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                                  ENGROSSED SUBSTITUTE HOUSE BILL NO. 341

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State of Washington                              50th Legislature                              1987 Regular Session

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

Read first time 3/6/87 and passed to Committee on Rules.

AN ACT Relating to banks and banking; amending RCW 30.04.900; adding a new section to chapter 30.04 RCW; creating a new section; and repealing RCW 30.04.200.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:

NEW SECTION. Sec. 1.     Agriculture is a major industry in Washington state.  During the last several years, farm credit has become tighter, making it more difficult for farmers and ranchers to obtain necessary financing.  In addition, commercial banks located in rural, farming communities have been faced with increased competition and harder times because of the drop in farm income and the increase in bankruptcies.  The legislature, by granting the additional powers provided in this act, intends that the supervisor of banking assure that the additional powers granted to commercial state chartered banks are those necessary to assure the viability of all banks, especially those located in rural communities, so that they will continue to be able to provide credit to farmers and ranchers.

NEW SECTION. Sec. 2.  A new section is added to chapter 30.04 RCW to read as follows:

          (1) A bank or trust company, alone or in conjunction with other entities, may form, incorporate, or invest in corporations or other entities, whether or not such other corporation or entity is related to the bank or trust company's business.  The aggregate amount of funds invested, or used in the formation of corporations or other entities under this section shall not exceed ten percent of the assets of the bank or trust company.

          (2) A bank or trust company may engage in an activity permitted under this section only with the prior authorization of the supervisor.  In approving or denying a proposed activity, the supervisor shall consider the financial and management strength of the institution, the convenience and needs of the public, and whether the proposed activity should be conducted through a subsidiary or affiliate of the bank.  The supervisor may not authorize under this section and no bank or trust company may act as an insurance  or travel agent unless otherwise authorized by state statute.

        Sec. 3.  Section 54, chapter 279, Laws of 1986 and RCW 30.04.900 are each amended to read as follows:

          (1) The supervisor of banking shall study the financial institution structure in the state and report to the governor and the appropriate standing committees of the house of representatives and the senate on changes which should be made to enable ((commercial banks)) state chartered financial institutions to remain safe and sound and yet be competitive with other federally chartered and nonchartered financial institutions.  In conducting the study the supervisor shall consider:

          (a) The powers which ((commercial banks)) financial institutions under state regulatory authority should be entitled to exercise;

          (b) The level of supervision that is necessary to assure safe and sound ((commercial banks)) financial institutions without unnecessarily restricting the operation of the institutions;

          (c) Whether the distinction between commercial banks, savings banks, and savings and loan associations should be retained, and if so, whether there should continue to be differences in their powers;

          (d) The general corporate powers that should be authorized for ((banking corporations)) financial institutions; and

          (e) Any other matters deemed by the supervisor to be relevant.

          (2) The supervisor, in conducting the study required by subsection (1) of this section shall consult with the supervisor of savings and loans and with representatives from all types of financial institutions, including large and small, urban and rural, commercial banks, savings banks, and savings and loan associations and credit unions.  The supervisor shall also advise the appropriate standing committees of the house of representatives and the senate of all meetings held to consider the study conducted under this section.

          (3) The supervisor of banking shall submit the report required by subsection (1) of this section not later than November 1, 1987.  A progress report shall be submitted to the governor and the respective standing committees of the house of representatives and the senate not later than December 1, 1986.

NEW SECTION. Sec. 4.  Section 30.04.200, chapter 33, Laws of 1955 and RCW 30.04.200 are each repealed.