House Study Bill 544



                                       SENATE/HOUSE FILE       
                                       BY  (PROPOSED DEPARTMENT OF
                                            COMMERCE BILL)


    Passed Senate, Date               Passed House,  Date             
    Vote:  Ayes        Nays           Vote:  Ayes        Nays         
                 Approved                            

                                      A BILL FOR

  1 An Act relating to the regulation of state banks and bank holding
  2    companies including the disclosure and release of regulatory
  3    information, attestation and publication requirements, the
  4    removal and service of officers, directors, and employees, and
  5    offers to purchase stock, and increasing civil penalties.
  6 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:
  7 TLSB 5323DP 81
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PAG LIN



  1  1    Section 1.  Section 524.212, Code 2005, is amended to read
  1  2 as follows:
  1  3    524.212  PROHIBITION AGAINST DISCLOSURE OF REGULATORY
  1  4 INFORMATION.
  1  5    The superintendent, members of the state banking council,
  1  6 general counsel, examiners, or other employees of the banking
  1  7 division shall not disclose, in any manner, to any person
  1  8 other than the person examined and those regulatory agencies
  1  9 referred to in section 524.217, subsection 2, any information
  1 10 relating specifically to the supervision and regulation of any
  1 11 state bank, persons subject to the provisions of chapter 533A,
  1 12 533C, 533D, 535B, 536, or 536A, any affiliate of any state
  1 13 bank, or an affiliate of a person subject to the provisions of
  1 14 chapter 533A, 533C, 533D, 535B, 536, or 536A, except when
  1 15 ordered to do so by a court of competent jurisdiction and then
  1 16 only in those instances referred to in section 524.215,
  1 17 subsections 1, 2, 3, and 5, or when the disclosure is
  1 18 otherwise expressly permitted or required by the provisions of
  1 19 chapter 533A, 533C, 533D, 535B, 536, or 536A.
  1 20    Sec. 2.  Section 524.217, subsection 2, Code 2005, is
  1 21 amended to read as follows:
  1 22    2.  The superintendent may furnish to the federal deposit
  1 23 insurance corporation, the federal reserve system, the office
  1 24 of the comptroller of the currency, the office of thrift
  1 25 supervision, national credit union administration, the federal
  1 26 home loan bank, the financial crimes enforcement network of
  1 27 the federal department of the treasury, the United States
  1 28 internal revenue service, and financial institution regulatory
  1 29 authorities of other states, or to any official or supervising
  1 30 examiner of such regulatory authorities, a copy of the report
  1 31 of any or all examinations made of any state bank and of any
  1 32 affiliate of a state bank.
  1 33    Sec. 3.  Section 524.220, subsection 1, Code 2005, is
  1 34 amended to read as follows:
  1 35    1.  A state bank shall render a full, clear, and accurate
  2  1 statement of its condition to the superintendent, in a format
  2  2 prescribed by the superintendent, verified by the oath of an
  2  3 officer and attested by the signatures of at least three of
  2  4 the directors, or verified by the oath of two of its officers,
  2  5 and attested by at least two of the directors.  The
  2  6 superintendent may, in the superintendent's discretion, use
  2  7 any form of statement of condition that is used by the federal
  2  8 deposit insurance corporation or the federal reserve system.
  2  9    Sec. 4.  Section 524.220, subsection 3, Code 2005, is
  2 10 amended by striking the subsection.
  2 11    Sec. 5.  Section 524.312, subsection 3, Code 2005, is
  2 12 amended to read as follows:
  2 13    3.  If a change in the location of the principal place of
  2 14 business of a state bank is proposed, application for approval
  2 15 of the superintendent shall be made as required by the
  2 16 superintendent pursuant to this section.  A change in location
  2 17 of the principal place of business of a state bank, including
  2 18 a change from one municipal corporation to another municipal
  2 19 corporation within an urban complex, requires an amendment to
  2 20 the articles of incorporation pursuant to sections 524.1502,
  2 21 524.1504, and 524.1506.  A state bank seeking approval of a
  2 22 change of location pursuant to this subsection shall publish
  2 23 once each week for two consecutive weeks a notice of the
  2 24 proposed change of location in a newspaper of general
  2 25 circulation in the municipal corporation or unincorporated
  2 26 area in which the state bank has its principal place of
  2 27 business, or if there is none, in a newspaper of general
  2 28 circulation in the county, or in a county adjoining the
  2 29 county, in which the state bank has its principal place of
  2 30 business, and in the municipal corporation in which it seeks
  2 31 to establish its principal place of business, or if there is
  2 32 none, in a newspaper of general circulation in the county, or
  2 33 in a county adjoining the county, in which the municipal
  2 34 corporation is located.  The notices notice shall be published
  2 35 within thirty days after the application to the superintendent
  3  1 for approval of the change in location is accepted for
  3  2 processing.  The notice shall set forth the name of the state
  3  3 bank, the present location of its principal place of business,
  3  4 the location to which it proposes to move its principal place
  3  5 of business, and the date upon which the application was
  3  6 accepted for processing by the superintendent.
  3  7    Sec. 6.  Section 524.606, subsection 2, unnumbered
  3  8 paragraph 1, Code 2005, is amended to read as follows:
  3  9    If, in the opinion of the superintendent, any director of a
  3 10 state bank or bank holding company has violated any law
  3 11 relating to such state bank or bank holding company or has
  3 12 engaged in unsafe or unsound practices in conducting the
  3 13 business of such state bank or bank holding company, the
  3 14 superintendent may cause notice to be served upon such
  3 15 director, to appear before the superintendent to show cause
  3 16 why the director should not be removed from office.  A copy of
  3 17 such notice shall be sent to each director of the state bank
  3 18 or bank holding company affected, by registered or certified
  3 19 mail.  If, after granting the accused director a reasonable
  3 20 opportunity to be heard, the superintendent finds that the
  3 21 director violated any law relating to such state bank or bank
  3 22 holding company or engaged in unsafe or unsound practices in
  3 23 conducting the business of such state bank or bank holding
  3 24 company, the superintendent, in the superintendent's
  3 25 discretion, may order that such director be removed from
  3 26 office, and that such director be prohibited from serving in
  3 27 any capacity in any other bank, bank holding company, bank
  3 28 affiliate, trust company, or an entity licensed under chapter
  3 29 533A, 533C, 533D, 535B, 536, or 536A.  A copy of the order
  3 30 shall be served upon such director and upon the state bank or
  3 31 bank holding company of which the person is a director at
  3 32 which time the person shall cease to be a director of the
  3 33 state bank or bank holding company.  The resignation,
  3 34 termination of employment, or separation of such director,
  3 35 including a separation caused by the closing of the state bank
  4  1 or bank holding company at which the person serves as a
  4  2 director, does not affect the jurisdiction and authority of
  4  3 the superintendent to cause notice to be served and proceed
  4  4 under this subsection against the director, if the notice is
  4  5 served before the end of the six=year period beginning on the
  4  6 date the director ceases to be a director with the bank.
  4  7    Sec. 7.  Section 524.707, subsection 2, Code 2005, is
  4  8 amended to read as follows:
  4  9    2.  Section 524.606, subsection 2, which provides for the
  4 10 removal of directors by the superintendent, shall have equal
  4 11 application to officers and employees of a bank, bank holding
  4 12 company, bank affiliate, or trust company.
  4 13    Sec. 8.  Section 524.1601, Code 2005, is amended to read as
  4 14 follows:
  4 15    524.1601  PENALTIES AND CRIMINAL PROVISIONS APPLICABLE TO
  4 16 DIRECTORS, OFFICERS, AND EMPLOYEES OF STATE BANKS AND BANK
  4 17 HOLDING COMPANIES.
  4 18    1.  A director, officer, or employee of a state bank or
  4 19 bank holding company who willfully violates any of the
  4 20 provisions of subsection 4 of section 524.612, section
  4 21 524.613, subsection 2 of section 524.706, insofar as such
  4 22 subsection incorporates subsection 4 of section 524.612, or
  4 23 section 524.710, shall be guilty of a serious misdemeanor,
  4 24 plus, in the following circumstances, an additional fine or
  4 25 fines equal to:
  4 26    a.  The amount of money or the value of the property which
  4 27 the director, officer, or employee received for procuring, or
  4 28 attempting to procure, a loan, extension of credit, or
  4 29 investment by the state bank or bank holding company, upon
  4 30 conviction of a violation of subsection 1 of section 524.613,
  4 31 or of subsection 1 of section 524.710.
  4 32    b.  The amount by which the director's, officer's, or
  4 33 employee's deposit account in the state bank or bank holding
  4 34 company is overdrawn, upon conviction of a violation of
  4 35 subsection 2 of section 524.613, or of subsection 2 of section
  5  1 524.710.
  5  2    c.  The amount of any profit which the director, officer,
