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| 1 | + | Amended IN Senate March 30, 2022 CALIFORNIA LEGISLATURE 20212022 REGULAR SESSION Senate Bill No. 1176Introduced by Senator LimnFebruary 17, 2022 An act to add Division 26 (commencing with Section 100100) to the Financial Code, relating to financial institutions. LEGISLATIVE COUNSEL'S DIGESTSB 1176, as amended, Limn. Financial institutions: California Community Reinvestment Act. Department of Financial Protection and Innovation: loan-related activities: data analysis and practices.Existing law establishes the Department of Financial Protection and Innovation, which is under the direction of the Commissioner of Financial Protection and Innovation. Existing law makes the department responsible for administering various laws relating to financial institutions, including banks and credit unions. Existing law, until January 1, 2030, establishes the Financial Empowerment Fund, and provides that moneys in the fund are continuously appropriated to the commissioner for allocation to fund financial education and financial empowerment programs and services for at-risk populations in California, as specified.This bill would establish the California Community Reinvestment Act, and would require a covered financial institution, as defined, to have a continuing and affirmative obligation to meet the financial services needs of the communities, including low- and moderate-income communities and communities of color, in which the covered financial institution conducts substantial business, as specified. The bill would require the commissioner to assess the record of each covered financial institution in satisfying this obligation no less than once every 3 years, as specified. After each assessment, the bill would require the commissioner to assign one of 5 possible ratings to describe how the covered financial institution is meeting its community financial services needs, and to prepare a specified written evaluation of the covered financial institutions record of performance. The bill would authorize the commissioner to consider this record of performance when considering an application for, among other things, the establishment of a branch or the relocation of a main office. The bill would also prohibit a covered financial institution with certain ratings from receiving state funds for deposit or being awarded a state contract to provide financial services.This bill would also authorize the commissioner to conduct specified investigations into covered financial institutions for compliance with the act. The bill would also authorize the commissioner to examine, in consultation with state and federal regulators, covered financial institutions for their compliance with specified state and federal laws.This bill would establish the Community Reinvestment Fund within the State Treasury, and would make moneys in the fund available, upon appropriation by the Legislature, to the commissioner for purposes of administering these provisions. The bill would authorize the commissioner to issue an administrative penalty of up to $100,000 to a covered financial institution that regularly fails to meet its obligations under the act, and would require those penalties to be deposited in the fund.Existing federal law, the Home Mortgage Disclosure Act (HMDA), requires specified financial institutions, including certain banks, savings associations, and credit unions, to compile and make available to the public for inspection specific data about mortgage loans. Existing federal law, the Community Reinvestment Act (CRA), also requires regulated financial institutions, as defined, to be subject to certain assessments by federal agencies to ensure those financial institutions are acting consistently to meet the credit needs of the communities in which they are chartered.This bill would require the Department of Financial Protection and Innovation to conduct a peer group analysis of the mortgage-related activities of each licensee, as defined, as reflected in data provided pursuant to the HMDA. The bill would require the analysis to compare licensees within the same peer group along specified metrics and to use multivariate regression analysis or other statistical tools that control for applicant or borrower characteristics that affect identified outcomes, to the extent those characteristics are available. The bill would require the analysis to be made available to the public and posted on the departments internet website.The bill would require the department to seek information from regulators in other states that have enacted laws modeled after the CRA and identify best practices in administering those laws, review federal rules implementing the CRA, and provide recommendations on how the rules could be adapted and applied to examinations of licensees, as defined. The bill would further require the department, if any amendment is proposed to a federal rule implementing the CRA before June 30, 2023, to seek information from regulators in other states that have enacted laws modeled after the CRA to determine how changes in the federal rule have or may affect implementation of the state law. The bill would require the above-described information and recommendations to be summarized and made available to the public and posted on the departments internet website.The bill would require the department to also review its statutory authority, regulations, and processes related to the examination of a licensee and determine whether the department has adequate authority to examine a licensee for how well the licensee meets the financial services needs of underserved communities.The bill would require the department to provide summary reports of its findings pursuant to the above provisions to the respective chairpersons of specified legislative committees. The bill would include related legislative findings.Digest Key Vote: MAJORITY Appropriation: NO Fiscal Committee: YES Local Program: NO Bill TextThe people of the State of California do enact as follows:SECTION 1. The Legislature finds and declares all of the following:(a) According to the Federal Reserve Bank of San Francisco, low-income consumers and consumers of color are less likely to have traditional banking relationships than consumers with average incomes or White consumers. Disparities in access to basic financial services is one factor that results in disparities in access to credit. Across mortgage, small business, and auto loans, Black and Hispanic consumers are more likely to be denied credit or receive higher interest rates when they do get a loan. Secret shopper studies have shown that Black and Hispanic consumers receive different information from bankers when applying for loans as well. The more limited availability of traditional, affordable credit may push these consumers into predatory products or those with very high interest rates, like payday loans, or may result in reliance on traditionalbut more expensivetypes of debt, like credit cards.(b) The Department of Financial Protection and Innovation regulates and oversees providers of financial services and products in California. Among its duties, the department administers licensing programs that cover state banks, state credit unions, independent mortgage companies, nonbank lenders, and certain financial technology companies that provide payment services or make loans. While the department examines these companies for compliance with the requirements and prohibitions of applicable licensing laws, these laws do not authorize or direct the department to evaluate how well these companies are serving the needs of underserved communities.(c) In 2020, the Legislature passed and the Governor signed Assembly Bill 1864 (Limn) (Chapter 157), which provided the Department of Financial Protection and Innovation (DFPI) with flexible authority to regulate and oversee providers of financial services that are not covered by existing licensing laws. The authority provided by AB 1864 was modeled after the authority provided by Congress to the Consumer Financial Protection Bureau, including authority to investigate and bring enforcement actions against unfair, deceptive, or abusive acts or practices. On March 16, 2022, the Consumer Financial Protection Bureau announced that it would expand its antidiscrimination efforts to combat discriminatory practices across the board in consumer finance, as such practices may constitute an unfair act or practice.(d) In 1977, the federal government enacted the Community Reinvestment Act, which establishes a continuing and affirmative obligation for banks to help meet the credit needs of the local communities in which they are chartered and instructs the federal banking regulators to assess banks on how well they meet the credit needs of their communities. The Community Reinvestment Act does not cover credit unions, independent mortgage companies, or other nonbank financial service providers, all of which have grown in importance and market share in the financial services industry since 1977.(e) It is the intent of the Legislature to enact this division to begin the process of increasing the priority of equity and the needs of underserved communities in the supervisory and regulatory activities of the Department of Financial Protection and Innovation, as such activities relate to licensees of the department.SEC. 2. Division 26 (commencing with Section 100100) is added to the Financial Code, to read:DIVISION 26. Examining Equity in Financial Services100100. For purposes of this division, the following definitions apply:(a) Department means the Department of Financial Protection and Innovation.(b) Licensee means a bank, savings association, credit union, finance lender, or residential mortgage lender.100101. (a) The department shall conduct a peer group analysis of each licensees mortgage-related activities as reflected in data provided pursuant to the federal Home Mortgage Disclosure Act (12 U.S.C. Sec. 2801 et seq.). The analysis shall compare licensees within the same peer group along the following metrics:(1) Loan approval rates by income and by race and ethnicity.(2) Loan costs, including interest rates and closing costs, by income and by race and ethnicity.