88R12646 MLH-F
By: Lambert, Ashby H.B. No. 3574
A BILL TO BE ENTITLED
AN ACT
relating to the regulation of state banks.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Section 31.002(a)(15), Finance Code, is amended
to read as follows:
(15) "Deposit" means the establishment of a
debtor-creditor relationship represented by the agreement of the
deposit debtor to act as a holding, paying, or disbursing agent for
the deposit creditor. The term:
(A) includes:
(i) an unpaid balance of money that is
received by the deposit debtor in the usual course of business in
exchange for conditional or unconditional credit to a commercial,
checking, savings, or time account of the deposit creditor or the
creditor's designee, or that is evidenced by a certificate of
deposit or similar instrument, a certified check or draft drawn
against a deposit account, or a letter of credit or traveler's check
on which the deposit debtor is primarily liable, but excluding an
obligation arising under Chapter 151 [152];
(ii) money or credit given for money
received by the deposit debtor in the usual course of business for a
special purpose, including money:
(a) held as escrow money, as security
for an obligation due to the deposit debtor or another person, or as
security for a loan;
(b) left with a deposit debtor by a
deposit creditor to meet maturing obligations that are not yet due;
and
(c) held by the deposit debtor to meet
an acceptance or letter of credit;
(iii) an outstanding draft, cashier's
check, money order, or other officer's check issued by the deposit
debtor in the usual course of business for any purpose, including
payment for services, dividends, or purchases; and
(iv) an obligation that the finance
commission by rule defines as a deposit liability, except that the
term may not include money received for immediate application to
reduction of an indebtedness; and
(B) does not include an obligation that this
subtitle or finance commission rule determines not to be a deposit
liability.
SECTION 2. Section 31.005(b), Finance Code, is amended to
read as follows:
(b) Subsection (a) does not apply to a federally insured
depository institution [or other entity] organized under the laws
of this state, another state, the United States, or a foreign
sovereign state to the extent that the depository institution or
other entity is:
(1) authorized under its charter or the laws of this
state or the United States to use a term, word, character, ideogram,
phonogram, or phrase prohibited by Subsection (a); and
(2) authorized by the laws of this state or the United
States to conduct the activities in which it is engaged in this
state.
SECTION 3. Section 31.105, Finance Code, is amended by
adding Subsection (c-2) to read as follows:
(c-2) If a person currently serving as an officer, director,
employee, controlling shareholder, or other position participating
in the affairs of a state bank refuses to comply with a subpoena,
the banking commissioner may issue an order on an emergency basis
removing the person from the person's position and prohibiting the
person from participating in the affairs of the state bank or any
other entity chartered, registered, permitted, or licensed by the
banking commissioner until the person complies with the subpoena.
SECTION 4. Section 33.005, Finance Code, is amended to read
as follows:
Sec. 33.005. EXEMPTIONS. The following acquisitions are
exempt from Section 33.001:
(1) an acquisition of securities in connection with
the exercise of a security interest or otherwise in full or partial
satisfaction of a debt previously contracted for in good faith and
the acquiring person files written notice of acquisition with the
banking commissioner before the person votes the securities
acquired;
(2) unless the banking commissioner provides
otherwise in writing, an acquisition of voting securities in any
class or series by a controlling person who:
(A) [has previously complied with and received
approval under this subchapter or who] was identified as a
controlling person in a state bank in a prior application filed with
and approved by the banking commissioner;
(B) has from the date of receipt of approval
under this subchapter continuously held power to vote 25 percent or
more of any class of voting securities of the state bank; or
(C) is considered to have from the date of
receipt of approval under this subchapter continuously controlled
the state bank under Section 33.001(b);
(3) an acquisition or transfer by operation of law,
will, or intestate succession and the acquiring person files
written notice of acquisition with the banking commissioner before
the person votes the securities acquired;
(4) a transaction subject to Chapter 202 if:
(A) the acquiring bank holding company currently
owns and controls a state bank; or
(B) the post-transaction controlling person[:
[(i) has previously complied with and
received approval as a controlling person under this subchapter; or
[(ii)] is identified as the controlling
person in a merger or other acquisition-related application filed
with the banking commissioner concurrently with the submission
required by Section 202.001; and
(5) a transaction exempted by the banking commissioner
or by rules adopted under this subtitle because the transaction is
not within the purposes of this subchapter or the regulation of the
transaction is not necessary or appropriate to achieve the
objectives of this subchapter.
