29-26 [and the commissioner]; and
29-27 (10) lend and invest its money as authorized by this
30-1 subtitle and rules of the finance commission [and the
30-2 commissioner].
30-3 SECTION 51. Section 93.004, Finance Code, is amended to read
30-4 as follows:
30-5 Sec. 93.004. POWER TO BORROW. (a) A savings bank may borrow
30-6 and give security, subject to rules adopted by the finance
30-7 commission [and the commissioner].
30-8 (b) A savings bank at any time through action of its board
30-9 may issue a capital note, debenture, or other capital obligation
30-10 authorized by rules adopted by the finance commission [and the
30-11 commissioner].
30-12 SECTION 52. Section 93.008, Finance Code, is amended to read
30-13 as follows:
30-14 Sec. 93.008. POWERS RELATIVE TO OTHER FINANCIAL
30-15 INSTITUTIONS. Subject to limitations prescribed by rule of the
30-16 finance commission [and the commissioner], a savings bank may make
30-17 a loan or investment or engage in an activity permitted:
30-18 (1) under state law for a bank or savings and loan
30-19 association; or
30-20 (2) under federal law for a federal savings and loan
30-21 association, savings bank, or national bank if the financial
30-22 institution's principal office is located in this state.
30-23 SECTION 53. Section 94.001(a), Finance Code, is amended to
30-24 read as follows:
30-25 (a) The [commissioner and the] finance commission by rule
30-26 may limit loans to one borrower. Those limits may not be less
30-27 restrictive than the limits imposed on savings associations under
31-1 Section 5(u), Home Owners' Loan Act (12 U.S.C. Section 1464(u)).
31-2 SECTION 54. Section 94.002(a), Finance Code, is amended to
31-3 read as follows:
31-4 (a) Subject to rules adopted by the [commissioner and the]
31-5 finance commission, a savings bank may lend or invest not more than
31-6 40 percent of the savings bank's total assets in commercial loans.
31-7 SECTION 55. Section 94.203, Finance Code, is amended to read
31-8 as follows:
31-9 Sec. 94.203. RULES. The [commissioner and the] finance
31-10 commission shall adopt rules to implement this subchapter,
31-11 including rules that define the categories of loans and investments
31-12 described by Section 94.201.
31-13 SECTION 56. Section 94.251(a), Finance Code, is amended to
31-14 read as follows:
31-15 (a) A savings bank or a subsidiary may not invest in an
31-16 equity security unless the security qualifies as an investment
31-17 grade security under rules adopted by the [commissioner and the]
31-18 finance commission.
31-19 SECTION 57. Section 94.253, Finance Code, is amended to read
31-20 as follows:
31-21 Sec. 94.253. RULES. The [commissioner and the] finance
31-22 commission may adopt rules necessary to implement this subchapter,
31-23 including rules relating to eligible investment criteria,
31-24 investment diversification, and resource management requirements.
31-25 SECTION 58. Section 94.301, Finance Code, is amended to read
31-26 as follows:
31-27 Sec. 94.301. AUTHORIZATION. With the prior consent of the
32-1 commissioner and subject to rules adopted by the [commissioner and
32-2 the] finance commission, a savings bank may invest in a subsidiary
32-3 corporation created under general corporation law.
32-4 SECTION 59. Section 94.304, Finance Code, is amended to read
32-5 as follows:
32-6 Sec. 94.304. RULES. The [commissioner and the] finance
32-7 commission shall adopt rules on permitted activities of a
32-8 subsidiary corporation in which a savings bank invests under
32-9 Section 94.301.
32-10 SECTION 60. Section 95.007(b), Finance Code, is amended to
32-11 read as follows:
32-12 (b) A savings bank shall compute and pay interest and
32-13 dividends according to rules adopted by the [commissioner and the]
32-14 finance commission.