(3) The mix of loan types by income and by race and ethnicity.(b) The analysis shall use multivariate regression analysis or other statistical tools that control for applicant or borrower characteristics that affect outcomes identified in paragraphs (1) to (3), inclusive, of subdivision (a), to the extent that such characteristics are available. (c) The analysis required by this section shall be made available to the public and posted on the departments internet website.(d) (1) On or before ____, the department shall provide a summary report of its findings pursuant to this section to the respective chairpersons of the Senate Banking and Financial Institutions Committee and the Assembly Banking and Finance Committee.(2) The requirement for submitting a report imposed under paragraph (1) shall be inoperative on ____, pursuant to Section 10231.5 of the Government Code.(3) A report to be submitted pursuant to paragraph (1) shall be submitted in compliance with Section 9795 of the Government Code.100102. (a) The department shall seek information from regulators in other states that have enacted laws modeled after the Community Reinvestment Act (12 USC Sec. 2901) and identify best practices in administering such laws.(b) The department shall review the federal rules implementing the Community Reinvestment Act and provide recommendations on how the rules could be adapted and applied to examinations of licensees.(c) If any amendment is proposed to a federal rule implementing the Community Reinvestment Act before June 30, 2023, the department shall seek information from regulators in other states that have enacted laws modeled after the Community Reinvestment Act to determine how changes in the federal rule have or may affect the implementation of the state law.(d) The information required to be identified and the recommendations required by this section shall be summarized and made available to the public and posted on the departments internet website. (e) (1) On or before ____, the department shall provide a summary report of its findings pursuant to this section to the respective chairpersons of the Senate Committee on Banking and Financial Institutions and the Assembly Committee on Banking and Finance. (2) The requirement for submitting a report imposed under paragraph (1) is inoperative on ____, pursuant to Section 10231.5 of the Government Code.(3) A report to be submitted pursuant to paragraph (1) shall be submitted in compliance with Section 9795 of the Government Code.100103. (a) The department shall review its statutory authority, regulations, and processes related to the examination of a licensee and determine whether the department has adequate authority to examine a licensee for how well the licensee meets the financial services needs of underserved communities.(b) (1) On or before ____, the department shall provide a summary report of its findings pursuant to this section to the respective chairpersons of the Senate Committee on Banking and Financial Institutions and the Assembly Committee on Banking and Finance.(2) The requirement for submitting a report imposed under paragraph (1) is inoperative on ____, pursuant to Section 10231.5 of the Government Code.(3) A report to be submitted pursuant to paragraph (1) shall be submitted in compliance with Section 9795 of the Government Code. | |
| 2 | 2 | ||
| 3 | - | ||
| 3 | + | Amended IN Senate March 30, 2022 CALIFORNIA LEGISLATURE 20212022 REGULAR SESSION Senate Bill No. 1176Introduced by Senator LimnFebruary 17, 2022 An act to add Division 26 (commencing with Section 100100) to the Financial Code, relating to financial institutions. LEGISLATIVE COUNSEL'S DIGESTSB 1176, as amended, Limn. Financial institutions: California Community Reinvestment Act. Department of Financial Protection and Innovation: loan-related activities: data analysis and practices.Existing law establishes the Department of Financial Protection and Innovation, which is under the direction of the Commissioner of Financial Protection and Innovation. Existing law makes the department responsible for administering various laws relating to financial institutions, including banks and credit unions. Existing law, until January 1, 2030, establishes the Financial Empowerment Fund, and provides that moneys in the fund are continuously appropriated to the commissioner for allocation to fund financial education and financial empowerment programs and services for at-risk populations in California, as specified.This bill would establish the California Community Reinvestment Act, and would require a covered financial institution, as defined, to have a continuing and affirmative obligation to meet the financial services needs of the communities, including low- and moderate-income communities and communities of color, in which the covered financial institution conducts substantial business, as specified. The bill would require the commissioner to assess the record of each covered financial institution in satisfying this obligation no less than once every 3 years, as specified. After each assessment, the bill would require the commissioner to assign one of 5 possible ratings to describe how the covered financial institution is meeting its community financial services needs, and to prepare a specified written evaluation of the covered financial institutions record of performance. The bill would authorize the commissioner to consider this record of performance when considering an application for, among other things, the establishment of a branch or the relocation of a main office. The bill would also prohibit a covered financial institution with certain ratings from receiving state funds for deposit or being awarded a state contract to provide financial services.This bill would also authorize the commissioner to conduct specified investigations into covered financial institutions for compliance with the act. The bill would also authorize the commissioner to examine, in consultation with state and federal regulators, covered financial institutions for their compliance with specified state and federal laws.This bill would establish the Community Reinvestment Fund within the State Treasury, and would make moneys in the fund available, upon appropriation by the Legislature, to the commissioner for purposes of administering these provisions. The bill would authorize the commissioner to issue an administrative penalty of up to $100,000 to a covered financial institution that regularly fails to meet its obligations under the act, and would require those penalties to be deposited in the fund.Existing federal law, the Home Mortgage Disclosure Act (HMDA), requires specified financial institutions, including certain banks, savings associations, and credit unions, to compile and make available to the public for inspection specific data about mortgage loans. Existing federal law, the Community Reinvestment Act (CRA), also requires regulated financial institutions, as defined, to be subject to certain assessments by federal agencies to ensure those financial institutions are acting consistently to meet the credit needs of the communities in which they are chartered.This bill would require the Department of Financial Protection and Innovation to conduct a peer group analysis of the mortgage-related activities of each licensee, as defined, as reflected in data provided pursuant to the HMDA. The bill would require the analysis to compare licensees within the same peer group along specified metrics and to use multivariate regression analysis or other statistical tools that control for applicant or borrower characteristics that affect identified outcomes, to the extent those characteristics are available. The bill would require the analysis to be made available to the public and posted on the departments internet website.The bill would require the department to seek information from regulators in other states that have enacted laws modeled after the CRA and identify best practices in administering those laws, review federal rules implementing the CRA, and provide recommendations on how the rules could be adapted and applied to examinations of licensees, as defined. The bill would further require the department, if any amendment is proposed to a federal rule implementing the CRA before June 30, 2023, to seek information from regulators in other states that have enacted laws modeled after the CRA to determine how changes in the federal rule have or may affect implementation of the state law. The bill would require the above-described information and recommendations to be summarized and made available to the public and posted on the departments internet website.The bill would require the department to also review its statutory authority, regulations, and processes related to the examination of a licensee and determine whether the department has adequate authority to examine a licensee for how well the licensee meets the financial services needs of underserved communities.The bill would require the department to provide summary reports of its findings pursuant to the above provisions to the respective chairpersons of specified legislative committees. The bill would include related legislative findings.Digest Key Vote: MAJORITY Appropriation: NO Fiscal Committee: YES Local Program: NO | |
| 4 | 4 | ||
| 5 | - | ||
| 5 | + | Amended IN Senate March 30, 2022 | |
| 6 | 6 | ||
| 7 | - | Amended IN Senate May 19, 2022 | |
| 8 | 7 | Amended IN Senate March 30, 2022 | |
| 9 | 8 | ||
| 10 | 9 | CALIFORNIA LEGISLATURE 20212022 REGULAR SESSION | |
| 11 | 10 | ||
| 12 | 11 | Senate Bill | |
| 13 | 12 | ||
| 14 | 13 | No. 1176 | |
| 15 | 14 | ||
| 16 | 15 | Introduced by Senator LimnFebruary 17, 2022 | |
| 17 | 16 | ||
| 18 | 17 | Introduced by Senator Limn | |
| 19 | 18 | February 17, 2022 | |
| 20 | 19 | ||
| 21 | 20 | An act to add Division 26 (commencing with Section 100100) to the Financial Code, relating to financial institutions. | |
| 22 | 21 | ||
| 23 | 22 | LEGISLATIVE COUNSEL'S DIGEST | |
| 24 | 23 | ||
| 25 | 24 | ## LEGISLATIVE COUNSEL'S DIGEST | |
| 26 | 25 | ||
| 27 | - | SB 1176, as amended, Limn. Department of Financial Protection and Innovation: loan-related activities: data analysis and practices. | |
