House File 2587 - Enrolled

PAG LIN



  1  1                                    HOUSE FILE 2587
  1  2
  1  3                             AN ACT
  1  4 RELATING TO FINANCIAL INSTITUTIONS INCLUDING THE REGULATION OF
  1  5    STATE BANKS, BANK HOLDING COMPANIES, AND INDUSTRIAL LOAN
  1  6    COMPANIES, AND PROVIDING FOR PENALTIES.
  1  7
  1  8 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:
  1  9
  1 10    Section 1.  Section 12C.22, subsection 6, paragraph a, Code
  1 11 2005, is amended to read as follows:
  1 12    a.  Investment securities and shares in which a bank is
  1 13 permitted to invest under section 524.901, subsections 1, 2,
  1 14 and 3, and 4.
  1 15    Sec. 2.  Section 524.217, subsection 2, Code 2005, is
  1 16 amended to read as follows:
  1 17    2.  The superintendent may furnish to the federal deposit
  1 18 insurance corporation, the federal reserve system, the office
  1 19 of the comptroller of the currency, the office of thrift
  1 20 supervision, national credit union administration, the federal
  1 21 home loan bank, the financial crimes enforcement network of
  1 22 the federal department of the treasury, the United States
  1 23 internal revenue service, and financial institution regulatory
  1 24 authorities of other states, or to any official or supervising
  1 25 examiner of such regulatory authorities, a copy of the report
  1 26 of any or all examinations made of any state bank and of any
  1 27 affiliate of a state bank.
  1 28    Sec. 3.  Section 524.220, subsection 1, Code 2005, is
  1 29 amended to read as follows:
  1 30    1.  A state bank shall render a full, clear, and accurate
  1 31 statement of its condition to the superintendent, in a format
  1 32 prescribed by the superintendent, verified by the oath of an
  1 33 officer and attested by the signatures of at least three of
  1 34 the directors, or verified by the oath of two of its officers,
  1 35 and attested by at least two of the directors.  The
  2  1 superintendent may, in the superintendent's discretion, use
  2  2 any form of statement of condition that is used by the federal
  2  3 deposit insurance corporation or the federal reserve system.
  2  4    Sec. 4.  Section 524.220, subsection 3, Code 2005, is
  2  5 amended by striking the subsection.
  2  6    Sec. 5.  Section 524.312, subsection 3, Code 2005, is
  2  7 amended to read as follows:
  2  8    3.  If a change in the location of the principal place of
  2  9 business of a state bank is proposed, application for approval
  2 10 of the superintendent shall be made as required by the
  2 11 superintendent pursuant to this section.  A change in location
  2 12 of the principal place of business of a state bank, including
  2 13 a change from one municipal corporation to another municipal
  2 14 corporation within an urban complex, requires an amendment to
  2 15 the articles of incorporation pursuant to sections 524.1502,
  2 16 524.1504, and 524.1506.  A state bank seeking approval of a
  2 17 change of location pursuant to this subsection shall publish
  2 18 once each week for two consecutive weeks a notice of the
  2 19 proposed change of location in a newspaper of general
  2 20 circulation in the municipal corporation or unincorporated
  2 21 area in which the state bank has its principal place of
  2 22 business, or if there is none, in a newspaper of general
  2 23 circulation in the county, or in a county adjoining the
  2 24 county, in which the state bank has its principal place of
  2 25 business, and in the municipal corporation in which it seeks
  2 26 to establish its principal place of business, or if there is
  2 27 none, in a newspaper of general circulation in the county, or
  2 28 in a county adjoining the county, in which the municipal
  2 29 corporation is located.  The notices notice shall be published
  2 30 within thirty days after the application to the superintendent
  2 31 for approval of the change in location is accepted for
  2 32 processing.  The notice shall set forth the name of the state
  2 33 bank, the present location of its principal place of business,
  2 34 the location to which it proposes to move its principal place
  2 35 of business, and the date upon which the application was
  3  1 accepted for processing by the superintendent.
  3  2    Sec. 6.  Section 524.606, subsection 2, unnumbered
  3  3 paragraph 1, Code 2005, is amended to read as follows:
  3  4    If, in the opinion of the superintendent, any director of a
  3  5 state bank or bank holding company has violated any law
  3  6 relating to such state bank or bank holding company or has
  3  7 engaged in unsafe or unsound practices in conducting the
  3  8 business of such state bank or bank holding company, the
  3  9 superintendent may cause notice to be served upon such
  3 10 director, to appear before the superintendent to show cause
  3 11 why the director should not be removed from office.  A copy of
  3 12 such notice shall be sent to each director of the state bank
  3 13 or bank holding company affected, by registered or certified
  3 14 mail.  If, after granting the accused director a reasonable
  3 15 opportunity to be heard, the superintendent finds that the
  3 16 director violated any law relating to such state bank or bank
  3 17 holding company or engaged in unsafe or unsound practices in
  3 18 conducting the business of such state bank or bank holding
  3 19 company, the superintendent, in the superintendent's
  3 20 discretion, may order that such director be removed from
  3 21 office, and that such director be prohibited from serving in
  3 22 any capacity in any other bank, bank holding company, bank
  3 23 affiliate, trust company, or an entity licensed under chapter
  3 24 533A, 533C, 533D, 535B, 536, or 536A.  A copy of the order
  3 25 shall be served upon such director and upon the state bank or
  3 26 bank holding company of which the person is a director at
  3 27 which time the person shall cease to be a director of the
  3 28 state bank or bank holding company.  The resignation,
  3 29 termination of employment, or separation of such director,
  3 30 including a separation caused by the closing of the state bank
  3 31 or bank holding company at which the person serves as a
  3 32 director, does not affect the jurisdiction and authority of
  3 33 the superintendent to cause notice to be served and proceed
  3 34 under this subsection against the director, if the notice is
  3 35 served before the end of the six=year period beginning on the
  4  1 date the director ceases to be a director with the bank.
  4  2    Sec. 7.  Section 524.707, subsection 2, Code 2005, is
  4  3 amended to read as follows:
  4  4    2.  Section 524.606, subsection 2, which provides for the
  4  5 removal of directors by the superintendent, shall have equal
  4  6 application to officers and employees of a bank, bank holding
  4  7 company, bank affiliate, or trust company.
  4  8    Sec. 8.  Section 524.1201, Code Supplement 2005, is amended
  4  9 by adding the following new subsection:
  4 10    NEW SUBSECTION.  4.  A bank shall not operate a loan
  4 11 production office or deposit production office in this state
  4 12 unless either the bank has received approval from the
  4 13 superintendent or the bank operated the loan production office
  4 14 or deposit production office before July 1, 2006.
  4 15    Sec. 9.  Section 524.1601, Code 2005, is amended to read as
  4 16 follows:
  4 17    524.1601  PENALTIES AND CRIMINAL PROVISIONS APPLICABLE TO
  4 18 DIRECTORS, OFFICERS, AND EMPLOYEES OF STATE BANKS AND BANK
  4 19 HOLDING COMPANIES.
  4 20    1.  A director, officer, or employee of a state bank or
  4 21 bank holding company who willfully violates any of the
  4 22 provisions of subsection 4 of section 524.612, section
  4 23 524.613, subsection 2 of section 524.706, insofar as such
  4 24 subsection incorporates subsection 4 of section 524.612, or
  4 25 section 524.710, shall be guilty of a serious misdemeanor,
  4 26 plus, in the following circumstances, an additional fine or
  4 27 fines equal to:
  4 28    a.  The amount of money or the value of the property which
  4 29 the director, officer, or employee received for procuring, or
  4 30 attempting to procure, a loan, extension of credit, or
  4 31 investment by the state bank or bank holding company, upon
  4 32 conviction of a violation of subsection 1 of section 524.613,
  4 33 or of subsection 1 of section 524.710.
  4 34    b.  The amount by which the director's, officer's, or
  4 35 employee's deposit account in the state bank or bank holding
  5  1 company is overdrawn, upon conviction of a violation of
  5  2 subsection 2 of section 524.613, or of subsection 2 of section
  5  3 524.710.
  5  4    c.  The amount of any profit which the director, officer,
  5  5 or employee receives on the transaction, upon conviction of a
  5  6 violation of subsection 4 of section 524.612, or of subsection
  5  7 2 of section 524.706, insofar as each applies to purchases
  5  8 from and sales to a state bank or bank holding company upon
  5  9 terms more favorable to such director, or officer, or employee
  5 10 than those offered to other persons.
  5 11    d.  The amount of profit, fees or other compensation
  5 12 received, upon conviction of a violation of section 524.710,
  5 13 subsection 1, paragraph "b".
  5 14    2.  A director or officer who willfully makes or receives a
  5 15 loan in violation of subsection 1 of section 524.612, or
  5 16 subsection 1 of section 524.706, shall be guilty of a serious
  5 17 misdemeanor and shall be subject to an additional fine equal
  5 18 to that amount of the loan in excess of the limitation imposed
  5 19 by such subsections, and shall be forever disqualified from
  5 20 acting as a director or officer of any state bank or bank
  5 21 holding company.  For the purpose of this subsection, amounts
  5 22 which are treated as obligations of an officer or director
  5 23 pursuant to subsection 5 of section 524.612, shall be
  5 24 considered in determining whether the loan or extension of
  5 25 credit is in violation of subsection 1 of section 524.612 and
  5 26 subsection 1 of section 524.706.
  5 27    3.  A director, officer, or employee of a state bank or
  5 28 bank holding company who willfully makes or receives a loan or
  5 29 extension of credit of funds held by the state bank or bank
  5 30 holding company as fiduciary, in violation of subsection 4 of
  5 31 section 524.1002, shall be guilty of a serious misdemeanor and
  5 32 shall be subject to a further fine equal to the amount of the
  5 33 loan or extension of credit made in violation of subsection 4
  5 34 of section 524.1002, and shall be forever disqualified from
  5 35 acting as a director, officer, or employee of any state bank
  6  1 or bank holding company.
  6  2    4.  A director, officer, or employee of a state bank or
  6  3 bank holding company who willfully violates, or participates
  6  4 in the violation of, section 524.814, or section 524.819,
  6  5 shall be guilty of a serious misdemeanor.
  6  6    Sec. 10.  Section 524.1602, unnumbered paragraph 1, Code
  6  7 2005, is amended to read as follows:
  6  8    The superintendent may impose a penalty on a state bank of
  6  9 up to one hundred thousand dollars for each day:
  6 10    Sec. 11.  Section 524.1603, subsection 2, Code 2005, is
  6 11 amended to read as follows:
  6 12    2.  The superintendent may impose a penalty on a state bank
  6 13 of up to one hundred thousand dollars for each day that it
  6 14 violates the provisions of section 524.1201.
  6 15    Sec. 12.  Section 536A.2, Code 2005, is amended by adding
  6 16 the following new subsections:
  6 17    NEW SUBSECTION.  1A.  "Affiliate" means the same as defined
  6 18 in 12 U.S.C. } 1841(k).
  6 19    NEW SUBSECTION.  1B.  "Commercial activities" means
  6 20 activities in which an industrial loan company is not
  6 21 specifically authorized to engage under the provisions of this
  6 22 chapter.
  6 23    NEW SUBSECTION.  1C.  "Control" means the same as provided
  6 24 in 12 U.S.C. } 1841(a)(2).
  6 25    Sec. 13.  Section 536A.4, Code 2005, is amended to read as
  6 26 follows:
  6 27    536A.4  LIMITATIONS.
  6 28    No A license shall not be issued to any individual,
  6 29 partnership, nonprofit organization, or unincorporated
  6 30 association.  A license shall not be issued to an applicant
  6 31 that engages in commercial activities directly or through an
  6 32 affiliate.  Not more than one place of business where loans
  6 33 are made shall be maintained under the same license but the
  6 34 superintendent may issue more than one license to the same
  6 35 licensee upon compliance, for each such additional license,
  7  1 with all the provisions of this chapter governing an original
  7  2 issuance of a license.
  7  3    Sec. 14.  Section 536A.5, subsection 6, Code 2005, is
  7  4 amended by striking the subsection.
  7  5    Sec. 15.  Section 536A.12, subsection 3, paragraph a, Code
  7  6 2005, is amended to read as follows:
  7  7    a.  For purposes of this section, "control" means control
  7  8 as defined in section 524.103.  However, a change of control
  7  9 does not occur when a majority shareholder of an industrial
  7 10 loan company transfers the shareholder's shares of the
  7 11 industrial loan company to a revocable trust, so long as the
  7 12 transferor retains the power to revoke the trust and take
  7 13 possession of such shares.
  7 14    Sec. 16.  Section 536A.21, Code 2005, is amended to read as
  7 15 follows:
  7 16    536A.21  OTHER BUSINESS IN SAME OFFICE.
  7 17    A licensee engaged in the business of operating an
  7 18 industrial loan company under the provisions of this chapter
  7 19 may not conduct its business within any office, room, suite,
  7 20 or place of business in which any other business is engaged in
  7 21 or conducted, unless specifically authorized to do so in
  7 22 writing by the superintendent upon the superintendent's
  7 23 finding that the character of the other business is such that
  7 24 its operation by the licensee would not facilitate evasions of
  7 25 this chapter or any other statute of the state of Iowa
  7 26 relating to the making of loans, or premises in which
  7 27 commercial activities are conducted, unless the place where
  7 28 its business is conducted by the industrial loan company is
  7 29 physically separated from the location where commercial
  7 30 activities are conducted and has a separate entrance.  The
  7 31 prohibition of this section shall not apply to the conduct of
  7 32 business if, prior to January 1, 2006, the superintendent has
  7 33 determined in writing that the character of the other business
  7 34 is such that its operation by the licensee would not
  7 35 facilitate evasions of the provisions of this chapter or any
  8  1 other provision of the Code relating to the making of loans.
  8  2    Sec. 17.  Section 536A.22, unnumbered paragraph 3, Code
  8  3 2005, is amended by striking the unnumbered paragraph.
  8  4    Sec. 18.  Section 536A.23, Code 2005, is amended by adding
  8  5 the following new subsection:
  8  6    NEW SUBSECTION.  6.  Engage in commercial activities or
  8  7 have an affiliate that engages in commercial activities.  This
  8  8 subsection shall not apply to an industrial loan company with
  8  9 an affiliate that is engaged in commercial activities prior to
  8 10 January 1, 2006, if control of the industrial loan company is
  8 11 not thereafter transferred to an entity that engages in
  8 12 commercial activities directly or through an affiliate.
  8 13    Sec. 19.  NEW SECTION.  536A.32  ACQUISITIONS.
  8 14    Neither an out=of=state bank nor an out=of=state bank
  8 15 holding company shall directly or indirectly acquire control
  8 16 of, or directly or indirectly acquire all or substantially all
  8 17 of the assets of, an industrial loan company located in this
  8 18 state, unless the industrial loan company has been in
  8 19 continuous existence and operation for at least five years.
  8 20    Sec. 20.  NEW SECTION.  536A.33  ACQUISITIONS AND BRANCHES
  8 21 BY OUT=OF=STATE COMPANIES.
  8 22    An out=of=state industrial loan company, industrial bank,
  8 23 or similar institution as provided in 12 U.S.C. }
  8 24 1841(c)(2)(H), shall not do any of the following:
  8 25    1.  Establish or operate a branch in this state.
  8 26    2.  Directly or indirectly acquire control of an industrial
  8 27 loan company located in this state.
  8 28    3.  Directly or indirectly acquire all or substantially all
  8 29 of the assets of an industrial loan company in this state.
  8 30    Sec. 21.  NEW SECTION.  536A.34  ACTIVITIES OF BRANCHES OF
  8 31 OUT=OF=STATE COMPANIES.
  8 32    A branch of an out=of=state industrial loan company,
  8 33 industrial bank, or similar institution as provided in 12
  8 34 U.S.C. } 1841(c)(2)(H), shall not engage in any activity in
  8 35 this state in which an industrial loan company is not
  9  1 specifically permitted to engage under the provisions of this
  9  2 chapter, and shall not conduct operations at any location
  9  3 where an industrial loan company is not permitted to conduct
  9  4 operations under this chapter.
  9  5    Sec. 22.  Section 524.1803, Code 2005, is repealed.
  9  6
  9  7
  9  8                                                             
  9  9                               CHRISTOPHER C. RANTS
  9 10                               Speaker of the House
  9 11
  9 12
  9 13                                                             
  9 14                               JOHN P. KIBBIE
  9 15                               President of the Senate
  9 16
  9 17    I hereby certify that this bill originated in the House and
  9 18 is known as House File 2587, Eighty=first General Assembly.
  9 19
  9 20
  9 21                                                             
  9 22                               MARGARET THOMSON
  9 23                               Chief Clerk of the House
  9 24 Approved                , 2006
  9 25
  9 26
  9 27                            
  9 28 THOMAS J. VILSACK
  9 29 Governor