SECTION 5. Section 34.103(c), Finance Code, is amended to
read as follows:
(c) A state bank may not establish or acquire a subsidiary
or a controlling interest in a subsidiary that engages in
activities as principal in which the bank is prohibited from
engaging directly unless:
(1) the state bank's investment in the subsidiary has
been allowed [approved] by the Federal Deposit Insurance
Corporation under Section 24, Federal Deposit Insurance Act (12
U.S.C. Section 1831a); or
(2) with respect to a subsidiary engaged in activities
as principal that a national bank may conduct only through a
financial subsidiary, including firm underwriting of equity
securities other than as permitted by Section 34.101, and not
otherwise engaged in activities as principal that are impermissible
for a state bank or a financial subsidiary of a national bank, the
subsidiary's activities and the bank's investment are in compliance
with the restrictions and requirements of Section 46, Federal
Deposit Insurance Act (12 U.S.C. Section 1831w).
SECTION 6. Section 35.002(a), Finance Code, is amended to
read as follows:
(a) The banking commissioner has grounds to issue a cease
and desist order to a current or former [an] officer, employee, or
director of a state bank, or the bank itself acting through an
authorized person, if the banking commissioner determines from
examination or other credible evidence that the bank or person
directly or indirectly has:
(1) violated this subtitle or another applicable law;
(2) engaged in a breach of trust or other fiduciary
duty;
(3) refused to submit to examination or examination
under oath;
(4) conducted business in an unsafe or unsound manner;
or
(5) violated a condition of the bank's charter or an
agreement between the bank or the person and the banking
commissioner or the department.
SECTION 7. Section 35.106, Finance Code, is amended to read
as follows:
Sec. 35.106. AUTHORITY OF SUPERVISOR. During a period of
supervision, a bank, without the prior approval of the banking
commissioner or the supervisor or as otherwise permitted or
restricted by the order of supervision, may not:
(1) dispose of, sell, transfer, convey, or encumber
the bank's assets;
(2) lend or invest the bank's money;
(3) incur a debt, obligation, or liability;
(4) pay a cash dividend to the bank's shareholders;
[or]
(5) remove an executive officer or director, change
the number of executive officers or directors, or have any other
change in the position of executive officer or director; or
(6) engage in any other activity determined by the
banking commissioner to threaten the safety and soundness of the
bank.
SECTION 8. Section 281.006, Finance Code, is amended to
read as follows:
Sec. 281.006. RECORDS. To the extent permitted by state or
federal law, a financial institution shall provide, on request,
access to or copies of records relevant to the suspected financial
exploitation of a vulnerable adult to the department, the
commissioner, a law enforcement agency, or a prosecuting attorney's
office, either as part of a report to the department, commissioner,
law enforcement agency, or prosecuting attorney's office or at the
request of the department, commissioner, law enforcement agency, or
prosecuting attorney's office in accordance with an investigation.
SECTION 9. Section 35.002(a), Finance Code, as amended by
this Act, applies only to a violation that occurs on or after the
effective date of this Act. A violation that occurs before the
effective date of this Act is governed by the law in effect when the
violation occurred, and the former law is continued in effect for
that purpose.
SECTION 10. To the extent of any conflict, this Act prevails
over another Act of the 88th Legislature, Regular Session, 2023,
relating to nonsubstantive additions to and corrections in enacted
codes.
SECTION 11. This Act takes effect immediately if it
receives a vote of two-thirds of all the members elected to each
house, as provided by Section 39, Article III, Texas Constitution.
If this Act does not receive the vote necessary for immediate
effect, this Act takes effect September 1, 2023.