32-15 SECTION 61. Section 96.002(a), Finance Code, is amended to
32-16 read as follows:
32-17 (a) The [commissioner and the] finance commission may adopt
32-18 rules necessary to supervise and regulate savings banks and to
32-19 protect public investment in savings banks, including rules
32-20 relating to:
32-21 (1) the minimum amounts of capital required to
32-22 incorporate and operate as a savings bank, which may not be less
32-23 than the amounts required of corresponding national banks;
32-24 (2) the fees and procedures for processing, hearing,
32-25 and deciding applications filed with the commissioner or the
32-26 Savings and Loan Department under this subtitle;
32-27 (3) the books and records that a savings bank is
33-1 required to keep and the location at which the books and records
33-2 are required to be maintained;
33-3 (4) the accounting principles and practices that a
33-4 savings bank is required to observe;
33-5 (5) the conditions under which records may be copied
33-6 or reproduced for permanent storage before the originals are
33-7 destroyed;
33-8 (6) the form, content, and time of publication of
33-9 statements of condition;
33-10 (7) the form and content of annual reports and other
33-11 reports that a savings bank is required to prepare and publish or
33-12 file;
33-13 (8) the manner in which assets, liabilities, and
33-14 transactions in general are to be described when entered in the
33-15 books of a savings bank, so that the entry accurately describes the
33-16 subject matter of the entry;
33-17 (9) the conditions under which the commissioner may
33-18 require an asset to be charged off or reserves established by
33-19 transfer from surplus or paid-in capital because of depreciation of
33-20 or overstated value of the asset;
33-21 (10) the change of control of a savings bank;
33-22 (11) the conduct, management, and operation of a
33-23 savings bank;
33-24 (12) the withdrawable accounts, bonuses, plans, and
33-25 contracts for savings programs;
33-26 (13) the merger, consolidation, reorganization,
33-27 conversion, and liquidation of a savings bank;
34-1 (14) the establishment of an additional office or the
34-2 change of office location or name of a savings bank;
34-3 (15) the requirements for a savings bank's holding
34-4 companies, including those relating to:
34-5 (A) registration and periodic reporting of a
34-6 holding company with the commissioner; and
34-7 (B) transactions between a holding company, an
34-8 affiliate of a holding company, or a savings bank; and
34-9 (16) the powers of a savings bank to make loans and
34-10 investments that contain provisions reasonably necessary to ensure
34-11 that a loan made by a savings bank is consistent with sound lending
34-12 practices and that the savings bank's investment will promote the
34-13 purposes of this subtitle, including provisions governing:
34-14 (A) the type of loans and the conditions under
34-15 which a savings bank may originate, make, or sell loans;
34-16 (B) the conditions under which a savings bank
34-17 may purchase or participate in a loan made by another lender;
34-18 (C) the conditions for the servicing of a loan
34-19 for another lender;
34-20 (D) the conditions under which a savings bank
34-21 may lend money on the security of a loan made by another person;
34-22 (E) the conditions under which a savings bank
34-23 may pledge loans held by it as collateral for borrowing by the
34-24 savings bank;
34-25 (F) the conditions under which a savings bank
34-26 may invest in securities and debt instruments;
34-27 (G) the documentation that a savings bank must
35-1 have in its files at the time of funding or purchase of a loan, an
35-2 investment, or a participation in a loan;
35-3 (H) the form and content of statements of
35-4 expenses and fees and other charges that are paid by a borrower or
35-5 that a borrower is obligated to pay;
35-6 (I) the title information that must be
35-7 maintained;
35-8 (J) the borrower's insurance coverage of
35-9 property securing a loan;
35-10 (K) an appraisal report;
35-11 (L) the financial statement of a borrower;
35-12 (M) the fees or other compensation that may be
35-13 paid to a person in connection with obtaining a loan for a savings
35-14 bank, including an officer, director, employee, affiliated person,
35-15 consultant, or third party;
35-16 (N) the conditions under which the savings bank
35-17 may advance money to pay a tax, assessment, insurance premium, or
35-18 other similar charge for the protection of the savings bank's
35-19 interest in property securing the savings bank's loans;
35-20 (O) the terms under which a savings bank may
35-21 acquire and deal in real property;
35-22 (P) the valuation on a savings bank's books of
35-23 real property held by the savings bank;
35-24 (Q) the terms governing the investment by a
35-25 savings bank in a subsidiary, the powers that may be exercised by a
35-26 subsidiary, and the activities that may be engaged in by a
35-27 subsidiary; and
36-1 (R) any other matter considered necessary to
36-2 administer each type of transaction.
36-3 SECTION 62. Section 96.051(c), Finance Code, is amended to
36-4 read as follows:
36-5 (c) The [commissioner and the] finance commission may adopt
36-6 rules as necessary to implement this section.
36-7 SECTION 63. Section 97.001, Finance Code, is amended to read
36-8 as follows:
36-9 Sec. 97.001. RULES. (a) The [commissioner and the] finance
36-10 commission shall adopt rules:
36-11 (1) providing for the registration of and reporting by
36-12 holding companies;
36-13 (2) setting limitations on the activities and
36-14 investments of holding companies; and
36-15 (3) concerning other matters as appropriate under this
36-16 chapter.
36-17 (b) The [commissioner and the] finance commission may adopt
36-18 rules governing transactions between a subsidiary savings bank of a
36-19 holding company and an affiliate of the subsidiary.
36-20 SECTION 64. Section 119.006, Finance Code, is amended to
36-21 read as follows:
36-22 Sec. 119.006. INITIATION OF RULEMAKING BY SAVINGS BANKS.
36-23 The finance commission [commissioner] shall initiate rulemaking
36-24 proceedings under Chapter 2001, Government Code, if at least 20
36-25 percent of the savings banks petition the finance commission
36-26 [commissioner] in writing requesting the adoption, amendment, or
36-27 repeal of a rule.
37-1 SECTION 65. Section 152.102(b), Finance Code, is amended to
37-2 read as follows:
37-3 (b) The commission [commissioner] may adopt and enforce
37-4 reasonable rules to prevent unsafe and unsound practices with
37-5 respect to a permissible investment required by this chapter.
37-6 SECTION 66. Section 152.103, Finance Code, is amended to
37-7 read as follows:
37-8 Sec. 152.103. EXCEPTIONS TO REQUIREMENTS. The commission
37-9 [commissioner] by rule may exempt a person from this chapter or
37-10 reduce a requirement of Section 152.102(b), 152.104, 152.205,
37-11 152.206, 152.207, 152.208(a), 152.209, 152.304(b), 152.305,
37-12 152.403, 152.503, or 152.504 if:
37-13 (1) the person does not engage in the business of
37-14 selling checks to the public and the sale of checks by the person
37-15 is:
37-16 (A) ancillary to the person's business; and
37-17 (B) limited to commercial contracts in
37-18 interstate commerce; and
37-19 (2) the commission [commissioner] determines that the
37-20 exemption or reduced requirement is in the public interest.
37-21 SECTION 67. Section 152.202(b), Finance Code, is amended to
37-22 read as follows:
37-23 (b) Notwithstanding Subsection (a)(5), a person who meets
37-24 the requirements of that subsection is subject to:
37-25 (1) any other provision of this chapter to the extent
37-26 the person engages in the business of selling checks; and
37-27 (2) rules adopted by the commission [commissioner] to
38-1 administer and carry out that subsection, including rules to:
38-2 (A) define a term used in that subsection; and
38-3 (B) establish limits or requirements on the
38-4 bonding and net worth of the person and the person's activities
38-5 relating to the sale of checks other than those specified by that
38-6 subsection.
38-7 SECTION 68. Section 153.110(c), Finance Code, is amended to
38-8 read as follows:
38-9 (c) The commission [commissioner] may adopt rules to
38-10 implement this section.
38-11 SECTION 69. Section 153.117(a), Finance Code, as amended by
38-12 Chapters 62, 344, and 356, Acts of the 76th Legislature, Regular
38-13 Session, 1999, is reenacted and amended to read as follows:
38-14 (a) The following persons are not required to be licensed
38-15 under this chapter:
38-16 (1) a federally insured financial institution, as that
38-17 term is defined by Section 201.101 [as that term is defined by
38-18 state law governing bank holding companies and interstate bank
38-19 operations], that is organized under the laws of this state,
38-20 another state, or the United States;
38-21 (2) a foreign bank branch or agency in the United
38-22 States established under the federal International Banking Act of
38-23 1978 (12 U.S.C. Section 3101 et seq.), as amended;
38-24 (3) [(2)] a license holder under Chapter 152, except
38-25 that the license holder is required to comply with the other
38-26 provisions of this chapter to the extent the license holder engages
38-27 in currency exchange, transportation, or transmission transactions;
39-1 (4) a person registered as a securities dealer under
39-2 The Securities Act (Article 581-1 et seq., Vernon's Texas Civil
39-3 Statutes);
39-4 (5) an attorney or title company that in connection
39-5 with a real property transaction receives and disburses only
39-6 domestic currency on behalf of a party to the transaction;
39-7 (6) a Federal Reserve bank;
39-8 (7) a clearinghouse exercising bank payment,
39-9 collection, and clearing functions; or
39-10 (8) another person that the commission [commissioner]
39-11 may exempt by rule if the commission [commissioner] finds that the
39-12 licensing of the person is not necessary or appropriate to achieve
39-13 the objectives of this chapter.
39-14 SECTION 70. Section 153.205(b), Finance Code, is amended to
39-15 read as follows:
39-16 (b) The commission [commissioner] by rule may establish
39-17 requirements regarding content and the size and type of lettering
39-18 used in an advertisement for prices or rates.
