HOUSE BILL REPORT

HB 1736

BYRepresentatives Lux, Chandler and Dellwo;by request of Department of General Administration

Revising provisions on banks and trust companies.

House Committe on Financial Institutions & Insurance

Majority Report:  Do pass.  (10)

      Signed by Representatives Lux, Chair; Zellinsky, Vice Chair; Anderson, Crane, Day, Dorn, Ferguson, P. King, Nutley and Winsley.

House Staff:John Conniff (786-7119)

AS REPORTED BY COMMITTEE ON FINANCIAL INSTITUTIONS & INSURANCE

JANUARY 26, 1988

BACKGROUND:

The state Supervisor of Banking has regulatory responsibility for state chartered banks and savings banks. The Supervisor is required by law to conduct a financial examination of each bank at least once every eighteen months. The supervisor must conduct the examination without giving prior notice of the exam to the bank. The Supervisor must also examine savings banks; but, the savings bank code does not contain specific provisions governing these exams. The examinations are confidential and improper disclosure of examination information is a gross misdemeanor.

In addition to periodically examining banks, the Supervisor is responsible for approving applications to acquire or change the control of a bank or savings bank. The Supervisor may prevent a change in ownership or control of a bank or savings bank by filing a restraining action in the superior court where the bank or savings bank is located. The action must be brought within thirty days from the date of filing of the application for a change of ownership or control.

SUMMARY:

The Supervisor of Banking may give notice to a bank of a proposed examination of the bank.

The Supervisor may enter into cooperative arrangements with federal and other state bank regulators for the examination of bank holding companies and the subsidiaries of holding companies. Examinations conducted by other regulatory bodies may be used by the Supervisor in lieu of the Supervisor's own examinations. Any exam received from other regulatory authorities is confidential and the Supervisor may share with other bank regulatory authorities information obtained through an examination conducted by the Supervisor.

Rather than bring a court action, the Supervisor may disapprove an application for control or acquisition of a bank within thirty days of the filing of the application or within forty-five days of the application date if the Supervisor extends the application review period. If the Supervisor disapproves the application, he must state the reasons for the disapproval and these reasons are confidential unless the disapproval is challenged in an administrative proceeding. If the person acquiring ownership or control of a bank replaces or changes the chief executive officer or any of the bank's directors within twelve months of the acquisition of ownership or control, the person must file a report with the Supervisor detailing the past and present business and professional affiliations of the new officer or director.

The examination and acquisition of ownership and control provisions of the bank code are added to the savings bank code.

Fiscal Note:      Not Requested.

Effective Date:This bill contains an emergency clause and takes effect immediately.

House Committee ‑ Testified For:    Tom Oldfield, Supervisor of Banking.

House Committee - Testified Against:      None Presented.

House Committee - Testimony For:    This legislation will provide the tools for more efficient and comprehensive examination of banks and savings banks by the Division of Banking.

House Committee - Testimony Against:      None Presented.