87R11032 SRA-F
By: West S.B. No. 1714
A BILL TO BE ENTITLED
AN ACT
relating to the Texas Community Reinvestment Act; authorizing a
fee.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Subtitle Z, Title 3, Finance Code, is amended by
adding Chapter 282 to read as follows:
CHAPTER 282. TEXAS COMMUNITY REINVESTMENT ACT
SUBCHAPTER A. GENERAL PROVISIONS
Sec. 282.001. SHORT TITLE. This chapter may be cited as the
Texas Community Reinvestment Act.
Sec. 282.002. DEFINITIONS. In this chapter:
(1) "Banking commissioner" means the banking
commissioner of Texas.
(2) "Covered financial institution" means:
(A) a bank, savings bank, or credit union
chartered under the laws of this state;
(B) an entity licensed in this state to make or
originate residential mortgage loans that lent or originated 50 or
more residential mortgage loans in the previous calendar year; and
(C) any other financial institution under the
jurisdiction of the department as designated by rule by the banking
commissioner.
(3) "Department" means the Texas Department of
Banking.
Sec. 282.003. APPLICABILITY OF CHAPTER. This chapter does
not apply to a bank, savings bank, savings and loan association, or
credit union chartered under the laws of the United States.
Sec. 282.004. CONFLICT WITH OTHER LAW. To the extent this
chapter conflicts with other law, this chapter prevails.
Sec. 282.005. RULES. (a) The banking commissioner may
adopt rules necessary and appropriate to implement and enforce this
chapter, including rules that:
(1) promote access for all communities in this state
to appropriate financial services from covered financial
institutions;
(2) define fair lending practices in connection with
the activities of covered financial institutions;
(3) define the terms used in this chapter and
interpret the provisions of this chapter; and
(4) create a public comments process.
(b) To implement this chapter, the banking commissioner
shall adopt rules incorporating the regulations applicable to
covered financial institutions under federal law. The banking
commissioner may make adjustments and exceptions to the rules as
necessary.
SUBCHAPTER B. ASSESSMENT OF COVERED FINANCIAL INSTITUTIONS'
SERVICE TO LOCAL COMMUNITIES
Sec. 282.051. OBLIGATIONS OF COVERED FINANCIAL
INSTITUTIONS. (a) Each covered financial institution has a
continuing and affirmative obligation to meet the financial
services needs of the communities in which the institution's
offices, branches, and other facilities are maintained that is:
(1) consistent with the safe and sound operation of
the financial institution; and
(2) for a credit union, consistent with the credit
union's common bond.
(b) Each covered financial institution that provides all or
a majority of the institution's products and services through
mobile and other digital channels has a continuing and affirmative
obligation to help meet the financial services needs of
deposit-based assessment areas, including areas contiguous to
those areas, low-income and moderate-income neighborhoods, and
areas where there is a lack of access to safe and affordable banking
and lending services, that is:
(1) consistent with the safe and sound operation of
the financial institution; and
(2) for a credit union, consistent with a credit
union's common bond.
Sec. 282.052. ASSESSMENT OF COVERED FINANCIAL
INSTITUTIONS. (a) The banking commissioner shall assess the
record of each covered financial institution in satisfying the
financial institution's obligations under Section 282.051.
(b) The banking commissioner by rule shall provide for an
assessment of the following factors relating to whether covered
financial institutions are meeting the financial services needs of
local communities:
(1) activities to ascertain the financial services
needs of the community, including communication with community
members regarding financial services provided;
(2) extent of marketing activities to make members of
the community aware of the financial services offered;
(3) origination of mortgage loans, including home
improvement and rehabilitation loans, and other efforts to assist
existing low-income and moderate-income residents to be able to
remain in affordable housing in the their neighborhoods;
(4) for small business lenders, the origination of
loans to businesses with gross annual revenues of $1,000,000 or
less, particularly those in low-income and moderate-income
neighborhoods;
(5) participation, including investments, in
community development and redevelopment programs, small business
technical assistance programs, minority-owned depository
institutions, community development financial institutions, and
mutually-owned financial institutions;
(6) efforts working with delinquent customers to
facilitate a resolution of the delinquency;
(7) origination of loans that show an undue
concentration and a systematic pattern of lending resulting in the
loss of affordable housing units;
(8) evidence of discriminatory and prohibited
practices; and
(9) other factors that reasonably bear on the extent
to which a covered financial institution is meeting the financial
services needs of the institution's entire community, including
responsiveness to community needs as reflected by public comments.