39-19 SECTION 71. Section 153.303(a), Finance Code, is amended to
39-20 read as follows:
39-21 (a) The commission [commissioner] shall set the license
39-22 application fees, license fees, license renewal fees, and
39-23 examination fees in amounts that are reasonable and necessary to
39-24 defray the cost of administering this chapter.
39-25 SECTION 72. Section 154.051(b), Finance Code, is amended to
39-26 read as follows:
39-27 (b) The Finance Commission of Texas [department] may adopt
40-1 reasonable rules concerning:
40-2 (1) fees to defray the cost of administering this
40-3 chapter;
40-4 (2) the keeping and inspection of records relating to
40-5 the sale of prepaid funeral benefits;
40-6 (3) the filing of contracts and reports;
40-7 (4) changes in the management or control of an
40-8 organization; and
40-9 (5) any other matter relating to the enforcement and
40-10 administration of this chapter.
40-11 SECTION 73. Section 154.104(b), Finance Code, is amended to
40-12 read as follows:
40-13 (b) The Finance Commission of Texas [department] by rule may
40-14 adopt a system under which permits expire on various dates during
40-15 the year.
40-16 SECTION 74. Section 154.109(a), Finance Code, is amended to
40-17 read as follows:
40-18 (a) The commissioner by order may cancel or suspend a permit
40-19 if the commissioner finds, by examination or other credible
40-20 evidence, that the permit holder:
40-21 (1) violated this chapter or another law of this state
40-22 relating to the sale of prepaid funeral benefits, including a final
40-23 order of the commissioner or rule of the Finance Commission of
40-24 Texas [commissioner or department];
40-25 (2) misrepresented or concealed a material fact in the
40-26 permit application; or
40-27 (3) obtained, or attempted to obtain, the permit by
41-1 misrepresentation, concealment, or fraud.
41-2 SECTION 75. Section 154.111(a), Finance Code, is amended to
41-3 read as follows:
41-4 (a) The Finance Commission of Texas [department] shall adopt
41-5 rules governing the selection of a successor permit holder.
41-6 SECTION 76. Section 154.351, Finance Code, is amended to
41-7 read as follows:
41-8 Sec. 154.351. MAINTENANCE OF GUARANTY FUND. The Finance
41-9 Commission of Texas [department] by rule shall maintain a fund to
41-10 guarantee performance by sellers of prepaid funeral benefits
41-11 contracts of their obligations to the purchasers under the
41-12 provisions of this chapter governing prepaid funeral trusts.
41-13 SECTION 77. Section 154.356(b), Finance Code, is amended to
41-14 read as follows:
41-15 (b) The assessments shall be deposited in the fund and
41-16 administered by the department and the advisory council in
41-17 accordance with Finance Commission of Texas [department] rules.
41-18 SECTION 78. Section 154.406(a), Finance Code, is amended to
41-19 read as follows:
41-20 (a) After notice and opportunity for hearing, the
41-21 commissioner may impose an administrative penalty on a person who:
41-22 (1) violates this chapter or a final order of the
41-23 commissioner or rule of the Finance Commission of Texas
41-24 [commissioner or department]; and
41-25 (2) does not correct the violation before the 31st day
41-26 after the date the person receives written notice of the violation
41-27 from the department.
42-1 SECTION 79. Section 154.407, Finance Code, is amended to
42-2 read as follows:
42-3 Sec. 154.407. INJUNCTIVE RELIEF. The commissioner may sue
42-4 in a district court in Travis County to enjoin a violation or
42-5 threatened violation of:
42-6 (1) this chapter; or
42-7 (2) a final order of the commissioner or rule of the
42-8 Finance Commission of Texas [commissioner or the department].
42-9 SECTION 80. Section 154.408(a), Finance Code, is amended to
42-10 read as follows:
42-11 (a) The commissioner may issue a cease and desist order to a
42-12 person if the commissioner finds by examination or other credible
42-13 evidence that the person has violated a law of this state relating
42-14 to the sale of prepaid funeral benefits, including a violation of
42-15 this chapter or a final order of the commissioner or rule of the
42-16 Finance Commission of Texas [commissioner or the department].
42-17 SECTION 81. Section 156.004, Finance Code, is amended to
42-18 read as follows:
42-19 Sec. 156.004. DISCLOSURE TO APPLICANT. At the time an
42-20 applicant submits an application to a mortgage broker, the mortgage
42-21 broker shall provide to the applicant a disclosure that specifies
42-22 the nature of the relationship between applicant and broker, the
42-23 duties the broker has to the applicant, and how the mortgage broker
42-24 will be compensated. The finance commission [commissioner], by
42-25 rule, shall promulgate a standard disclosure form to be used by the
42-26 mortgage broker.
42-27 SECTION 82. Section 156.102, Finance Code, is amended to
43-1 read as follows:
43-2 Sec. 156.102. RULEMAKING AUTHORITY. (a) The finance
43-3 commission [Subject to review and compliance with the directives of
43-4 the finance commission as provided by Section 11.306, the
43-5 commissioner] may adopt and enforce rules necessary for the intent
43-6 of or to ensure compliance with this chapter.
43-7 (b) The finance commission [commissioner] may adopt rules to
43-8 prohibit false, misleading, or deceptive practices by mortgage
43-9 brokers and loan officers but may not adopt any other rules
43-10 restricting competitive bidding or advertising by mortgage brokers
43-11 or loan officers. When adopting rules under this subsection, the
43-12 finance commission [commissioner] may not restrict:
43-13 (1) the use of any medium for an advertisement;
43-14 (2) the personal appearance of or voice of a person in
43-15 an advertisement;
43-16 (3) the size or duration of an advertisement; or
43-17 (4) a mortgage broker's or loan officer's
43-18 advertisement under a trade name.
43-19 (c) The finance commission [commissioner] may adopt rules
43-20 regarding books and records that a person licensed under this
43-21 chapter is required to keep, including the location at which the
43-22 books and records must be kept.
43-23 (d) The finance commission [commissioner] shall consult with
43-24 the mortgage broker advisory committee when proposing and adopting
43-25 rules under this chapter.
43-26 SECTION 83. Section 156.104(h), Finance Code, is amended to
43-27 read as follows:
44-1 (h) In addition to other powers and duties delegated to it
44-2 by the commissioner, the advisory committee shall advise the
44-3 finance commission and commissioner with respect to:
44-4 (1) the proposal and adoption of rules relating to:
44-5 (A) the licensing of mortgage brokers and loan
44-6 officers;
44-7 (B) the education and experience requirements
44-8 for licensing mortgage brokers and loan officers;
44-9 (C) conduct and ethics of mortgage brokers and
44-10 loan officers;
44-11 (D) continuing education for licensed mortgage
44-12 brokers and loan officers and the types of courses acceptable as
44-13 continuing education courses under this chapter; and
44-14 (E) the granting or denying of an application or
44-15 request for renewal for a mortgage broker license or loan officer
44-16 license;
44-17 (2) the form of or format for any applications or
44-18 other documents under this chapter; and
44-19 (3) the interpretation, implementation, and
44-20 enforcement of this chapter.
44-21 SECTION 84. Section 156.206(b), Finance Code, is amended to
44-22 read as follows:
44-23 (b) The commissioner shall obtain criminal history record
44-24 information on an applicant that is maintained by the Department of
44-25 Public Safety. By rule, the finance commission [commissioner] may
44-26 require applicants to submit information and fingerprints necessary
44-27 for the commissioner to obtain criminal background information from
45-1 the Federal Bureau of Investigation. The commissioner may also
45-2 obtain criminal history record information from any court or any
45-3 local, state, or national governmental agency.
45-4 SECTION 85. Section 156.207(c), Finance Code, is amended to
45-5 read as follows:
45-6 (c) In accordance with any rules adopted by the finance
45-7 commission under this subsection, the commissioner may issue a
45-8 provisional license to an applicant if a significant delay is
45-9 necessary to process the application, review information related to
45-10 the application, or obtain information related to the application.
45-11 The commissioner may revoke a provisional license issued under this
45-12 subsection on a ground listed under Section 156.303 or on any
45-13 ground that the commissioner could have denied issuance of the
45-14 license on the application.
45-15 SECTION 86. Sections 156.208(a), (b), (f), and (g), Finance
45-16 Code, are amended to read as follows:
45-17 (a) A mortgage broker license issued under this chapter is
45-18 valid for two years and may be renewed on or before its expiration
45-19 date if the mortgage broker:
45-20 (1) pays to the commissioner a renewal fee in an
45-21 amount determined by the commissioner not to exceed $375 and a
45-22 recovery fund fee provided by Section 156.502;
45-23 (2) has not been convicted of a felony the
45-24 commissioner determines is directly related to the occupation of a
45-25 mortgage broker under Article 6252-13c, Revised Statutes; and
45-26 (3) provides the commissioner with satisfactory
45-27 evidence that the mortgage broker:
46-1 (A) has attended, during the term of the current
46-2 license, 15 hours of continuing education courses that the
46-3 commissioner, in accordance with the rules adopted by the finance
46-4 commission under this section, has approved as continuing education
46-5 courses; or
46-6 (B) maintains an active license in this state
46-7 as:
46-8 (i) a real estate broker;
46-9 (ii) a real estate salesperson;
46-10 (iii) an attorney; or
46-11 (iv) a local recording agent or insurance
46-12 solicitor or agent for a legal reserve life insurance company under
46-13 Chapter 21, Insurance Code, or an equivalent license under Chapter
46-14 21, Insurance Code.