  5  3 or employee receives on the transaction, upon conviction of a
  5  4 violation of subsection 4 of section 524.612, or of subsection
  5  5 2 of section 524.706, insofar as each applies to purchases
  5  6 from and sales to a state bank or bank holding company upon
  5  7 terms more favorable to such director, or officer, or employee
  5  8 than those offered to other persons.
  5  9    d.  The amount of profit, fees or other compensation
  5 10 received, upon conviction of a violation of section 524.710,
  5 11 subsection 1, paragraph "b".
  5 12    2.  A director or officer who willfully makes or receives a
  5 13 loan in violation of subsection 1 of section 524.612, or
  5 14 subsection 1 of section 524.706, shall be guilty of a serious
  5 15 misdemeanor and shall be subject to an additional fine equal
  5 16 to that amount of the loan in excess of the limitation imposed
  5 17 by such subsections, and shall be forever disqualified from
  5 18 acting as a director or officer of any state bank or bank
  5 19 holding company. For the purpose of this subsection, amounts
  5 20 which are treated as obligations of an officer or director
  5 21 pursuant to subsection 5 of section 524.612, shall be
  5 22 considered in determining whether the loan or extension of
  5 23 credit is in violation of subsection 1 of section 524.612 and
  5 24 subsection 1 of section 524.706.
  5 25    3.  A director, officer, or employee of a state bank or
  5 26 bank holding company who willfully makes or receives a loan or
  5 27 extension of credit of funds held by the state bank or bank
  5 28 holding company as fiduciary, in violation of subsection 4 of
  5 29 section 524.1002, shall be guilty of a serious misdemeanor and
  5 30 shall be subject to a further fine equal to the amount of the
  5 31 loan or extension of credit made in violation of subsection 4
  5 32 of section 524.1002, and shall be forever disqualified from
  5 33 acting as a director, officer, or employee of any state bank
  5 34 or bank holding company.
  5 35    4.  A director, officer, or employee of a state bank or
  6  1 bank holding company who willfully violates, or participates
  6  2 in the violation of, section 524.814, or section 524.819,
  6  3 shall be guilty of a serious misdemeanor.
  6  4    Sec. 9.  Section 524.1602, unnumbered paragraph 1, Code
  6  5 2005, is amended to read as follows:
  6  6    The superintendent may impose a penalty on a state bank of
  6  7 up to one hundred thousand dollars for each day:
  6  8    Sec. 10.  Section 524.1603, subsection 2, Code 2005, is
  6  9 amended to read as follows:
  6 10    2.  The superintendent may impose a penalty on a state bank
  6 11 of up to one hundred thousand dollars for each day that it
  6 12 violates the provisions of section 524.1201.
  6 13    Sec. 11.  Section 524.1803, Code 2005, is repealed.
  6 14                           EXPLANATION
  6 15    This bill relates to the regulation of state banks.  The
  6 16 bill restricts the ability of the superintendent of banking,
  6 17 the banking council, and banking division employees from
  6 18 disclosing certain information regarding delayed deposit
  6 19 services lenders and mortgage bankers and brokers.  The bill
  6 20 permits the superintendent to provide copies of examinations
  6 21 or reports to the financial crimes enforcement network of the
  6 22 U.S. department of the treasury and the internal revenue
  6 23 service.
  6 24    The bill changes the verification and attestation
  6 25 requirements for reports to the superintendent by requiring
  6 26 two officers to verify and at least two directors to attest to
  6 27 the report rather than allowing an alternative verification by
  6 28 one officer and attestation by at least three directors.  The
  6 29 bill repeals the requirement that a state bank publish the
  6 30 bank's statement of condition in a local newspaper.  The bill
  6 31 reduces the number of times a state bank must publish a notice
  6 32 of a proposed change of location of its principal place of
  6 33 business in a local newspaper.
  6 34    The bill provides the superintendent with authority to
  6 35 remove a director, officer, or employee of a bank holding
  7  1 company for engaging in unsafe or unsound practices in
  7  2 conducting the business of the bank holding company and
  7  3 prohibit the director from serving in any capacity for another
  7  4 entity regulated by the superintendent.  The bill makes the
  7  5 criminal provisions of Code chapter 524 applicable to a
  7  6 director, officer, or employee of a bank holding company.
  7  7    The bill increases the penalty the superintendent may
  7  8 impose on a state bank from $100 per day to $1,000 per day.
  7  9 The bill repeals the provision restricting the ability of a
  7 10 bank holding company to purchase stock of a state or national
  7 11 bank.
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