Texas 2021 - 87th Regular

Texas Senate Bill SB1714 Compare Versions

Only one version of the bill is available at this time.

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1	1	87R11032 SRA-F
2	2	By: West S.B. No. 1714
3	3
4	4
5	5	A BILL TO BE ENTITLED
6	6	AN ACT
7	7	relating to the Texas Community Reinvestment Act; authorizing a
8	8	fee.
9	9	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
10	10	SECTION 1. Subtitle Z, Title 3, Finance Code, is amended by
11	11	adding Chapter 282 to read as follows:
12	12	CHAPTER 282. TEXAS COMMUNITY REINVESTMENT ACT
13	13	SUBCHAPTER A. GENERAL PROVISIONS
14	14	Sec. 282.001. SHORT TITLE. This chapter may be cited as the
15	15	Texas Community Reinvestment Act.
16	16	Sec. 282.002. DEFINITIONS. In this chapter:
17	17	(1) "Banking commissioner" means the banking
18	18	commissioner of Texas.
19	19	(2) "Covered financial institution" means:
20	20	(A) a bank, savings bank, or credit union
21	21	chartered under the laws of this state;
22	22	(B) an entity licensed in this state to make or
23	23	originate residential mortgage loans that lent or originated 50 or
24	24	more residential mortgage loans in the previous calendar year; and
25	25	(C) any other financial institution under the
26	26	jurisdiction of the department as designated by rule by the banking
27	27	commissioner.
28	28	(3) "Department" means the Texas Department of
29	29	Banking.
30	30	Sec. 282.003. APPLICABILITY OF CHAPTER. This chapter does
31	31	not apply to a bank, savings bank, savings and loan association, or
32	32	credit union chartered under the laws of the United States.
33	33	Sec. 282.004. CONFLICT WITH OTHER LAW. To the extent this
34	34	chapter conflicts with other law, this chapter prevails.
35	35	Sec. 282.005. RULES. (a) The banking commissioner may
36	36	adopt rules necessary and appropriate to implement and enforce this
37	37	chapter, including rules that:
38	38	(1) promote access for all communities in this state
39	39	to appropriate financial services from covered financial
40	40	institutions;
41	41	(2) define fair lending practices in connection with
42	42	the activities of covered financial institutions;
43	43	(3) define the terms used in this chapter and
44	44	interpret the provisions of this chapter; and
45	45	(4) create a public comments process.
46	46	(b) To implement this chapter, the banking commissioner
47	47	shall adopt rules incorporating the regulations applicable to
48	48	covered financial institutions under federal law. The banking
49	49	commissioner may make adjustments and exceptions to the rules as
50	50	necessary.
51	51	SUBCHAPTER B. ASSESSMENT OF COVERED FINANCIAL INSTITUTIONS'
52	52	SERVICE TO LOCAL COMMUNITIES
53	53	Sec. 282.051. OBLIGATIONS OF COVERED FINANCIAL
54	54	INSTITUTIONS. (a) Each covered financial institution has a
55	55	continuing and affirmative obligation to meet the financial
56	56	services needs of the communities in which the institution's
57	57	offices, branches, and other facilities are maintained that is:
58	58	(1) consistent with the safe and sound operation of
59	59	the financial institution; and
60	60	(2) for a credit union, consistent with the credit
61	61	union's common bond.
62	62	(b) Each covered financial institution that provides all or
63	63	a majority of the institution's products and services through
64	64	mobile and other digital channels has a continuing and affirmative
65	65	obligation to help meet the financial services needs of
66	66	deposit-based assessment areas, including areas contiguous to
67	67	those areas, low-income and moderate-income neighborhoods, and
68	68	areas where there is a lack of access to safe and affordable banking
69	69	and lending services, that is:
70	70	(1) consistent with the safe and sound operation of
71	71	the financial institution; and
72	72	(2) for a credit union, consistent with a credit
73	73	union's common bond.
74	74	Sec. 282.052. ASSESSMENT OF COVERED FINANCIAL
75	75	INSTITUTIONS. (a) The banking commissioner shall assess the
76	76	record of each covered financial institution in satisfying the
77	77	financial institution's obligations under Section 282.051.
78	78	(b) The banking commissioner by rule shall provide for an
79	79	assessment of the following factors relating to whether covered
80	80	financial institutions are meeting the financial services needs of
81	81	local communities:
82	82	(1) activities to ascertain the financial services
83	83	needs of the community, including communication with community
84	84	members regarding financial services provided;
85	85	(2) extent of marketing activities to make members of
86	86	the community aware of the financial services offered;
87	87	(3) origination of mortgage loans, including home
88	88	improvement and rehabilitation loans, and other efforts to assist
89	89	existing low-income and moderate-income residents to be able to
90	90	remain in affordable housing in the their neighborhoods;
91	91	(4) for small business lenders, the origination of
92	92	loans to businesses with gross annual revenues of $1,000,000 or
93	93	less, particularly those in low-income and moderate-income
94	94	neighborhoods;
95	95	(5) participation, including investments, in
96	96	community development and redevelopment programs, small business
97	97	technical assistance programs, minority-owned depository
98	98	institutions, community development financial institutions, and
99	99	mutually-owned financial institutions;
100	100	(6) efforts working with delinquent customers to
101	101	facilitate a resolution of the delinquency;
102	102	(7) origination of loans that show an undue
103	103	concentration and a systematic pattern of lending resulting in the
104	104	loss of affordable housing units;
105	105	(8) evidence of discriminatory and prohibited
106	106	practices; and
107	107	(9) other factors that reasonably bear on the extent
108	108	to which a covered financial institution is meeting the financial
109	109	services needs of the institution's entire community, including
110	110	responsiveness to community needs as reflected by public comments.
