Bill Text: IA HF630 | 2017-2018 | 87th General Assembly | Introduced

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Bill Title: A bill for an act relating to banks, credit unions, and certain consumer credit transactions. (Formerly HF 559 & HSB 126.)

Spectrum: Committee Bill

Status: (Introduced - Dead) 2017-04-17 - Withdrawn. H.J. 1035. [HF630 Detail]

Download: Iowa-2017-HF630-Introduced.html

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House File 630 - Introduced




                                 HOUSE FILE       
                                 BY  COMMITTEE ON WAYS AND
                                     MEANS

                                 (SUCCESSOR TO HF 559)
                                 (SUCCESSOR TO HSB 126)

                                      A BILL FOR

  1 An Act relating to banks, credit unions, and certain consumer
  2    credit transactions.
  3 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:
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PAG LIN



  1  1    Section 1.  Section 524.213, Code 2017, is amended to read
  1  2 as follows:
  1  3    524.213  Duties and powers of superintendent.
  1  4    The superintendent shall have general control, supervision
  1  5 and regulation of all state banks and shall be charged with
  1  6 the administration, interpretation, and execution of the laws,
  1  7 rules, and regulations of this state and any other state or
  1  8 federal law or regulation relating to banks and banking and
  1  9 with such other duties and responsibilities as are imposed
  1 10 upon the superintendent by the laws of this state. The
  1 11 superintendent shall have power to adopt and promulgate such
  1 12 rules and regulations as necessary to carry out and enforce,
  1 13 properly and effectively, the provisions of this chapter and
  1 14 chapter 12C applicable to banks.
  1 15    Sec. 2.  Section 524.612, subsections 1, 2, and 5, Code 2017,
  1 16 are amended by striking the subsections.
  1 17    Sec. 3.  Section 524.612, subsection 3, Code 2017, is amended
  1 18 to read as follows:
  1 19    3.  A director shall not receive terms or be paid a rate
  1 20 of interest on deposits, by a state bank of which the person
  1 21 is a director, which are more favorable than that provided to
  1 22 any other customer under similar circumstances.  Any waiver of
  1 23 ordinary or customary charges related to deposit accounts shall
  1 24 not violate this subsection.
  1 25    Sec. 4.  Section 524.613, subsection 2, Code 2017, is amended
  1 26 by striking the subsection.
  1 27    Sec. 5.  Section 524.706, subsection 1, Code 2017, is amended
  1 28 by striking the subsection.
  1 29    Sec. 6.  Section 524.706, subsection 2, Code 2017, is amended
  1 30 to read as follows:
  1 31    2.  Section 524.612, subsection 2, applies to executive
  1 32 officers, and section 524.612, subsections 3 and 4, apply to
  1 33 all officers and employees.
  1 34    Sec. 7.  Section 524.710, subsection 2, Code 2017, is amended
  1 35 by striking the subsection.
  2  1    Sec. 8.  Section 524.1601, subsection 1, paragraph b, Code
  2  2 2017, is amended to read as follows:
  2  3    b.  The amount by which the director's, or executive
  2  4  officer's, or employee's deposit account in the state bank
  2  5 or bank holding company is overdrawn, upon conviction of a
  2  6  in violation of section 524.613, subsection 2, or of  section
  2  7 524.710, subsection 2 12 C.F.R. {215.4(e).
  2  8    Sec. 9.  Section 524.1601, subsection 2, Code 2017, is
  2  9 amended to read as follows:
  2 10    2.  A director or officer who willfully makes or receives a
  2 11 loan in violation of section 524.612, subsection 1, or section
  2 12 524.706, subsection 1 12 C.F.R. {215.4 or 215.5, shall be
  2 13 guilty of a serious misdemeanor and shall be subject to an
  2 14 additional fine equal to that amount of the loan in excess
  2 15 of the limitation imposed by such subsections regulations,
  2 16 and shall be forever disqualified from acting as a director
  2 17 or officer of any state bank or bank holding company. For
  2 18 the purpose of this subsection, amounts which are treated as
  2 19 obligations of an officer or director pursuant to section
  2 20 524.612, subsection 5, shall be considered in determining
  2 21 whether the loan or extension of credit is in violation of
  2 22 section 524.612, subsection 1, and  section 524.706, subsection
  2 23 1.
  2 24    Sec. 10.  Section 524.1806, Code 2017, is amended to read as
  2 25 follows:
  2 26    524.1806  Banks owned or controlled ==== officers and directors.
  2 27    An individual who is a director or an officer of a bank
  2 28 holding company, as specified by section 524.1801, is deemed
  2 29 to be a director or an officer, or both, as the case may be, of
  2 30 each bank so owned or controlled by that bank holding company,
  2 31 for the purposes of sections 524.612, 524.613 and 524.706, and
  2 32 for the purposes of 12 C.F.R. pt. 215.
  2 33    Sec. 11.  Section 533.205, subsection 7, Code 2017, is
  2 34 amended to read as follows:
  2 35    7.  A state credit union shall not may pay an overdraft of a
  3  1 director, officer, or employee of the state credit union on an
  3  2 account at the state credit union, unless subject to the rules
  3  3 of the superintendent, when the payment of funds is made in
  3  4 accordance with either any of the following:
  3  5    a.  A written, preauthorized, interest=bearing extension of
  3  6 credit plan that specifies a method of repayment.
  3  7    b.  A written, preauthorized transfer of collected funds
  3  8 from another account of the account holder at the state credit
  3  9 union.
  3 10    c.  The overdraft is paid pursuant to an overdraft protection
  3 11 plan or courtesy pay program.
  3 12    Sec. 12.  Section 537.2301, Code 2017, is amended by adding
  3 13 the following new subsection:
  3 14    NEW SUBSECTION.  2A.  A supervised loan made by a person in
  3 15 violation of subsection 2 shall be void and the consumer is
  3 16 not obligated to pay either the amount financed or the finance
  3 17 charge. If the consumer has paid any part of the amount
  3 18 financed or the finance charge, the consumer has a right to
  3 19 recover the payment from the person in violation of subsection
  3 20 2 or from an assignee of that person's rights who undertakes
  3 21 direct collection of payments or enforcement of rights arising
  3 22 from the debt. With respect to violations arising from
  3 23 loans made pursuant to open=end credit, no action pursuant
  3 24 to this subsection may be brought more than two years after
  3 25 the violation occurred. With respect to violations arising
  3 26 from other loans, no action pursuant to this subsection may
  3 27 be brought more than one year after the due date of the last
  3 28 scheduled payment of the agreement pursuant to which the charge
  3 29 was paid.
  3 30    Sec. 13.  Section 537.2501, subsection 1, paragraph f,
  3 31 subparagraph (1), Code 2017, is amended to read as follows:
  3 32    (1)  With respect to open=end credit pursuant to a credit
  3 33 card issued by the creditor which entitles the cardholder
  3 34 to purchase or lease goods or services from at least one
  3 35 hundred persons not related to the card issuer, the parties
  4  1 may contract for an over=limit charge up to fifteen dollars in
  4  2 accordance with 12 C.F.R. {1026.52(b) if the balance of the
  4  3 account exceeds the credit limit established pursuant to the
  4  4 agreement. The over=limit charge under this paragraph shall
  4  5 not be assessed again in a subsequent billing cycle unless in a
  4  6 subsequent billing cycle the account balance has been reduced
  4  7 below the credit limit.
  4  8    Sec. 14.  Section 537.2501, subsection 1, paragraph g, Code
  4  9 2017, is amended to read as follows:
  4 10    g.  A surcharge of not more than five percent of the amount
  4 11 of the face value of the payment instrument or twenty dollars,
  4 12 whichever is greater, for each dishonored payment instrument
  4 13 provided that the fee is clearly and conspicuously disclosed
  4 14 in the cardholder agreement. However, the amount of the
  4 15 surcharge shall not exceed twenty dollars unless the check,
  4 16 draft, or order was presented twice or the maker does not have
  4 17 an account with the drawee. If the check, draft, or order was
  4 18 presented twice or the maker does not have an account with the
  4 19 drawee, the amount of the surcharge shall not exceed fifty
  4 20 dollars as provided for in section 554.3512 for a dishonored
  4 21 check, draft, or order that was accepted as payment for a
  4 22 consumer credit transaction payment. The surcharge shall not
  4 23 be assessed against the maker if the reason for the dishonor of
  4 24 the instrument is that the maker has stopped payment pursuant
  4 25 to section 554.4403.
  4 26    Sec. 15.  Section 537.2501, subsection 1, Code 2017, is
  4 27 amended by adding the following new paragraph:
  4 28    NEW PARAGRAPH.  k.  Credit reporting charges.
  4 29    Sec. 16.  Section 537.2502, subsection 1, paragraph a,
  4 30 subparagraph (1), Code 2017, is amended to read as follows:
  4 31    (1)  Five percent of the unpaid amount of the installment, or
  4 32 a maximum of twenty thirty dollars.
  4 33    Sec. 17.  Section 537.2502, subsection 1, paragraph b, Code
  4 34 2017, is amended to read as follows:
  4 35    b.  For an interest=bearing transaction, an amount not