46-15 (b) A loan officer license issued under this chapter is
46-16 valid for two years and may be renewed on or before its expiration
46-17 date if the loan officer:
46-18 (1) pays to the commissioner a renewal fee in an
46-19 amount determined by the commissioner not to exceed $175 and a
46-20 recovery fund fee provided by Section 156.502;
46-21 (2) has not been convicted of a felony the
46-22 commissioner determines is directly related to the occupation of a
46-23 loan officer under Article 6252-13c, Revised Statutes; and
46-24 (3) provides the commissioner with satisfactory
46-25 evidence that the loan officer:
46-26 (A) has attended, during the term of the current
46-27 license, 15 hours of continuing education courses that the
47-1 commissioner, in accordance with the rules adopted by the finance
47-2 commission under this section, has approved as continuing education
47-3 courses, including courses provided by or through the licensed
47-4 mortgage broker with whom the loan officer is associated after
47-5 submission to and approval by the commission; or
47-6 (B) maintains an active license in this state
47-7 as:
47-8 (i) a real estate broker;
47-9 (ii) a real estate salesperson;
47-10 (iii) an attorney; or
47-11 (iv) a local recording agent or insurance
47-12 solicitor or agent for a legal reserve life insurance company under
47-13 Chapter 21, Insurance Code, or an equivalent license under Chapter
47-14 21, Insurance Code.
47-15 (f) The finance commission [commissioner] by rule may adopt
47-16 a system under which licenses expire on a date or dates other than
47-17 December 31. If a system is adopted under this subsection, dates
47-18 relating to expiration and issuance of licenses shall be adjusted
47-19 accordingly. For the biennium in which the license expiration date
47-20 is changed, license fees shall be prorated on a monthly basis so
47-21 that each license holder pays only that portion of the license fee
47-22 that is allocable to the number of months during which the license
47-23 is valid. On renewal of the license on the new expiration date,
47-24 the total license renewal fee is payable.
47-25 (g) The finance commission [commissioner] shall adopt rules
47-26 related to the approval of courses for continuing education credit
47-27 under this section that provide for the acceptance of continuing
48-1 education courses that are related to finance, financial
48-2 consulting, lending, real estate contracts, discrimination laws,
48-3 deceptive trade practices, real property conveyances, and other
48-4 topics that are relevant to mortgage brokers and that are
48-5 acceptable as continuing education courses to other professional
48-6 licensing agencies.
48-7 SECTION 87. Section 156.210, Finance Code, is amended to
48-8 read as follows:
48-9 Sec. 156.210. PROBATIONARY LICENSE. The commissioner may
48-10 issue a probationary license. The finance commission
48-11 [commissioner] by rule shall adopt reasonable terms and conditions
48-12 for a probationary license.