111	111	Sec. 282.053. EXAMINATIONS; FEES. (a) The banking
112	112	commissioner, in consultation with state and federal agencies with
113	113	appropriate regulatory authority, may examine each covered
114	114	financial institution for compliance with this chapter and other
115	115	applicable state and federal fair lending laws, including:
116	116	(1) the Texas Fair Housing Act (Chapter 301, Property
117	117	Code);
118	118	(2) the Equal Credit Opportunity Act (15 U.S.C.
119	119	Section 1691 et seq.); and
120	120	(3) the Home Mortgage Disclosure Act of 1975 (12
121	121	U.S.C. Section 2801 et seq.).
122	122	(b) The banking commissioner may adopt rules with respect to
123	123	the frequency and manner of examination, including the imposition
124	124	of examination fees.
125	125	(c) The banking commissioner shall appoint a suitable
126	126	person to perform the examination. The banking commissioner or the
127	127	commissioner's appointees may:
128	128	(1) examine the books, records, documents, and
129	129	operations of each covered financial institution or the
130	130	institution's parent company, subsidiaries, affiliates, or agents;
131	131	and
132	132	(2) examine under oath any officers, directors,
133	133	employees, and agents of the covered financial institution or the
134	134	institution's parent company, subsidiaries, affiliates, or agents.
135	135	(d) Any document or record prepared or obtained in
136	136	connection with or relating to the examination, and any record
137	137	prepared or obtained by the banking commissioner, to the extent
138	138	that the record summarizes or contains information derived from any
139	139	document or record described by this section, is not public
140	140	information subject to disclosure under Chapter 552, Government
141	141	Code, unless otherwise provided by this chapter.
142	142	Sec. 282.054. WRITTEN EVALUATION. (a) On completion of an
143	143	examination of a covered financial institution under Section
144	144	282.053, the banking commissioner shall prepare a written
145	145	evaluation of the covered financial institution's record of
146	146	performance under this chapter.
147	147	(b) Each evaluation must have:
148	148	(1) a public section that includes, at a minimum, the
149	149	information that would be disclosed in a written evaluation under
150	150	the Community Reinvestment Act of 1977 (12 U.S.C. Section 2901 et
151	151	seq.); and
152	152	(2) a confidential section.
153	153	(c) After the banking commissioner gives the covered
154	154	financial institution an opportunity to comment on the evaluation,
155	155	the banking commissioner shall make the public section of the
156	156	evaluation open to public inspection on request.
157	157	(d) The written evaluation must include:
158	158	(1) the assessment factors used to determine the
159	159	covered financial institution's descriptive rating;
160	160	(2) the banking commissioner's conclusions with
161	161	respect to each assessment factor;
162	162	(3) a discussion of the facts supporting those
163	163	conclusions;
164	164	(4) the covered financial institution's descriptive
165	165	rating and the basis for the rating; and
166	166	(5) a summary of public comments.
167	167	Sec. 282.055. RATINGS FOR RECORD OF PERFORMANCE. (a) Based
168	168	on an examination under Section 282.053, the banking commissioner
169	169	shall assign a covered financial institution one of the following
170	170	ratings in regard to the institution's record of performance in
171	171	meeting the institution's community financial service needs:
172	172	(1) outstanding;
173	173	(2) satisfactory;
174	174	(3) needs to improve; or
175	175	(4) substantial noncompliance.
176	176	(b) Notwithstanding the provisions of this chapter, the
177	177	banking commissioner may establish an alternative examination
178	178	procedure for any covered financial institution that, as of its
179	179	most recent examination, has been assigned a rating of outstanding
180	180	or satisfactory for the institution's record of performance in
181	181	meeting the institution's community financial services needs.
182	182	Sec. 282.056. PUBLIC NOTICE. Each covered financial
183	183	institution shall provide, in the public lobby in each of the
184	184	institution's offices and on the institution's Internet website, a
185	185	public notice that is substantially similar to the following:
186	186	"STATE OF TEXAS
187	187	COMMUNITY REINVESTMENT NOTICE
188	188	The Texas Department of Banking (department) evaluates our
189	189	performance in meeting the financial services needs of this
190	190	community, including the needs of low-income to moderate-income
191	191	households. The department takes this evaluation into account when
192	192	deciding on certain applications submitted by us for approval by
193	193	the department. Your involvement is encouraged. You may obtain a
194	194	copy of our evaluation. You may also submit signed, written
195	195	comments about our performance in meeting community financial
196	196	services needs to the department."
