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Regular Session, 2012 ENROLLED
SENATE BILL NO. 164
BY SENATORS MARTINY AND THOMPSON
AN ACT1
To amend and reenact R.S. 6:415(B), (C), (D), (F) and (G), and to enact R.S. 6:415(I),2
relative to banking; to provide certain restrictions and prohibit certain practices; to3
provide for loans, credit exposure, derivative transactions, restrictions, and rules; to4
provide certain definitions; and to provide for related matters.5
Be it enacted by the Legislature of Louisiana:6
Section 1. R.S. 6:415(B), (C), (D), (F) and (G) are hereby amended and reenacted,7
and R.S. 6:415(I) is hereby enacted to read as follows: 8
ยง415. Loans; other credit exposure; derivative transactions; restrictions;9
penalties10
* * *11
B. A state bank shall not loan on a secured basis to any one borrower, directly12
or indirectly, an amount in excess of one-half the sum of its capital stock and surplus,13
provided that all amounts loaned on an unsecured basis up to the limit set forth14
in Subsection A of this Section shall be added to all amounts loaned on a secured15
basis pursuant to this Subsection, and the total thereof shall not exceed one half16
of the state bank's capital stock and surplus. However, a state bank may loan to17
one borrower an amount not to exceed the sum of its capital stock and surplus, but18
only when such loan is secured by a pledge of obligations of the United States of19
America, or of the state of Louisiana, or any subdivision or municipality thereof, or20
is a commodity loan secured by readily marketable staples.21
C. Loans and other extensions of credit which are fully secured by a pledge22
of any deposit of the lending bank are not subject to any of the limits prescribed by23
this Section. For the purposes of this Subsection, a loan or other extension of24
credit is "fully secured" only to the extent of the dollar amount of the funds in25 SB NO. 164 ENROLLED
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the deposit account at any time while the loan or other extension of credit is1
outstanding, and provided that the funds in the deposit account that are relied2
upon for the exemption provided in this Subsection comply with all of the3
following requirements:4
(1) A security interest has been and remains perfected as to third parties5
pursuant to applicable state and federal laws and regulations.6
(2) The bank maintains adequate internal controls and procedures to7
prevent improper release of the pledged deposit account funds.8
(3) The funds in the pledged deposit account are fully collected and9
subject to no superior or intervening right or order of a party other than the10
bank.11
(4) The funds remain on deposit in the deposit account at all times while12
the loan or extension of credit is outstanding.13
D. The acceptance of drafts and, the issuance of letters of credit, and the14
entering into any credit exposure arising from a derivative transaction,15
repurchase agreement, reverse repurchase agreement, securities lending16
transaction, or securities borrowing transaction between the lending bank and17
the borrower shall also be subject to this Section. For purposes of this Section,18
a "derivative transaction" shall include any transaction that is a contract,19
agreement, swap, warrant, note or option that is based, in whole or in part, on20
the value of, any interest in, any quantitative measure of, or the occurrence of21
any event relating to, one or more commodities, securities, currencies, interest22
or other rates, indices, or other assets.23
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F. In accordance with regulations promulgated by the commissioner, a A25
state bank may acquire a pool of loans and other extensions of credit or a26
participation in such pool of loans or extensions of credit from other entities, with27
partial or full recourse to those entities to the extent that the limits prescribed in28
Subsections A and B of this Section apply to individual loans contained in the pool,29
provided that an executive officer of the bank, designated by the board of directors,30 SB NO. 164 ENROLLED
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affirm by affidavit that a representative portion of the individual loans has been1
reviewed by him, or by a qualified third party who has contracted with the bank for2
that purpose, to determine that they appear to be credit worthy, and that the bank is3
relying primarily on the responsibility of each maker for payment of the loans or4
extensions of credit and not on a full or partial recourse endorsement and guarantee5
by the transferor.6
G. In accordance with regulations promulgated by the commissioner, a A7
state bank may make a loan or other extension of credit which would otherwise8
exceed the limits prescribed in Subsections A and B of this Section when the9
purpose of the loan is to finance the sale of real estate acquired for debts previously10
contracted or for use as bank premises. Such loans may only be made upon prior11
written approval of the commissioner.12
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I. The commissioner of financial institutions shall have the authority to14
promulgate rules and regulations in accordance with the Administrative15
Procedure Act regarding the provisions of this Section.16
Section 2. This Act shall become effective upon signature by the governor or, if not17
signed by the governor, upon expiration of the time for bills to become law without signature18
by the governor, as provided by Article III, Section 18 of the Constitution of Louisiana. If19
vetoed by the governor and subsequently approved by the legislature, this Act shall become20
effective on the day following such approval.21
PRESIDENT OF THE SENATE
SPEAKER OF THE HOUSE OF REPRESENTATIVES
GOVERNOR OF THE STATE OF LOUISIANA
APPROVED: