Duties of review boards for banks, savings banks, savings and loan associations, and credit unions and eliminating the mortgage loan originator council

Each review board must: 1) review the acts and decisions of the division of banking (division) in DFI or OCU with respect to applicable financial institutions; 2) advise the division or OCU with respect to applicable financial institutions; and 3) perform other review functions provided by law with respect to applicable financial institutions. The Banking Review Board and Credit Union Review Board may also require the division or OCU, respectively, to submit any of its actions to the review board for approval. OCU must also confer with the Credit Union Review Board on matters affecting credit unions.

Current law specifies additional specific functions of these review boards, such as the following:

1. The division must establish a reasonable fee structure for savings banks and savings and loan associations, and this fee structure is subject to approval by the Savings Institutions Review Board.

2. The division may by rule provide state savings and loan associations or state banks, and OCU may provide credit unions, with authority equivalent to their federal counterparts, with the approval of, respectively, the Savings Institutions Review Board, Banking Review Board, or Credit Union Review Board.

3. The division must issue orders prescribing reasonable rules for conducting business as a savings and loan association and these orders are subject to approval by the Savings Institutions Review Board. Certain rules relating to the formation of savings and loan institutions are also subject to approval by the review board.

4. The limit on the total amount of mortgage loans that a savings and loan association may make to a single borrower, and on the amount of mortgage loans that may be sold and then serviced by the savings and loan association, are determined by the division and the Savings Institutions Review Board, subject to certain statutory limitations.

5. The Banking Review Board may make rules to safeguard the interest of depositors and stockholders in emergencies and may make rules and prescribe schedules for arriving at a fair valuation of bank assets. In examining banks, the division must determine the fair valuation of assets in accordance with the rules and schedules prescribed by the Banking Review Board.

6. Before seeking removal of an officer or director of a bank for certain reasons related to the safety or solvency of the bank, the division must have the approval of the Banking Review Board.

7. To establish uniform savings rules for banks providing conditions under which banks may accept deposits or uniform rules regulating fiduciary operations, the division must have the approval of the Banking Review Board.

8. If the division has reason to believe a banking violation has occurred that subjects a person to prosecution for a criminal offense or to a penalty, the division must bring the relevant information to the attention of the Banking Review Board, which may then bring the information to the attention of the Attorney General.

9. The Banking Review Board must determine the annual assessment amount to be paid to the division by state banks.

10. If the division determines that it should take possession of a bank for specified reasons, including that the bank is unsafe, unsound, or undercapitalized, the division must bring the matter to the attention of the Banking Review Board and the Banking Review Board must decide whether or not the division should take possession of the bank.

11. After receiving an application to form a state bank and conducting its investigation on the application, the division must make a written report to the Banking Review Board. The review board must make a decision approving or disapproving the application. Immediately after the bank's formation, the division must determine the required capital of the bank, subject to review by the Banking Review Board.

12. The division must consult with the Banking Review Board before making recommendations to any bank as to the advisability of consolidation or merger with other banks.

13. The Banking Review Board must set fees for certified copies of records filed with the division.

14. OCU must promulgate rules relating to the business of credit unions, and these rules are subject to the approval of the Credit Union Review Board.

15. OCU must determine the assessment amounts for credit unions, which is subject to approval by the Credit Union Review Board.

Under this bill, review boards must advise the division with respect to applicable financial institutions only if the division requests advice. Also, instead of OCU being required to confer with the Credit Union Review Board on matters affecting credit unions and OCU, OCU must keep the Credit Union Review Board aware of the activities of credit unions and supervisory actions that OCU has taken and may confer with and seek the advice of the Credit Union Review Board on how to improve the condition and service of credit unions and on any other matters affecting credit unions and OCU. In addition, instead of the Banking Review Board and Credit Union Review Board requiring the division or OCU, respectively, to submit any of the division's or OCU's actions to the review board for approval, it is the division or OCU that decides to submit any of the division's or OCU's actions to the review board for approval. However, the bill does not affect review board authority for the types of specific functions described in items 1. to 15., above.

Under current law, there is a mortgage loan originator council (council) created in DFI. The council consists of six persons appointed by the secretary of financial institutions (secretary) and the secretary or his or her designee. The only function specified by statute for the council is that the division must consult with the council in promulgating rules related to residential mortgage brokerage service contracts and disclosures.

This bill eliminates the council.