197	197	Sec. 282.058. CORPORATE ACTIVITIES AND RENEWAL
198	198	APPLICATIONS. (a) The banking commissioner shall consider the
199	199	record of performance of the covered financial institution and the
200	200	institution's parent company, including subsidiaries, relative to
201	201	this chapter in considering an application for:
202	202	(1) the establishment of a branch office or other
203	203	facility;
204	204	(2) the relocation of a main office, branch office, or
205	205	other facility;
206	206	(3) a license renewal;
207	207	(4) a change in control of a covered financial
208	208	institution; or
209	209	(5) a merger or consolidation with, the acquisition of
210	210	assets of, or the assumption of liabilities of:
211	211	(A) a covered financial institution;
212	212	(B) an out-of-state bank, credit union, or
213	213	residential mortgage licensee;
214	214	(C) a national bank or credit union; or
215	215	(D) a foreign financial institution.
216	216	(b) The record of performance of the covered financial
217	217	institution may be the basis for the denial of an application
218	218	described by Subsection (a).
219	219	SUBCHAPTER C. COOPERATIVE AGREEMENTS
220	220	Sec. 282.101. COOPERATIVE AGREEMENTS. (a) For purposes of
221	221	this chapter, the banking commissioner may:
222	222	(1) conduct any examinations under this chapter with
223	223	state, other state, or federal regulators;
224	224	(2) enter into cooperative agreements regarding:
225	225	(A) the coordination of or joint participation in
226	226	the examinations;
227	227	(B) the amount and assessment of examination
228	228	fees; or
229	229	(C) enforcement actions related to the
230	230	examinations; and
231	231	(3) accept reports of examinations by other regulators
232	232	under those agreements.
233	233	(b) Any coordination or joint participation under this
234	234	section:
235	235	(1) may seek to promote efficient regulation and
236	236	effect cost reductions for the department and covered financial
237	237	institutions; and
238	238	(2) may not limit public participation as permitted
239	239	under certain federal regulations.
240	240	Sec. 282.102. CONFIDENTIALITY; PRIVILEGES. Any
241	241	information or material shared for purposes of coordination or
242	242	joint participation under this subchapter continues to be subject
243	243	to the requirements under any federal or state law regarding the
244	244	privacy or confidentiality of the information or material. Any
245	245	privilege arising under federal or state law, including the rules
246	246	of any federal or state court, with respect to the information or
247	247	material, continues to apply to the information or material.
248	248	Sec. 282.103. AUTHORITY NOT LIMITED. This subchapter may
249	249	not be construed as limiting the authority of the banking
250	250	commissioner to independently conduct examinations of and
251	251	enforcement actions against a covered financial institution.
252	252	SECTION 2. Subchapter C, Chapter 404, Government Code, is
253	253	amended by adding Section 404.0213 to read as follows:
254	254	Sec. 404.0213. CONSIDERATION OF FINANCIAL INSTITUTION'S
255	255	COMMITMENT TO COMMUNITY. (a) In addition to any other requirements
256	256	under law, the comptroller shall consider a financial institution's
257	257	record and current level of financial commitment to the
258	258	institution's local community when deciding whether to deposit
259	259	state funds in the financial institution. The comptroller may
260	260	consider:
261	261	(1) for financial institutions subject to the
262	262	Community Reinvestment Act of 1977 (12 U.S.C. Section 2901 et
263	263	seq.), the current and historical ratings that the financial
264	264	institution has received, to the extent that those ratings are
265	265	publicly available, under that law;
266	266	(2) any changes in ownership, management, policies, or
267	267	practices of the financial institution that may affect the level of
268	268	the financial institution's commitment to the institution's
269	269	community;
270	270	(3) the financial impact that the withdrawal or denial
271	271	of deposits of state funds might have on the financial institution;
272	272	and
273	273	(4) the financial impact to the state as a result of
274	274	withdrawing state funds or refusing to deposit additional state
275	275	funds in the financial institution.
276	276	(b) State funds may not be deposited in a financial
277	277	institution subject to the Community Reinvestment Act of 1977 (12
278	278	U.S.C. Section 2901 et seq.) unless the institution has a current
279	279	rating of satisfactory or outstanding under that law.
280	280	(c) When investing or depositing state funds, the
281	281	comptroller may give preference to financial institutions that have
282	282	a current rating of outstanding under the Community Reinvestment
283	283	Act of 1977 (12 U.S.C. Section 2901 et seq.).
284	284	(d) This section may not be construed as authorizing the
285	285	comptroller to conduct an examination or investigation of a
286	286	financial institution or to receive information that is not
287	287	publicly available and the disclosure of which is otherwise
288	288	prohibited by law.
289	289	SECTION 3. This Act takes effect September 1, 2021.