| 26 | + | SB 1176, as amended, Limn. Financial institutions: California Community Reinvestment Act. Department of Financial Protection and Innovation: loan-related activities: data analysis and practices. | |
| 28 | 27 | ||
| 29 | - | Existing law establishes the Department of Financial Protection and Innovation, which is under the direction of the Commissioner of Financial Protection and Innovation. Existing law makes the department responsible for administering various laws relating to financial institutions, including banks and credit unions.Existing federal law, the Home Mortgage Disclosure Act (HMDA), requires specified financial institutions, including certain banks, savings associations, and credit unions, to compile and make available to the public for inspection specific data about mortgage loans. Existing federal law, the Community Reinvestment Act (CRA), also requires regulated financial institutions, as defined, to be subject to certain assessments by federal agencies to ensure those financial institutions are acting consistently to meet the credit needs of the communities in which they are chartered.This bill would require the Department of Financial Protection and Innovation to conduct a peer group analysis of the mortgage-related activities of each licensee, as defined, as reflected in data provided pursuant to the HMDA. The bill would require the analysis to compare licensees within the same peer group along specified metrics and to use multivariate regression analysis or other statistical tools that control for applicant or borrower characteristics that affect identified outcomes, to the extent those characteristics are available. | |
| 28 | + | Existing law establishes the Department of Financial Protection and Innovation, which is under the direction of the Commissioner of Financial Protection and Innovation. Existing law makes the department responsible for administering various laws relating to financial institutions, including banks and credit unions. Existing law, until January 1, 2030, establishes the Financial Empowerment Fund, and provides that moneys in the fund are continuously appropriated to the commissioner for allocation to fund financial education and financial empowerment programs and services for at-risk populations in California, as specified.This bill would establish the California Community Reinvestment Act, and would require a covered financial institution, as defined, to have a continuing and affirmative obligation to meet the financial services needs of the communities, including low- and moderate-income communities and communities of color, in which the covered financial institution conducts substantial business, as specified. The bill would require the commissioner to assess the record of each covered financial institution in satisfying this obligation no less than once every 3 years, as specified. After each assessment, the bill would require the commissioner to assign one of 5 possible ratings to describe how the covered financial institution is meeting its community financial services needs, and to prepare a specified written evaluation of the covered financial institutions record of performance. The bill would authorize the commissioner to consider this record of performance when considering an application for, among other things, the establishment of a branch or the relocation of a main office. The bill would also prohibit a covered financial institution with certain ratings from receiving state funds for deposit or being awarded a state contract to provide financial services.This bill would also authorize the commissioner to conduct specified investigations into covered financial institutions for compliance with the act. The bill would also authorize the commissioner to examine, in consultation with state and federal regulators, covered financial institutions for their compliance with specified state and federal laws.This bill would establish the Community Reinvestment Fund within the State Treasury, and would make moneys in the fund available, upon appropriation by the Legislature, to the commissioner for purposes of administering these provisions. The bill would authorize the commissioner to issue an administrative penalty of up to $100,000 to a covered financial institution that regularly fails to meet its obligations under the act, and would require those penalties to be deposited in the fund.Existing federal law, the Home Mortgage Disclosure Act (HMDA), requires specified financial institutions, including certain banks, savings associations, and credit unions, to compile and make available to the public for inspection specific data about mortgage loans. Existing federal law, the Community Reinvestment Act (CRA), also requires regulated financial institutions, as defined, to be subject to certain assessments by federal agencies to ensure those financial institutions are acting consistently to meet the credit needs of the communities in which they are chartered.This bill would require the Department of Financial Protection and Innovation to conduct a peer group analysis of the mortgage-related activities of each licensee, as defined, as reflected in data provided pursuant to the HMDA. The bill would require the analysis to compare licensees within the same peer group along specified metrics and to use multivariate regression analysis or other statistical tools that control for applicant or borrower characteristics that affect identified outcomes, to the extent those characteristics are available. The bill would require the analysis to be made available to the public and posted on the departments internet website.The bill would require the department to seek information from regulators in other states that have enacted laws modeled after the CRA and identify best practices in administering those laws, review federal rules implementing the CRA, and provide recommendations on how the rules could be adapted and applied to examinations of licensees, as defined. The bill would further require the department, if any amendment is proposed to a federal rule implementing the CRA before June 30, 2023, to seek information from regulators in other states that have enacted laws modeled after the CRA to determine how changes in the federal rule have or may affect implementation of the state law. The bill would require the above-described information and recommendations to be summarized and made available to the public and posted on the departments internet website.The bill would require the department to also review its statutory authority, regulations, and processes related to the examination of a licensee and determine whether the department has adequate authority to examine a licensee for how well the licensee meets the financial services needs of underserved communities.The bill would require the department to provide summary reports of its findings pursuant to the above provisions to the respective chairpersons of specified legislative committees. The bill would include related legislative findings. | |
| 30 | 29 | ||
| 31 | - | Existing law establishes the Department of Financial Protection and Innovation, which is under the direction of the Commissioner of Financial Protection and Innovation. Existing law makes the department responsible for administering various laws relating to financial institutions, including banks and credit unions. | |
| 30 | + | Existing law establishes the Department of Financial Protection and Innovation, which is under the direction of the Commissioner of Financial Protection and Innovation. Existing law makes the department responsible for administering various laws relating to financial institutions, including banks and credit unions. Existing law, until January 1, 2030, establishes the Financial Empowerment Fund, and provides that moneys in the fund are continuously appropriated to the commissioner for allocation to fund financial education and financial empowerment programs and services for at-risk populations in California, as specified. | |
| 31 | + | ||
| 32 | + | This bill would establish the California Community Reinvestment Act, and would require a covered financial institution, as defined, to have a continuing and affirmative obligation to meet the financial services needs of the communities, including low- and moderate-income communities and communities of color, in which the covered financial institution conducts substantial business, as specified. The bill would require the commissioner to assess the record of each covered financial institution in satisfying this obligation no less than once every 3 years, as specified. After each assessment, the bill would require the commissioner to assign one of 5 possible ratings to describe how the covered financial institution is meeting its community financial services needs, and to prepare a specified written evaluation of the covered financial institutions record of performance. The bill would authorize the commissioner to consider this record of performance when considering an application for, among other things, the establishment of a branch or the relocation of a main office. The bill would also prohibit a covered financial institution with certain ratings from receiving state funds for deposit or being awarded a state contract to provide financial services. | |
| 33 | + | ||
| 34 | + | ||
| 35 | + | ||
| 36 | + | This bill would also authorize the commissioner to conduct specified investigations into covered financial institutions for compliance with the act. The bill would also authorize the commissioner to examine, in consultation with state and federal regulators, covered financial institutions for their compliance with specified state and federal laws. | |
| 37 | + | ||
| 38 | + | ||
| 39 | + | ||
| 40 | + | This bill would establish the Community Reinvestment Fund within the State Treasury, and would make moneys in the fund available, upon appropriation by the Legislature, to the commissioner for purposes of administering these provisions. The bill would authorize the commissioner to issue an administrative penalty of up to $100,000 to a covered financial institution that regularly fails to meet its obligations under the act, and would require those penalties to be deposited in the fund. | |
| 41 | + | ||
| 42 | + | ||
| 32 | 43 | ||