48-13 SECTION 88. Section 156.303(a), Finance Code, is amended to
48-14 read as follows:
48-15 (a) The commissioner may order disciplinary action against a
48-16 licensed mortgage broker or a licensed loan officer when the
48-17 commissioner, after a hearing, has determined that the person:
48-18 (1) obtained a license under this chapter through a
48-19 false or fraudulent representation or made a material
48-20 misrepresentation in an application for a license under this
48-21 chapter;
48-22 (2) published or caused to be published an
48-23 advertisement related to the business of a mortgage broker or loan
48-24 officer that:
48-25 (A) is misleading;
48-26 (B) is likely to deceive the public;
48-27 (C) in any manner tends to create a misleading
49-1 impression;
49-2 (D) fails to identify as a mortgage broker or
49-3 loan officer the person causing the advertisement to be published;
49-4 or
49-5 (E) violates federal or state law;
49-6 (3) while performing an act for which a license under
49-7 this chapter is required, engaged in conduct that constitutes
49-8 improper, fraudulent, or dishonest dealings;
49-9 (4) failed to notify the commissioner not later than
49-10 the 30th day after the date of the final conviction if the person,
49-11 in a court of this or another state or in a federal court, has been
49-12 convicted of or entered a plea of guilty or nolo contendere to a
49-13 felony or a criminal offense involving fraud;
49-14 (5) failed to use a fee collected in advance of
49-15 closing of a mortgage loan for a purpose for which the fee was
49-16 paid;
49-17 (6) charged or received, directly or indirectly, a fee
49-18 for assisting a mortgage applicant in obtaining a mortgage loan
49-19 before all of the services that the person agreed to perform for
49-20 the mortgage applicant are completed, and the proceeds of the
49-21 mortgage loan have been disbursed to or on behalf of the mortgage
49-22 applicant, except as provided by Section 156.304;
49-23 (7) failed within a reasonable time to honor a check
49-24 issued to the commissioner after the commissioner has mailed a
49-25 request for payment by certified mail to the person's last known
49-26 business address as reflected by the commissioner's records;
49-27 (8) paid compensation to a person who is not licensed
50-1 or exempt under this chapter for acts for which a license under
50-2 this chapter is required;
50-3 (9) induced or attempted to induce a party to a
50-4 contract to breach the contract so the person may make a mortgage
50-5 loan;
50-6 (10) published or circulated an unjustified or
50-7 unwarranted threat of legal proceedings in matters related to the
50-8 person's actions or services as a mortgage broker or loan officer,
50-9 as applicable;
50-10 (11) established an association, by employment or
50-11 otherwise, with a person not licensed or exempt under this chapter
50-12 who was expected or required to act as a mortgage broker or loan
50-13 officer;
50-14 (12) aided, abetted, or conspired with a person to
50-15 circumvent the requirements of this chapter;
50-16 (13) acted in the dual capacity of a mortgage broker
50-17 or loan officer and real estate broker, salesperson, or attorney in
50-18 a transaction without the knowledge and written consent of the
50-19 mortgage applicant or in violation of applicable requirements under
50-20 federal law;
50-21 (14) discriminated against a prospective borrower on
50-22 the basis of race, color, religion, sex, national origin, ancestry,
50-23 familial status, or a disability;
50-24 (15) failed or refused on demand to:
50-25 (A) produce a document, book, or record
50-26 concerning a mortgage loan transaction conducted by the mortgage
50-27 broker or loan officer for inspection by the commissioner or the
51-1 commissioner's authorized personnel or representative;
51-2 (B) give the commissioner or the commissioner's
51-3 authorized personnel or representative free access to the books or
51-4 records relating to the person's business kept by an officer,
51-5 agent, or employee of the person or any business entity through
51-6 which the person conducts mortgage brokerage activities, including
51-7 a subsidiary or holding company affiliate; or
51-8 (C) provide information requested by the
51-9 commissioner as a result of a formal or informal complaint made to
51-10 the commissioner;
51-11 (16) failed without just cause to surrender, on
51-12 demand, a copy of a document or other instrument coming into the
51-13 person's possession that was provided to the person by another
51-14 person making the demand or that the person making the demand is
51-15 under law entitled to receive; or
51-16 (17) disregarded or violated this chapter or a rule
51-17 adopted by the finance commission [commissioner] under this
51-18 chapter.
51-19 SECTION 89. Section 156.506(d), Finance Code, is amended to
51-20 read as follows:
51-21 (d) This section does not limit the authority of the
51-22 commissioner to take disciplinary action against a mortgage broker
51-23 or loan officer for a violation of this chapter or the rules
51-24 adopted by the finance commission [commissioner] under this
51-25 chapter. The repayment in full to the fund of all obligations of a
51-26 mortgage broker or loan officer does not nullify or modify the
51-27 effect of any other disciplinary proceeding brought under this
52-1 chapter.
52-2 SECTION 90. Section 202.005(a), Finance Code, is amended to
52-3 read as follows:
52-4 (a) The commissioner may:
52-5 (1) examine a bank holding company that controls a
52-6 Texas bank to the same extent as if the bank holding company were a
52-7 Texas state bank; and
52-8 (2) bring an enforcement proceeding under Chapter 35
52-9 against a bank holding company that violates or participates in a
52-10 violation of this subtitle, an agreement filed with the
52-11 commissioner under this chapter, or a rule adopted by the finance
52-12 commission or order issued by the commissioner [or the finance
52-13 commission] under this subtitle, as if the bank holding company
52-14 were a Texas state bank.