  5  1 exceeding five percent of the unpaid amount of the installment,
  5  2 or a maximum of fifteen thirty dollars.
  5  3    Sec. 18.  Section 537.2502, subsection 4, Code 2017, is
  5  4 amended to read as follows:
  5  5    4.  With respect to open=end credit, the parties may contract
  5  6 for a delinquency charge on any payment not paid in full when
  5  7 due, as originally scheduled or as deferred, in an amount up to
  5  8 fifteen thirty dollars.
  5  9    Sec. 19.  Section 537.2510, Code 2017, is amended by adding
  5 10 the following new subsection:
  5 11    NEW SUBSECTION.  8.  This section does not apply to a
  5 12 financial institution as defined in section 537.1301.
  5 13    Sec. 20.  Section 537.5201, subsection 3, Code 2017, is
  5 14 amended to read as follows:
  5 15    3.  If a creditor has contracted for or received a charge
  5 16 in excess of that allowed by this chapter, or if a consumer
  5 17 is entitled to a refund and a person liable to the consumer
  5 18 refuses to make a refund within a reasonable time after demand,
  5 19 the consumer may recover from the creditor or the person
  5 20 liable, in an action other than a class action, the excess
  5 21 charge or refund and a penalty in an amount determined by the
  5 22 court not less than one two hundred dollars or more than one
  5 23  two thousand dollars. With respect to excess charges arising
  5 24 from sales or loans made pursuant to open=end credit, no action
  5 25 pursuant to this subsection may be brought more than two years
  5 26 after the time the excess charge was made. With respect to
  5 27 excess charges arising from other consumer credit transactions
  5 28 no action pursuant to this subsection may be brought more than
  5 29 one year after the due date of the last scheduled payment of
  5 30 the agreement pursuant to which the charge was made. For
  5 31 purposes of this subsection, a reasonable time is presumed to
  5 32 be thirty days.
  5 33    Sec. 21.  Section 537.5203, subsection 1, paragraph a, Code
  5 34 2017, is amended to read as follows:
  5 35    a.  Twice the amount of the finance charge in connection with
  6  1 the transaction, but the liability pursuant to this paragraph
  6  2 shall be not less than one two hundred dollars or more than one
  6  3  two thousand dollars.
  6  4    Sec. 22.  Section 537.6113, subsection 2, Code 2017, is
  6  5 amended to read as follows:
  6  6    2.  The administrator may bring a civil action against a
  6  7 person to recover a civil penalty of no more than five ten
  6  8  thousand dollars for repeatedly and intentionally violating
  6  9 this chapter. No civil penalty pursuant to this subsection
  6 10 may be imposed for violations of this chapter occurring more
  6 11 than two years before the action is brought or for making
  6 12 unconscionable agreements or engaging in a course of fraudulent
  6 13 or unconscionable conduct.
  6 14    Sec. 23.  Section 537.6203, subsections 1 and 4, Code 2017,
  6 15 are amended to read as follows:
  6 16    1.  A person required to file notification shall pay to the
  6 17 administrator an annual fee of ten fifty dollars. The fee
  6 18 shall be paid with the filing of the first notification and on
  6 19 or before January 31 of each succeeding year.
  6 20    4.  In addition to the penalties provided by section
  6 21 537.6113, subsection 3, the administrator may collect a charge,
  6 22 established by rule, not exceeding twenty=five seventy=five
  6 23  dollars from each person required to pay fees under this
  6 24 section who fails to pay the fees in full within thirty days
  6 25 after they are due.
  6 26                           EXPLANATION
  6 27 The inclusion of this explanation does not constitute agreement with
  6 28 the explanation's substance by the members of the general assembly.
  6 29    This bill relates to banks, credit unions, and certain
  6 30 consumer credit transactions.
  6 31    The bill modifies several provisions relating to state
  6 32 banks in Code chapter 524. The bill specifies that the
  6 33 superintendent of banking is charged with the administration,
  6 34 interpretation, and execution of the laws, rules, and
  6 35 regulations of any state or federal law or regulation relating
  7  1 to banking. The bill eliminates various provisions applicable
  7  2 to the directors and officers of state banks, including
  7  3 limitations on the receipt of loans and extensions of credit
  7  4 by such persons. However, the bill adds several references to
  7  5 federal law regulating loans to directors and officers in Code
  7  6 chapter 524.
  7  7    Current Code section 533.205(7) provides that a state credit
  7  8 union shall not pay an overdraft of a director, officer, or
  7  9 employee, unless the payment is made in accordance with an