| 33 | 44 | Existing federal law, the Home Mortgage Disclosure Act (HMDA), requires specified financial institutions, including certain banks, savings associations, and credit unions, to compile and make available to the public for inspection specific data about mortgage loans. Existing federal law, the Community Reinvestment Act (CRA), also requires regulated financial institutions, as defined, to be subject to certain assessments by federal agencies to ensure those financial institutions are acting consistently to meet the credit needs of the communities in which they are chartered. | |
| 34 | 45 | ||
| 35 | - | This bill would require the Department of Financial Protection and Innovation to conduct a peer group analysis of the mortgage-related activities of each licensee, as defined, as reflected in data provided pursuant to the HMDA. The bill would require the analysis to compare licensees within the same peer group along specified metrics and to use multivariate regression analysis or other statistical tools that control for applicant or borrower characteristics that affect identified outcomes, to the extent those characteristics are available. | |
| 46 | + | This bill would require the Department of Financial Protection and Innovation to conduct a peer group analysis of the mortgage-related activities of each licensee, as defined, as reflected in data provided pursuant to the HMDA. The bill would require the analysis to compare licensees within the same peer group along specified metrics and to use multivariate regression analysis or other statistical tools that control for applicant or borrower characteristics that affect identified outcomes, to the extent those characteristics are available. The bill would require the analysis to be made available to the public and posted on the departments internet website. | |
| 36 | 47 | ||
| 37 | - | The bill would require the department to seek information from regulators in other states that have enacted laws modeled after the CRA and identify best practices in administering those laws, review federal rules implementing the CRA, and provide recommendations on how the rules could be adapted and applied to examinations of licensees, as defined. The bill would further require the department, if any amendment is proposed to a federal rule implementing the CRA before June 30, 2023, to seek information from regulators in other states that have enacted laws modeled after the CRA to determine how changes in the federal rule have or may affect implementation of the state law. | |
| 48 | + | The bill would require the department to seek information from regulators in other states that have enacted laws modeled after the CRA and identify best practices in administering those laws, review federal rules implementing the CRA, and provide recommendations on how the rules could be adapted and applied to examinations of licensees, as defined. The bill would further require the department, if any amendment is proposed to a federal rule implementing the CRA before June 30, 2023, to seek information from regulators in other states that have enacted laws modeled after the CRA to determine how changes in the federal rule have or may affect implementation of the state law. The bill would require the above-described information and recommendations to be summarized and made available to the public and posted on the departments internet website. | |
| 38 | 49 | ||
| 39 | 50 | The bill would require the department to also review its statutory authority, regulations, and processes related to the examination of a licensee and determine whether the department has adequate authority to examine a licensee for how well the licensee meets the financial services needs of underserved communities. | |
| 40 | 51 | ||
| 41 | 52 | The bill would require the department to provide summary reports of its findings pursuant to the above provisions to the respective chairpersons of specified legislative committees. The bill would include related legislative findings. | |
| 42 | 53 | ||
| 43 | 54 | ## Digest Key | |
| 44 | 55 | ||
| 45 | 56 | ## Bill Text | |
| 46 | 57 | ||
| 47 | - | The people of the State of California do enact as follows:SECTION 1. The Legislature finds and declares all of the following:(a) According to the Federal Reserve Bank of San Francisco, low-income consumers and consumers of color are less likely to have traditional banking relationships than consumers with average incomes or White consumers. Disparities in access to basic financial services is one factor that results in disparities in access to credit. Across mortgage, small business, and auto loans, Black and Hispanic consumers are more likely to be denied credit or receive higher interest rates when they do get a loan. Secret shopper studies have shown that Black and Hispanic consumers receive different information from bankers when applying for loans as well. The more limited availability of traditional, affordable credit may push these consumers into predatory products or those with very high interest rates, like payday loans, or may result in reliance on traditionalbut more expensivetypes of debt, like credit cards.(b) The Department of Financial Protection and Innovation regulates and oversees providers of financial services and products in California. Among its duties, the department administers licensing programs that cover state banks, state credit unions, independent mortgage companies, nonbank lenders, and certain financial technology companies that provide payment services or make loans. While the department examines these companies for compliance with the requirements and prohibitions of applicable licensing laws, these laws do not authorize or direct the department to evaluate how well these companies are serving the needs of underserved communities.(c) In 2020, the Legislature passed and the Governor signed Assembly Bill 1864 (Limn) (Chapter 157), which provided the Department of Financial Protection and Innovation (DFPI) with flexible authority to regulate and oversee providers of financial services that are not covered by existing licensing laws. The authority provided by AB 1864 was modeled after the authority provided by Congress to the Consumer Financial Protection Bureau, including authority to investigate and bring enforcement actions against unfair, deceptive, or abusive acts or practices. On March 16, 2022, the Consumer Financial Protection Bureau announced that it would expand its antidiscrimination efforts to combat discriminatory practices across the board in consumer finance, as such practices may constitute an unfair act or practice.(d) In 1977, the federal government enacted the Community Reinvestment Act, which establishes a continuing and affirmative obligation for banks to help meet the credit needs of the local communities in which they are chartered and instructs the federal banking regulators to assess banks on how well they meet the credit needs of their communities. The Community Reinvestment Act does not cover credit unions, independent mortgage companies, or other nonbank financial service providers, all of which have grown in importance and market share in the financial services industry since 1977.(e) It is the intent of the Legislature to enact this division to begin the process of increasing the priority of equity and the needs of underserved communities in the supervisory and regulatory activities of the Department of Financial Protection and Innovation, as such activities relate to licensees of the department.SEC. 2. Division 26 (commencing with Section 100100) is added to the Financial Code, to read:DIVISION 26. Examining Equity in Financial Services100100. For purposes of this division, the following definitions apply:(a) Department means the Department of Financial Protection and Innovation.(b) Licensee means a bank, savings association, credit union, finance lender, or residential mortgage lender.100101. (a) The department shall conduct a peer group analysis of each licensees mortgage-related activities as reflected in | |
| 58 | + | The people of the State of California do enact as follows:SECTION 1. The Legislature finds and declares all of the following:(a) According to the Federal Reserve Bank of San Francisco, low-income consumers and consumers of color are less likely to have traditional banking relationships than consumers with average incomes or White consumers. Disparities in access to basic financial services is one factor that results in disparities in access to credit. Across mortgage, small business, and auto loans, Black and Hispanic consumers are more likely to be denied credit or receive higher interest rates when they do get a loan. Secret shopper studies have shown that Black and Hispanic consumers receive different information from bankers when applying for loans as well. The more limited availability of traditional, affordable credit may push these consumers into predatory products or those with very high interest rates, like payday loans, or may result in reliance on traditionalbut more expensivetypes of debt, like credit cards.(b) The Department of Financial Protection and Innovation regulates and oversees providers of financial services and products in California. Among its duties, the department administers licensing programs that cover state banks, state credit unions, independent mortgage companies, nonbank lenders, and certain financial technology companies that provide payment services or make loans. While the department examines these companies for compliance with the requirements and prohibitions of applicable licensing laws, these laws do not authorize or direct the department to evaluate how well these companies are serving the needs of underserved communities.(c) In 2020, the Legislature passed and the Governor signed Assembly Bill 1864 (Limn) (Chapter 157), which provided the Department of Financial Protection and Innovation (DFPI) with flexible authority to regulate and oversee providers of financial services that are not covered by existing licensing laws. The authority provided by AB 1864 was modeled after the authority provided by Congress to the Consumer Financial Protection Bureau, including authority to investigate and bring enforcement actions against unfair, deceptive, or abusive acts or practices. On March 16, 2022, the Consumer Financial Protection Bureau announced that it would expand its antidiscrimination efforts to combat discriminatory practices across the board in consumer finance, as such practices may constitute an unfair act or practice.