52-15 SECTION 91. Section 273.204, Finance Code, is amended to
52-16 read as follows:
52-17 Sec. 273.204. CONDITIONS UNDER WHICH CORPORATION MAY
52-18 EXERCISE POWERS AND DUTIES. The corporation may not exercise a
52-19 power or perform a duty under Section 273.203 or 273.205 or
52-20 Subchapter E until the Office of Thrift Supervision and the Federal
52-21 Deposit Insurance Corporation have:
52-22 (1) officially recognized that the corporation in
52-23 exercising that power or performing that duty will reduce and
52-24 minimize the liability of the Federal Deposit Insurance
52-25 Corporation; and
52-26 (2) taken any necessary action to permit member
52-27 associations to use without restraint all of the operational power
53-1 the member associations have under the laws of this state,
53-2 including rules of the Finance Commission of Texas [Savings and
53-3 Loan Department].
53-4 SECTION 92. Section 345.351(b), Finance Code, is amended to
53-5 read as follows:
53-6 (b) The finance commission [commissioner] by rule may
53-7 establish procedures to facilitate the registration and collection
53-8 of fees under this section, including rules staggering throughout
53-9 the year the dates on which fees are due.
53-10 SECTION 93. Section 347.451(b), Finance Code, is amended to
53-11 read as follows:
53-12 (b) The finance commission [commissioner] by rule may
53-13 establish procedures to facilitate the registration and collection
53-14 of fees under this section, including rules staggering the due
53-15 dates of the fees throughout the year.
53-16 SECTION 94. Section 348.401(b), Finance Code, is amended to
53-17 read as follows:
53-18 (b) The finance commission [commissioner] by rule may
53-19 establish procedures to facilitate the registration and collection
53-20 of fees under this section, including rules staggering throughout
53-21 the year the dates on which fees are due.
53-22 SECTION 95. Sections 371.006(a) and (d), Finance Code, are
53-23 amended to read as follows:
53-24 (a) The Finance Commission of Texas [commissioner] may adopt
53-25 rules to enforce this chapter.
53-26 (d) On application by any person and on payment of any
53-27 associated cost, the commissioner shall furnish the person a
54-1 certified copy of a rule adopted by the Finance Commission of Texas
54-2 [commissioner].
54-3 SECTION 96. Section 371.007(a), Finance Code, is amended to
54-4 read as follows:
54-5 (a) The Finance Commission of Texas [commissioner] by rule
54-6 may adopt a system under which licenses issued under this chapter
54-7 expire on various dates during the year.
54-8 SECTION 97. Section 371.181(b), Finance Code, is amended to
54-9 read as follows:
54-10 (b) The Finance Commission of Texas [commissioner] shall
54-11 adopt rules that allow:
54-12 (1) a consumer who has filed an offense report with a
54-13 local law enforcement agency to request that a pawnbroker search
54-14 the records of the pawnshop; and
54-15 (2) the pawnbroker to assist the consumer and the
54-16 local law enforcement agency in locating and recovering stolen
54-17 property.
54-18 SECTION 98. Section 371.183, Finance Code, is amended to
54-19 read as follows:
54-20 Sec. 371.183. CONSUMER INFORMATION. The Finance Commission
54-21 of Texas [commissioner] by rule may require a pawnshop to display,
54-22 in an area in the pawnshop accessible to a consumer, materials
54-23 provided by the commissioner that are designed to:
54-24 (1) inform a consumer of the duties, rights, and
54-25 responsibilities of parties to a transaction regulated by the
54-26 commissioner; and
54-27 (2) inform and assist a robbery, burglary, or theft
55-1 victim.
55-2 SECTION 99. Section 11.201, Finance Code, is repealed.
55-3 SECTION 100. A rule adopted by the Banking Commissioner of
55-4 Texas, the Savings and Loan Commissioner, or the Consumer Credit
55-5 Commissioner that is in effect on the effective date of this Act
55-6 and that is not inconsistent with this Act remains in effect
55-7 as a rule or regulation of the Finance Commission of Texas until
55-8 superseded by action of the finance commission.
55-9 SECTION 101. The changes made by this Act to the
55-10 qualifications for membership on the Finance Commission of Texas do
55-11 not affect the entitlement of a member serving on the commission
55-12 immediately before the effective date of this Act to continue to
55-13 carry out the finance commission's functions for the remainder
55-14 of the member's term. The changes in law apply only to a member
55-15 appointed on or after the effective date of this Act. This Act
55-16 does not prohibit a person who is a member of the finance
55-17 commission on the effective date of this Act from being reappointed
55-18 to the finance commission if the person has the qualifications
55-19 required for a member under Chapter 11, Finance Code, as
55-20 amended by this Act.
55-21 SECTION 102. This Act takes effect September 1, 2001.