Sec. 282.053. EXAMINATIONS; FEES. (a) The banking
commissioner, in consultation with state and federal agencies with
appropriate regulatory authority, may examine each covered
financial institution for compliance with this chapter and other
applicable state and federal fair lending laws, including:
(1) the Texas Fair Housing Act (Chapter 301, Property
Code);
(2) the Equal Credit Opportunity Act (15 U.S.C.
Section 1691 et seq.); and
(3) the Home Mortgage Disclosure Act of 1975 (12
U.S.C. Section 2801 et seq.).
(b) The banking commissioner may adopt rules with respect to
the frequency and manner of examination, including the imposition
of examination fees.
(c) The banking commissioner shall appoint a suitable
person to perform the examination. The banking commissioner or the
commissioner's appointees may:
(1) examine the books, records, documents, and
operations of each covered financial institution or the
institution's parent company, subsidiaries, affiliates, or agents;
and
(2) examine under oath any officers, directors,
employees, and agents of the covered financial institution or the
institution's parent company, subsidiaries, affiliates, or agents.
(d) Any document or record prepared or obtained in
connection with or relating to the examination, and any record
prepared or obtained by the banking commissioner, to the extent
that the record summarizes or contains information derived from any
document or record described by this section, is not public
information subject to disclosure under Chapter 552, Government
Code, unless otherwise provided by this chapter.
Sec. 282.054. WRITTEN EVALUATION. (a) On completion of an
examination of a covered financial institution under Section
282.053, the banking commissioner shall prepare a written
evaluation of the covered financial institution's record of
performance under this chapter.
(b) Each evaluation must have:
(1) a public section that includes, at a minimum, the
information that would be disclosed in a written evaluation under
the Community Reinvestment Act of 1977 (12 U.S.C. Section 2901 et
seq.); and
(2) a confidential section.
(c) After the banking commissioner gives the covered
financial institution an opportunity to comment on the evaluation,
the banking commissioner shall make the public section of the
evaluation open to public inspection on request.
(d) The written evaluation must include:
(1) the assessment factors used to determine the
covered financial institution's descriptive rating;
(2) the banking commissioner's conclusions with
respect to each assessment factor;
(3) a discussion of the facts supporting those
conclusions;
(4) the covered financial institution's descriptive
rating and the basis for the rating; and
(5) a summary of public comments.
Sec. 282.055. RATINGS FOR RECORD OF PERFORMANCE. (a) Based
on an examination under Section 282.053, the banking commissioner
shall assign a covered financial institution one of the following
ratings in regard to the institution's record of performance in
meeting the institution's community financial service needs:
(1) outstanding;
(2) satisfactory;
(3) needs to improve; or
(4) substantial noncompliance.
(b) Notwithstanding the provisions of this chapter, the
banking commissioner may establish an alternative examination
procedure for any covered financial institution that, as of its
most recent examination, has been assigned a rating of outstanding
or satisfactory for the institution's record of performance in
meeting the institution's community financial services needs.
Sec. 282.056. PUBLIC NOTICE. Each covered financial
institution shall provide, in the public lobby in each of the
institution's offices and on the institution's Internet website, a
public notice that is substantially similar to the following:
"STATE OF TEXAS
COMMUNITY REINVESTMENT NOTICE
The Texas Department of Banking (department) evaluates our
performance in meeting the financial services needs of this
community, including the needs of low-income to moderate-income
households. The department takes this evaluation into account when
deciding on certain applications submitted by us for approval by
the department. Your involvement is encouraged. You may obtain a
copy of our evaluation. You may also submit signed, written
comments about our performance in meeting community financial
services needs to the department."