(d) In 1977, the federal government enacted the Community Reinvestment Act, which establishes a continuing and affirmative obligation for banks to help meet the credit needs of the local communities in which they are chartered and instructs the federal banking regulators to assess banks on how well they meet the credit needs of their communities. The Community Reinvestment Act does not cover credit unions, independent mortgage companies, or other nonbank financial service providers, all of which have grown in importance and market share in the financial services industry since 1977.(e) It is the intent of the Legislature to enact this division to begin the process of increasing the priority of equity and the needs of underserved communities in the supervisory and regulatory activities of the Department of Financial Protection and Innovation, as such activities relate to licensees of the department.SEC. 2. Division 26 (commencing with Section 100100) is added to the Financial Code, to read:DIVISION 26. Examining Equity in Financial Services100100. For purposes of this division, the following definitions apply:(a) Department means the Department of Financial Protection and Innovation.(b) Licensee means a bank, savings association, credit union, finance lender, or residential mortgage lender.100101. (a) The department shall conduct a peer group analysis of each licensees mortgage-related activities as reflected in data provided pursuant to the federal Home Mortgage Disclosure Act (12 U.S.C. Sec. 2801 et seq.). The analysis shall compare licensees within the same peer group along the following metrics:(1) Loan approval rates by income and by race and ethnicity.(2) Loan costs, including interest rates and closing costs, by income and by race and ethnicity.(3) The mix of loan types by income and by race and ethnicity.(b) The analysis shall use multivariate regression analysis or other statistical tools that control for applicant or borrower characteristics that affect outcomes identified in paragraphs (1) to (3), inclusive, of subdivision (a), to the extent that such characteristics are available. (c) The analysis required by this section shall be made available to the public and posted on the departments internet website.(d) (1) On or before ____, the department shall provide a summary report of its findings pursuant to this section to the respective chairpersons of the Senate Banking and Financial Institutions Committee and the Assembly Banking and Finance Committee.(2) The requirement for submitting a report imposed under paragraph (1) shall be inoperative on ____, pursuant to Section 10231.5 of the Government Code.(3) A report to be submitted pursuant to paragraph (1) shall be submitted in compliance with Section 9795 of the Government Code.100102. (a) The department shall seek information from regulators in other states that have enacted laws modeled after the Community Reinvestment Act (12 USC Sec. 2901) and identify best practices in administering such laws.(b) The department shall review the federal rules implementing the Community Reinvestment Act and provide recommendations on how the rules could be adapted and applied to examinations of licensees.(c) If any amendment is proposed to a federal rule implementing the Community Reinvestment Act before June 30, 2023, the department shall seek information from regulators in other states that have enacted laws modeled after the Community Reinvestment Act to determine how changes in the federal rule have or may affect the implementation of the state law.(d) The information required to be identified and the recommendations required by this section shall be summarized and made available to the public and posted on the departments internet website. (e) (1) On or before ____, the department shall provide a summary report of its findings pursuant to this section to the respective chairpersons of the Senate Committee on Banking and Financial Institutions and the Assembly Committee on Banking and Finance. (2) The requirement for submitting a report imposed under paragraph (1) is inoperative on ____, pursuant to Section 10231.5 of the Government Code.(3) A report to be submitted pursuant to paragraph (1) shall be submitted in compliance with Section 9795 of the Government Code.100103. (a) The department shall review its statutory authority, regulations, and processes related to the examination of a licensee and determine whether the department has adequate authority to examine a licensee for how well the licensee meets the financial services needs of underserved communities.(b) (1) On or before ____, the department shall provide a summary report of its findings pursuant to this section to the respective chairpersons of the Senate Committee on Banking and Financial Institutions and the Assembly Committee on Banking and Finance.(2) The requirement for submitting a report imposed under paragraph (1) is inoperative on ____, pursuant to Section 10231.5 of the Government Code.(3) A report to be submitted pursuant to paragraph (1) shall be submitted in compliance with Section 9795 of the Government Code. | |
| 48 | 59 | ||
| 49 | 60 | The people of the State of California do enact as follows: | |
| 50 | 61 | ||
| 51 | 62 | ## The people of the State of California do enact as follows: | |
| 52 | 63 | ||
| 53 | 64 | SECTION 1. The Legislature finds and declares all of the following:(a) According to the Federal Reserve Bank of San Francisco, low-income consumers and consumers of color are less likely to have traditional banking relationships than consumers with average incomes or White consumers. Disparities in access to basic financial services is one factor that results in disparities in access to credit. Across mortgage, small business, and auto loans, Black and Hispanic consumers are more likely to be denied credit or receive higher interest rates when they do get a loan. Secret shopper studies have shown that Black and Hispanic consumers receive different information from bankers when applying for loans as well. The more limited availability of traditional, affordable credit may push these consumers into predatory products or those with very high interest rates, like payday loans, or may result in reliance on traditionalbut more expensivetypes of debt, like credit cards.(b) The Department of Financial Protection and Innovation regulates and oversees providers of financial services and products in California. Among its duties, the department administers licensing programs that cover state banks, state credit unions, independent mortgage companies, nonbank lenders, and certain financial technology companies that provide payment services or make loans. While the department examines these companies for compliance with the requirements and prohibitions of applicable licensing laws, these laws do not authorize or direct the department to evaluate how well these companies are serving the needs of underserved communities.(c) In 2020, the Legislature passed and the Governor signed Assembly Bill 1864 (Limn) (Chapter 157), which provided the Department of Financial Protection and Innovation (DFPI) with flexible authority to regulate and oversee providers of financial services that are not covered by existing licensing laws. The authority provided by AB 1864 was modeled after the authority provided by Congress to the Consumer Financial Protection Bureau, including authority to investigate and bring enforcement actions against unfair, deceptive, or abusive acts or practices. On March 16, 2022, the Consumer Financial Protection Bureau announced that it would expand its antidiscrimination efforts to combat discriminatory practices across the board in consumer finance, as such practices may constitute an unfair act or practice.(d) In 1977, the federal government enacted the Community Reinvestment Act, which establishes a continuing and affirmative obligation for banks to help meet the credit needs of the local communities in which they are chartered and instructs the federal banking regulators to assess banks on how well they meet the credit needs of their communities. The Community Reinvestment Act does not cover credit unions, independent mortgage companies, or other nonbank financial service providers, all of which have grown in importance and market share in the financial services industry since 1977.(e) It is the intent of the Legislature to enact this division to begin the process of increasing the priority of equity and the needs of underserved communities in the supervisory and regulatory activities of the Department of Financial Protection and Innovation, as such activities relate to licensees of the department. | |
| 54 | 65 | ||
| 55 | 66 | SECTION 1. The Legislature finds and declares all of the following:(a) According to the Federal Reserve Bank of San Francisco, low-income consumers and consumers of color are less likely to have traditional banking relationships than consumers with average incomes or White consumers. Disparities in access to basic financial services is one factor that results in disparities in access to credit. Across mortgage, small business, and auto loans, Black and Hispanic consumers are more likely to be denied credit or receive higher interest rates when they do get a loan. Secret shopper studies have shown that Black and Hispanic consumers receive different information from bankers when applying for loans as well. The more limited availability of traditional, affordable credit may push these consumers into predatory products or those with very high interest rates, like payday loans, or may result in reliance on traditionalbut more expensivetypes of debt, like credit cards.(b) The Department of Financial Protection and Innovation regulates and oversees providers of financial services and products in California. Among its duties, the department administers licensing programs that cover state banks, state credit unions, independent mortgage companies, nonbank lenders, and certain financial technology companies that provide payment services or make loans. While the department examines these companies for compliance with the requirements and prohibitions of applicable licensing laws, these laws do not authorize or direct the department to evaluate how well these companies are serving the needs of underserved communities.(c) In 2020, the Legislature passed and the Governor signed Assembly Bill 1864 (Limn) (Chapter 157), which provided the Department of Financial Protection and Innovation (DFPI) with flexible authority to regulate and oversee providers of financial services that are not covered by existing licensing laws. The authority provided by AB 1864 was modeled after the authority provided by Congress to the Consumer Financial Protection Bureau, including authority to investigate and bring enforcement actions against unfair, deceptive, or abusive acts or practices. On March 16, 2022, the Consumer Financial Protection Bureau announced that it would expand its antidiscrimination efforts to combat discriminatory practices across the board in consumer finance, as such practices may constitute an unfair act or practice.(d) In 1977, the federal government enacted the Community Reinvestment Act, which establishes a continuing and affirmative obligation for banks to help meet the credit needs of the local communities in which they are chartered and instructs the federal banking regulators to assess banks on how well they meet the credit needs of their communities. The Community Reinvestment Act does not cover credit unions, independent mortgage companies, or other nonbank financial service providers, all of which have grown in importance and market share in the financial services industry since 1977.(e) It is the intent of the Legislature to enact this division to begin the process of increasing the priority of equity and the needs of underserved communities in the supervisory and regulatory activities of the Department of Financial Protection and Innovation, as such activities relate to licensees of the department. | |
| 56 | 67 | ||
| 57 | 68 | SECTION 1. The Legislature finds and declares all of the following: | |
| 58 | 69 | ||
| 59 | 70 | ### SECTION 1. | |
| 60 | 71 | ||
| 61 | 72 | (a) According to the Federal Reserve Bank of San Francisco, low-income consumers and consumers of color are less likely to have traditional banking relationships than consumers with average incomes or White consumers. Disparities in access to basic financial services is one factor that results in disparities in access to credit. Across mortgage, small business, and auto loans, Black and Hispanic consumers are more likely to be denied credit or receive higher interest rates when they do get a loan. Secret shopper studies have shown that Black and Hispanic consumers receive different information from bankers when applying for loans as well. The more limited availability of traditional, affordable credit may push these consumers into predatory products or those with very high interest rates, like payday loans, or may result in reliance on traditionalbut more expensivetypes of debt, like credit cards. | |
| 62 | 73 | ||
| 63 | 74 | (b) The Department of Financial Protection and Innovation regulates and oversees providers of financial services and products in California. Among its duties, the department administers licensing programs that cover state banks, state credit unions, independent mortgage companies, nonbank lenders, and certain financial technology companies that provide payment services or make loans. While the department examines these companies for compliance with the requirements and prohibitions of applicable licensing laws, these laws do not authorize or direct the department to evaluate how well these companies are serving the needs of underserved communities. | |
| 64 | 75 | ||
| 65 | 76 | (c) In 2020, the Legislature passed and the Governor signed Assembly Bill 1864 (Limn) (Chapter 157), which provided the Department of Financial Protection and Innovation (DFPI) with flexible authority to regulate and oversee providers of financial services that are not covered by existing licensing laws. The authority provided by AB 1864 was modeled after the authority provided by Congress to the Consumer Financial Protection Bureau, including authority to investigate and bring enforcement actions against unfair, deceptive, or abusive acts or practices. On March 16, 2022, the Consumer Financial Protection Bureau announced that it would expand its antidiscrimination efforts to combat discriminatory practices across the board in consumer finance, as such practices may constitute an unfair act or practice. | |
| 66 | 77 | ||
| 67 | 78 | (d) In 1977, the federal government enacted the Community Reinvestment Act, which establishes a continuing and affirmative obligation for banks to help meet the credit needs of the local communities in which they are chartered and instructs the federal banking regulators to assess banks on how well they meet the credit needs of their communities. The Community Reinvestment Act does not cover credit unions, independent mortgage companies, or other nonbank financial service providers, all of which have grown in importance and market share in the financial services industry since 1977. | |
| 68 | 79 | ||
| 69 | 80 | (e) It is the intent of the Legislature to enact this division to begin the process of increasing the priority of equity and the needs of underserved communities in the supervisory and regulatory activities of the Department of Financial Protection and Innovation, as such activities relate to licensees of the department. | |
| 70 | 81 | ||
| 71 | - | SEC. 2. Division 26 (commencing with Section 100100) is added to the Financial Code, to read:DIVISION 26. Examining Equity in Financial Services100100. For purposes of this division, the following definitions apply:(a) Department means the Department of Financial Protection and Innovation.(b) Licensee means a bank, savings association, credit union, finance lender, or residential mortgage lender.100101. (a) The department shall conduct a peer group analysis of each licensees mortgage-related activities as reflected in | |
| 82 | + | SEC. 2. Division 26 (commencing with Section 100100) is added to the Financial Code, to read:DIVISION 26. Examining Equity in Financial Services100100. For purposes of this division, the following definitions apply:(a) Department means the Department of Financial Protection and Innovation.(b) Licensee means a bank, savings association, credit union, finance lender, or residential mortgage lender.100101. (a) The department shall conduct a peer group analysis of each licensees mortgage-related activities as reflected in data provided pursuant to the federal Home Mortgage Disclosure Act (12 U.S.C. Sec. 2801 et seq.). The analysis shall compare licensees within the same peer group along the following metrics:(1) Loan approval rates by income and by race and ethnicity.(2) Loan costs, including interest rates and closing costs, by income and by race and ethnicity.(3) The mix of loan types by income and by race and ethnicity.(b) The analysis shall use multivariate regression analysis or other statistical tools that control for applicant or borrower characteristics that affect outcomes identified in paragraphs (1) to (3), inclusive, of subdivision (a), to the extent that such characteristics are available. (c) The analysis required by this section shall be made available to the public and posted on the departments internet website.(d) (1) On or before ____, the department shall provide a summary report of its findings pursuant to this section to the respective chairpersons of the Senate Banking and Financial Institutions Committee and the Assembly Banking and Finance Committee.(2) The requirement for submitting a report imposed under paragraph (1) shall be inoperative on ____, pursuant to Section 10231.5 of the Government Code.(3) A report to be submitted pursuant to paragraph (1) shall be submitted in compliance with Section 9795 of the Government Code.100102. (a) The department shall seek information from regulators in other states that have enacted laws modeled after the Community Reinvestment Act (12 USC Sec. 2901) and identify best practices in administering such laws.(b) The department shall review the federal rules implementing the Community Reinvestment Act and provide recommendations on how the rules could be adapted and applied to examinations of licensees.(c) If any amendment is proposed to a federal rule implementing the Community Reinvestment Act before June 30, 2023, the department shall seek information from regulators in other states that have enacted laws modeled after the Community Reinvestment Act to determine how changes in the federal rule have or may affect the implementation of the state law.(d) The information required to be identified and the recommendations required by this section shall be summarized and made available to the public and posted on the departments internet website. (e) (1) On or before ____, the department shall provide a summary report of its findings pursuant to this section to the respective chairpersons of the Senate Committee on Banking and Financial Institutions and the Assembly Committee on Banking and Finance. (2) The requirement for submitting a report imposed under paragraph (1) is inoperative on ____, pursuant to Section 10231.5 of the Government Code.(3) A report to be submitted pursuant to paragraph (1) shall be submitted in compliance with Section 9795 of the Government Code.100103. (a) The department shall review its statutory authority, regulations, and processes related to the examination of a licensee and determine whether the department has adequate authority to examine a licensee for how well the licensee meets the financial services needs of underserved communities.(b) (1) On or before ____, the department shall provide a summary report of its findings pursuant to this section to the respective chairpersons of the Senate Committee on Banking and Financial Institutions and the Assembly Committee on Banking and Finance.(2) The requirement for submitting a report imposed under paragraph (1) is inoperative on ____, pursuant to Section 10231.5 of the Government Code.(3) A report to be submitted pursuant to paragraph (1) shall be submitted in compliance with Section 9795 of the Government Code. | |
