FINAL BILL REPORT

SHB 341

                                  C 498 L 87

BYHouse Committee on Financial Institutions & Insurance (originally sponsored by Representatives Dellwo, Nutley, Chandler, Silver, Lux, Meyers, P. King, Ferguson, Betrozoff, C. Smith and May)

Revising the corporate powers of banks.

House Committe on Financial Institutions & Insurance

Senate Committee on Financial Institutions

SYNOPSIS AS ENACTED

BACKGROUND:

State chartered savings and loan associations are permitted to invest 10 percent of their assets in any activity or corporation.  Savings banks have similar authority.  However, state chartered commercial banks are not permitted to invest in corporations or to conduct activities that are not related to banking.

Commercial banks are prohibited from dealing in securities and the officers and employees of a commercial bank are prohibited from being officers or employees of a business engaged in selling securities.  Officers or employees are also prohibited from being trustees, directors, officers, or employees of a corporation making loans secured by collateral to any other corporation.  A securities business may not have an office or transact business in the same room as a bank. 

Last year, the legislature directed the supervisor of banking to establish a study commission to analyze bank powers and report to the legislature by November 1, 1987, with recommendations on changes to the bank code.

SUMMARY:

State chartered commercial banks may invest up to 10 percent of their assets or 50 percent of net worth, whichever is less, in any corporation whether or not such corporation is related to the banking business.  Before a bank may make an investment or engage in any activity under the act, the supervisor of banking must review and authorize the investment or activity after considering the bank's safety and soundness, the convenience and needs of the public, and whether the proposed activity ought to be conducted through a bank affiliate or subsidiary.  The supervisor may not authorize banks to act as insurance or travel agents.

The restriction on commercial banks dealing with securities and the relation of officers and employees of a bank with a securities business or other corporation which makes loans is repealed.

The study commission is modified to require a review of all state chartered financial institutions.  The director of the Department of General Administration is in charge of the study.

VOTES ON FINAL PASSAGE:

      House 93   2

      Senate    46     1(Senate amended)

      House 95   2(House concurred)

EFFECTIVE:July 26, 1987