AB 822

This bill allows the Division of Banking (division) and the Office of Credit

Unions (OCU) in the Department of Financial Institutions to disclose certain

financial institution information to a Federal Home Loan Bank and to accept and

rely on information collected by other agencies or independent third parties in

conducting financial institution examinations. The bill also increases the limit on

loans by a savings bank to a single person. The bill eliminates the requirement that

financial institutions and mortgage bankers pay interest on escrow accounts for

residential mortgage loans originated on or after the effective date of the bill. The

bill also specifies that the security that may be provided by a public depository to

secure the repayment of public deposits includes an irrevocable letter of credit issued

by a Federal Home Loan Bank or financial institution. The bill further allows a state

bank, with approval of the division, to reduce its capital and distribute cash or other

assets to its shareholders. The bill also includes provisions applicable to collateral

and other security interests of Federal Home Loan Banks in insurance company

liquidation proceedings. Finally, the bill modifies an administrative rule of the

Department of Workforce Development to conform the rule to a similar provision

under the federal Fair Labor Standards Act (FLSA).

Disclosure of information to Federal Home Loan Bank

Under current law, the division regulates state banks, savings banks, and

savings and loan associations and OCU regulates state credit unions (collectively,

financial institutions), and this regulation includes periodic examinations of these

financial institutions by, and reports from these financial institutions to, the division

or OCU. Current law generally requires the division and OCU to maintain the

confidentiality of examination information and of reports provided to the division or

OCU. However, limited exceptions allow disclosure under certain circumstances,

including disclosure to state regulatory authorities and to the Federal Deposit

Insurance Corporation or National Credit Union Administration.

This bill allows the division or OCU to furnish to a Federal Home Loan Bank,

upon request, a copy of any examination report made by, or other supervisory

information created by, the division or OCU if the Federal Home Loan Bank agrees

to treat the information confidentially.

Periodic examinations of financial institutions

With exceptions, current law requires the division and OCU to examine the

records and affairs of financial institutions under their respective jurisdictions at

least once every 18 months.

Under this bill, in conducting these periodic examinations, the division and

OCU may accept and rely on information collected by other agencies or independent

third parties in determining whether a financial institution has satisfied any

requirement that is part of the examination.

Limit on savings bank loans to one borrower