| 72 | 83 | ||
| 73 | 84 | SEC. 2. Division 26 (commencing with Section 100100) is added to the Financial Code, to read: | |
| 74 | 85 | ||
| 75 | 86 | ### SEC. 2. | |
| 76 | 87 | ||
| 77 | - | DIVISION 26. Examining Equity in Financial Services100100. For purposes of this division, the following definitions apply:(a) Department means the Department of Financial Protection and Innovation.(b) Licensee means a bank, savings association, credit union, finance lender, or residential mortgage lender.100101. (a) The department shall conduct a peer group analysis of each licensees mortgage-related activities as reflected in | |
| 88 | + | DIVISION 26. Examining Equity in Financial Services100100. For purposes of this division, the following definitions apply:(a) Department means the Department of Financial Protection and Innovation.(b) Licensee means a bank, savings association, credit union, finance lender, or residential mortgage lender.100101. (a) The department shall conduct a peer group analysis of each licensees mortgage-related activities as reflected in data provided pursuant to the federal Home Mortgage Disclosure Act (12 U.S.C. Sec. 2801 et seq.). The analysis shall compare licensees within the same peer group along the following metrics:(1) Loan approval rates by income and by race and ethnicity.(2) Loan costs, including interest rates and closing costs, by income and by race and ethnicity.(3) The mix of loan types by income and by race and ethnicity.(b) The analysis shall use multivariate regression analysis or other statistical tools that control for applicant or borrower characteristics that affect outcomes identified in paragraphs (1) to (3), inclusive, of subdivision (a), to the extent that such characteristics are available. (c) The analysis required by this section shall be made available to the public and posted on the departments internet website.(d) (1) On or before ____, the department shall provide a summary report of its findings pursuant to this section to the respective chairpersons of the Senate Banking and Financial Institutions Committee and the Assembly Banking and Finance Committee.(2) The requirement for submitting a report imposed under paragraph (1) shall be inoperative on ____, pursuant to Section 10231.5 of the Government Code.(3) A report to be submitted pursuant to paragraph (1) shall be submitted in compliance with Section 9795 of the Government Code.100102. (a) The department shall seek information from regulators in other states that have enacted laws modeled after the Community Reinvestment Act (12 USC Sec. 2901) and identify best practices in administering such laws.(b) The department shall review the federal rules implementing the Community Reinvestment Act and provide recommendations on how the rules could be adapted and applied to examinations of licensees.(c) If any amendment is proposed to a federal rule implementing the Community Reinvestment Act before June 30, 2023, the department shall seek information from regulators in other states that have enacted laws modeled after the Community Reinvestment Act to determine how changes in the federal rule have or may affect the implementation of the state law.(d) The information required to be identified and the recommendations required by this section shall be summarized and made available to the public and posted on the departments internet website. (e) (1) On or before ____, the department shall provide a summary report of its findings pursuant to this section to the respective chairpersons of the Senate Committee on Banking and Financial Institutions and the Assembly Committee on Banking and Finance. (2) The requirement for submitting a report imposed under paragraph (1) is inoperative on ____, pursuant to Section 10231.5 of the Government Code.(3) A report to be submitted pursuant to paragraph (1) shall be submitted in compliance with Section 9795 of the Government Code.100103. (a) The department shall review its statutory authority, regulations, and processes related to the examination of a licensee and determine whether the department has adequate authority to examine a licensee for how well the licensee meets the financial services needs of underserved communities.(b) (1) On or before ____, the department shall provide a summary report of its findings pursuant to this section to the respective chairpersons of the Senate Committee on Banking and Financial Institutions and the Assembly Committee on Banking and Finance.(2) The requirement for submitting a report imposed under paragraph (1) is inoperative on ____, pursuant to Section 10231.5 of the Government Code.(3) A report to be submitted pursuant to paragraph (1) shall be submitted in compliance with Section 9795 of the Government Code. | |
| 78 | 89 | ||
| 79 | - | DIVISION 26. Examining Equity in Financial Services100100. For purposes of this division, the following definitions apply:(a) Department means the Department of Financial Protection and Innovation.(b) Licensee means a bank, savings association, credit union, finance lender, or residential mortgage lender.100101. (a) The department shall conduct a peer group analysis of each licensees mortgage-related activities as reflected in | |
| 90 | + | DIVISION 26. Examining Equity in Financial Services100100. For purposes of this division, the following definitions apply:(a) Department means the Department of Financial Protection and Innovation.(b) Licensee means a bank, savings association, credit union, finance lender, or residential mortgage lender.100101. (a) The department shall conduct a peer group analysis of each licensees mortgage-related activities as reflected in data provided pursuant to the federal Home Mortgage Disclosure Act (12 U.S.C. Sec. 2801 et seq.). The analysis shall compare licensees within the same peer group along the following metrics:(1) Loan approval rates by income and by race and ethnicity.(2) Loan costs, including interest rates and closing costs, by income and by race and ethnicity.(3) The mix of loan types by income and by race and ethnicity.(b) The analysis shall use multivariate regression analysis or other statistical tools that control for applicant or borrower characteristics that affect outcomes identified in paragraphs (1) to (3), inclusive, of subdivision (a), to the extent that such characteristics are available. (c) The analysis required by this section shall be made available to the public and posted on the departments internet website.(d) (1) On or before ____, the department shall provide a summary report of its findings pursuant to this section to the respective chairpersons of the Senate Banking and Financial Institutions Committee and the Assembly Banking and Finance Committee.(2) The requirement for submitting a report imposed under paragraph (1) shall be inoperative on ____, pursuant to Section 10231.5 of the Government Code.(3) A report to be submitted pursuant to paragraph (1) shall be submitted in compliance with Section 9795 of the Government Code.100102. (a) The department shall seek information from regulators in other states that have enacted laws modeled after the Community Reinvestment Act (12 USC Sec. 2901) and identify best practices in administering such laws.(b) The department shall review the federal rules implementing the Community Reinvestment Act and provide recommendations on how the rules could be adapted and applied to examinations of licensees.(c) If any amendment is proposed to a federal rule implementing the Community Reinvestment Act before June 30, 2023, the department shall seek information from regulators in other states that have enacted laws modeled after the Community Reinvestment Act to determine how changes in the federal rule have or may affect the implementation of the state law.(d) The information required to be identified and the recommendations required by this section shall be summarized and made available to the public and posted on the departments internet website. (e) (1) On or before ____, the department shall provide a summary report of its findings pursuant to this section to the respective chairpersons of the Senate Committee on Banking and Financial Institutions and the Assembly Committee on Banking and Finance. (2) The requirement for submitting a report imposed under paragraph (1) is inoperative on ____, pursuant to Section 10231.5 of the Government Code.(3) A report to be submitted pursuant to paragraph (1) shall be submitted in compliance with Section 9795 of the Government Code.100103. (a) The department shall review its statutory authority, regulations, and processes related to the examination of a licensee and determine whether the department has adequate authority to examine a licensee for how well the licensee meets the financial services needs of underserved communities.(b) (1) On or before ____, the department shall provide a summary report of its findings pursuant to this section to the respective chairpersons of the Senate Committee on Banking and Financial Institutions and the Assembly Committee on Banking and Finance.(2) The requirement for submitting a report imposed under paragraph (1) is inoperative on ____, pursuant to Section 10231.5 of the Government Code.(3) A report to be submitted pursuant to paragraph (1) shall be submitted in compliance with Section 9795 of the Government Code. | |
| 80 | 91 | ||
| 81 | 92 | DIVISION 26. Examining Equity in Financial Services | |
| 82 | 93 | ||
| 83 | 94 | DIVISION 26. Examining Equity in Financial Services | |
| 84 | 95 | ||
| 85 | 96 | 100100. For purposes of this division, the following definitions apply:(a) Department means the Department of Financial Protection and Innovation.(b) Licensee means a bank, savings association, credit union, finance lender, or residential mortgage lender. | |
| 86 | 97 | ||
| 87 | 98 | ||
| 88 | 99 | ||
| 89 | 100 | 100100. For purposes of this division, the following definitions apply: | |
| 90 | 101 | ||
| 91 | 102 | (a) Department means the Department of Financial Protection and Innovation. | |
| 92 | 103 | ||
| 93 | 104 | (b) Licensee means a bank, savings association, credit union, finance lender, or residential mortgage lender. | |
| 94 | 105 | ||
| 95 | - | 100101. (a) The department shall conduct a peer group analysis of each licensees mortgage-related activities as reflected in | |
| 106 | + | 100101. (a) The department shall conduct a peer group analysis of each licensees mortgage-related activities as reflected in data provided pursuant to the federal Home Mortgage Disclosure Act (12 U.S.C. Sec. 2801 et seq.). The analysis shall compare licensees within the same peer group along the following metrics:(1) Loan approval rates by income and by race and ethnicity.(2) Loan costs, including interest rates and closing costs, by income and by race and ethnicity.(3) The mix of loan types by income and by race and ethnicity.(b) The analysis shall use multivariate regression analysis or other statistical tools that control for applicant or borrower characteristics that affect outcomes identified in paragraphs (1) to (3), inclusive, of subdivision (a), to the extent that such characteristics are available. (c) The analysis required by this section shall be made available to the public and posted on the departments internet website.(d) (1) On or before ____, the department shall provide a summary report of its findings pursuant to this section to the respective chairpersons of the Senate Banking and Financial Institutions Committee and the Assembly Banking and Finance Committee.(2) The requirement for submitting a report imposed under paragraph (1) shall be inoperative on ____, pursuant to Section 10231.5 of the Government Code.(3) A report to be submitted pursuant to paragraph (1) shall be submitted in compliance with Section 9795 of the Government Code. | |
| 96 | 107 | ||
| 97 | 108 | ||
| 98 | 109 | ||
| 99 | - | 100101. (a) The department shall conduct a peer group analysis of each licensees mortgage-related activities as reflected in | |
| 110 | + | 100101. (a) The department shall conduct a peer group analysis of each licensees mortgage-related activities as reflected in data provided pursuant to the federal Home Mortgage Disclosure Act (12 U.S.C. Sec. 2801 et seq.). The analysis shall compare licensees within the same peer group along the following metrics: | |
| 100 | 111 | ||
| 101 | - | (1) Loan | |
| 112 | + | (1) Loan approval rates by income and by race and ethnicity. | |
| 102 | 113 | ||
| 103 | - | (2) Loan costs, including | |
| 114 | + | (2) Loan costs, including interest rates and closing costs, by income and by race and ethnicity. | |
| 104 | 115 | ||
| 105 | 116 | (3) The mix of loan types by income and by race and ethnicity. | |
| 106 | 117 | ||
| 107 | - | (b) The analysis shall use multivariate regression analysis or other statistical tools that control for applicant or borrower characteristics that affect outcomes identified in paragraphs (1) to (3), inclusive, of subdivision (a), to the extent that such characteristics are available. | |
| 118 | + | (b) The analysis shall use multivariate regression analysis or other statistical tools that control for applicant or borrower characteristics that affect outcomes identified in paragraphs (1) to (3), inclusive, of subdivision (a), to the extent that such characteristics are available. | |
| 108 | 119 | ||
| 109 | 120 | (c) The analysis required by this section shall be made available to the public and posted on the departments internet website. | |
| 110 | 121 | ||
| 111 | 122 | (d) (1) On or before ____, the department shall provide a summary report of its findings pursuant to this section to the respective chairpersons of the Senate Banking and Financial Institutions Committee and the Assembly Banking and Finance Committee. | |
| 112 | 123 | ||
| 113 | 124 | (2) The requirement for submitting a report imposed under paragraph (1) shall be inoperative on ____, pursuant to Section 10231.5 of the Government Code. | |
| 114 | 125 | ||
| 115 | 126 | (3) A report to be submitted pursuant to paragraph (1) shall be submitted in compliance with Section 9795 of the Government Code. | |
| 116 | 127 | ||
| 117 | - | 100102. (a) The department shall seek information from regulators in other states that have enacted laws modeled after the Community Reinvestment Act (12 USC Sec. 2901) and identify best practices in administering such laws. | |
| 128 | + | 100102. (a) The department shall seek information from regulators in other states that have enacted laws modeled after the Community Reinvestment Act (12 USC Sec. 2901) and identify best practices in administering such laws.(b) The department shall review the federal rules implementing the Community Reinvestment Act and provide recommendations on how the rules could be adapted and applied to examinations of licensees.(c) If any amendment is proposed to a federal rule implementing the Community Reinvestment Act before June 30, 2023, the department shall seek information from regulators in other states that have enacted laws modeled after the Community Reinvestment Act to determine how changes in the federal rule have or may affect the implementation of the state law.(d) The information required to be identified and the recommendations required by this section shall be summarized and made available to the public and posted on the departments internet website. (e) (1) On or before ____, the department shall provide a summary report of its findings pursuant to this section to the respective chairpersons of the Senate Committee on Banking and Financial Institutions and the Assembly Committee on Banking and Finance. (2) The requirement for submitting a report imposed under paragraph (1) is inoperative on ____, pursuant to Section 10231.5 of the Government Code.(3) A report to be submitted pursuant to paragraph (1) shall be submitted in compliance with Section 9795 of the Government Code. | |
| 118 | 129 | ||
| 119 | 130 | ||
| 120 | 131 | ||
| 121 | - | 100102. (a) The department shall seek information from regulators in other states that have enacted laws modeled after the Community Reinvestment Act (12 USC Sec. 2901) and identify best practices in administering such laws. | |
| 132 | + | 100102. (a) The department shall seek information from regulators in other states that have enacted laws modeled after the Community Reinvestment Act (12 USC Sec. 2901) and identify best practices in administering such laws. | |
| 122 | 133 | ||
| 123 | 134 | (b) The department shall review the federal rules implementing the Community Reinvestment Act and provide recommendations on how the rules could be adapted and applied to examinations of licensees. | |
| 124 | 135 | ||
| 125 | - | ||
| 126 | - | ||
| 127 | 136 | (c) If any amendment is proposed to a federal rule implementing the Community Reinvestment Act before June 30, 2023, the department shall seek information from regulators in other states that have enacted laws modeled after the Community Reinvestment Act to determine how changes in the federal rule have or may affect the implementation of the state law. | |
| 128 | 137 | ||
| 138 | + | (d) The information required to be identified and the recommendations required by this section shall be summarized and made available to the public and posted on the departments internet website. | |
| 129 | 139 | ||
| 130 | - | ||
| 131 | - | (d) | |
| 132 | - | ||
| 133 | - | ||
| 134 | - | ||
| 135 | - | (b) The information required to be identified and the recommendations required by this section shall be summarized and made available to the public and posted on the departments internet website. | |
| 136 | - | ||
| 137 | - | (e) | |
| 138 | - | ||
| 139 | - | ||
| 140 | - | ||
| 141 | - | (c) (1) On or before ____, the department shall provide a summary report of its findings pursuant to this section to the respective chairpersons of the Senate Committee on Banking and Financial Institutions and the Assembly Committee on Banking and Finance. | |
| 140 | + | (e) (1) On or before ____, the department shall provide a summary report of its findings pursuant to this section to the respective chairpersons of the Senate Committee on Banking and Financial Institutions and the Assembly Committee on Banking and Finance. | |
| 142 | 141 | ||
| 143 | 142 | (2) The requirement for submitting a report imposed under paragraph (1) is inoperative on ____, pursuant to Section 10231.5 of the Government Code. | |
| 144 | 143 | ||
| 145 | 144 | (3) A report to be submitted pursuant to paragraph (1) shall be submitted in compliance with Section 9795 of the Government Code. | |
| 146 | 145 | ||
| 147 | 146 | 100103. (a) The department shall review its statutory authority, regulations, and processes related to the examination of a licensee and determine whether the department has adequate authority to examine a licensee for how well the licensee meets the financial services needs of underserved communities.(b) (1) On or before ____, the department shall provide a summary report of its findings pursuant to this section to the respective chairpersons of the Senate Committee on Banking and Financial Institutions and the Assembly Committee on Banking and Finance.(2) The requirement for submitting a report imposed under paragraph (1) is inoperative on ____, pursuant to Section 10231.5 of the Government Code.(3) A report to be submitted pursuant to paragraph (1) shall be submitted in compliance with Section 9795 of the Government Code. | |
| 148 | 147 | ||
| 149 | 148 | ||
| 150 | 149 | ||
| 151 | 150 | 100103. (a) The department shall review its statutory authority, regulations, and processes related to the examination of a licensee and determine whether the department has adequate authority to examine a licensee for how well the licensee meets the financial services needs of underserved communities. | |
| 152 | 151 | ||
| 153 | 152 | (b) (1) On or before ____, the department shall provide a summary report of its findings pursuant to this section to the respective chairpersons of the Senate Committee on Banking and Financial Institutions and the Assembly Committee on Banking and Finance. | |
| 154 | 153 | ||
| 155 | 154 | (2) The requirement for submitting a report imposed under paragraph (1) is inoperative on ____, pursuant to Section 10231.5 of the Government Code. | |
| 156 | 155 | ||
| 157 | 156 | (3) A report to be submitted pursuant to paragraph (1) shall be submitted in compliance with Section 9795 of the Government Code. |