Sec. 282.058. CORPORATE ACTIVITIES AND RENEWAL
APPLICATIONS. (a) The banking commissioner shall consider the
record of performance of the covered financial institution and the
institution's parent company, including subsidiaries, relative to
this chapter in considering an application for:
(1) the establishment of a branch office or other
facility;
(2) the relocation of a main office, branch office, or
other facility;
(3) a license renewal;
(4) a change in control of a covered financial
institution; or
(5) a merger or consolidation with, the acquisition of
assets of, or the assumption of liabilities of:
(A) a covered financial institution;
(B) an out-of-state bank, credit union, or
residential mortgage licensee;
(C) a national bank or credit union; or
(D) a foreign financial institution.
(b) The record of performance of the covered financial
institution may be the basis for the denial of an application
described by Subsection (a).
SUBCHAPTER C. COOPERATIVE AGREEMENTS
Sec. 282.101. COOPERATIVE AGREEMENTS. (a) For purposes of
this chapter, the banking commissioner may:
(1) conduct any examinations under this chapter with
state, other state, or federal regulators;
(2) enter into cooperative agreements regarding:
(A) the coordination of or joint participation in
the examinations;
(B) the amount and assessment of examination
fees; or
(C) enforcement actions related to the
examinations; and
(3) accept reports of examinations by other regulators
under those agreements.
(b) Any coordination or joint participation under this
section:
(1) may seek to promote efficient regulation and
effect cost reductions for the department and covered financial
institutions; and
(2) may not limit public participation as permitted
under certain federal regulations.
Sec. 282.102. CONFIDENTIALITY; PRIVILEGES. Any
information or material shared for purposes of coordination or
joint participation under this subchapter continues to be subject
to the requirements under any federal or state law regarding the
privacy or confidentiality of the information or material. Any
privilege arising under federal or state law, including the rules
of any federal or state court, with respect to the information or
material, continues to apply to the information or material.
Sec. 282.103. AUTHORITY NOT LIMITED. This subchapter may
not be construed as limiting the authority of the banking
commissioner to independently conduct examinations of and
enforcement actions against a covered financial institution.
SECTION 2. Subchapter C, Chapter 404, Government Code, is
amended by adding Section 404.0213 to read as follows:
Sec. 404.0213. CONSIDERATION OF FINANCIAL INSTITUTION'S
COMMITMENT TO COMMUNITY. (a) In addition to any other requirements
under law, the comptroller shall consider a financial institution's
record and current level of financial commitment to the
institution's local community when deciding whether to deposit
state funds in the financial institution. The comptroller may
consider:
(1) for financial institutions subject to the
Community Reinvestment Act of 1977 (12 U.S.C. Section 2901 et
seq.), the current and historical ratings that the financial
institution has received, to the extent that those ratings are
publicly available, under that law;
(2) any changes in ownership, management, policies, or
practices of the financial institution that may affect the level of
the financial institution's commitment to the institution's
community;
(3) the financial impact that the withdrawal or denial
of deposits of state funds might have on the financial institution;
and
(4) the financial impact to the state as a result of
withdrawing state funds or refusing to deposit additional state
funds in the financial institution.
(b) State funds may not be deposited in a financial
institution subject to the Community Reinvestment Act of 1977 (12
U.S.C. Section 2901 et seq.) unless the institution has a current
rating of satisfactory or outstanding under that law.
(c) When investing or depositing state funds, the
comptroller may give preference to financial institutions that have
a current rating of outstanding under the Community Reinvestment
Act of 1977 (12 U.S.C. Section 2901 et seq.).
(d) This section may not be construed as authorizing the
comptroller to conduct an examination or investigation of a
financial institution or to receive information that is not
publicly available and the disclosure of which is otherwise
prohibited by law.
SECTION 3. This Act takes effect September 1, 2021.