  7 10 extension of credit plan or transfer of funds from another
  7 11 account at the state credit union. The bill modifies this
  7 12 Code section by providing that a state credit union may pay
  7 13 an overdraft of a director, officer, or employee, subject to
  7 14 the rules of the superintendent, when the payment is made in
  7 15 accordance with an extension of credit plan, transfer of funds
  7 16 from another account at the state credit union, or pursuant to
  7 17 an overdraft protection plan or courtesy pay program.
  7 18    Current Code section 537.2301 authorizes certain persons to
  7 19 make supervised loans. The bill provides that a supervised
  7 20 loan made by a person in violation of Code section 537.2301(2)
  7 21 is void and the consumer is not obligated to pay the amount
  7 22 financed or the finance charge. A consumer who has already
  7 23 paid any part of such amount or charge may recover the payment.
  7 24 With respect to violations arising from loans made pursuant
  7 25 to open=end credit, no action may be brought pursuant to the
  7 26 bill more than two years after the violation occurred. With
  7 27 respect to violations arising from other loans, no action may
  7 28 be brought pursuant to the bill more than one year after the
  7 29 due date of the last scheduled payment of the agreement for
  7 30 which the charge was paid.
  7 31    Current Code section 537.2501 sets forth the charges that
  7 32 a creditor may receive in addition to a finance charge. The
  7 33 bill modifies the over=limit charge the parties to an open=end
  7 34 credit pursuant to a credit card transaction may contract for
  7 35 from up to $15 to a charge in accordance with federal law. The
  8  1 bill modifies the surcharge in Code section 537.2501(1)(g) to
  8  2 authorize a surcharge for a dishonored check, draft, or order
  8  3 not to exceed $30 as provided for in Code section 554.3512.
  8  4 The bill also provides that a creditor may receive credit
  8  5 reporting charges.
  8  6    Current Code section 537.2502 allows the parties in certain
  8  7 consumer credit transactions to contract for delinquency
  8  8 charges. For a precomputed consumer credit transaction, the
  8  9 maximum delinquency charge is increased from the greater of 5
  8 10 percent of the unpaid installment or $20, to the greater of
  8 11 5 percent of the unpaid installment or $30, or the deferral
  8 12 charge amount. For an interest=bearing consumer credit
  8 13 transaction, the maximum delinquency charge is increased from 5
  8 14 percent of the unpaid installment or $15, to 5 percent of the
  8 15 unpaid installment or $30. For an open=credit arrangement, the
  8 16 maximum delinquency charge is increased from $15 to $30.
  8 17    Current Code section 537.2510 requires creditors to rebate
  8 18 certain amounts to consumers upon the prepayment of precomputed
  8 19 consumer credit transactions. The bill provides that Code
  8 20 section 537.2510 does not apply to financial institutions as
  8 21 defined in Code section 537.1301. This would include banks,
  8 22 savings and loan associations, or state banks incorporated
  8 23 under state or federal law, and credit unions organized under
  8 24 state or federal law.
  8 25    Current Code section 537.5201 sets forth the remedies
  8 26 available to consumers for violations of Code chapter 537. The
  8 27 bill increases the penalty a creditor must pay for contracting
  8 28 for or receiving a charge in excess of that allowed by Code
  8 29 chapter 537 from not less than $100 or more than $1,000, to not
  8 30 less than $200 or more than $2,000.
  8 31    Current Code section 537.5203 sets forth the civil liability
  8 32 of a creditor who fails to disclose information to a person
  8 33 entitled to the information under Code chapter 537. The bill
  8 34 increases the amount a creditor is liable to such person from
  8 35 not less than $100 or more than $1,000 to not less than $200 or
  9  1 more than $2,000.
  9  2    Current Code section 537.6113 allows the attorney general to
  9  3 bring civil actions to recover moneys under Code chapter 537.
  9  4 The bill increases the civil penalty the attorney general may
  9  5 recover from a person for repeated and intentional violations
  9  6 of Code chapter 537 from no more than $5,000 to no more than
  9  7 $10,000.
  9  8    Current Code section 537.6203 sets forth various fees and
  9  9 charges for persons required to file notification pursuant to
  9 10 Code chapter 537. The bill increases the annual fee for a
  9 11 person required to file notification from $10 to $50. The bill
  9 12 also increases the late charge for failure to pay a fee within
  9 13 30 days that it is due from no more than $25 per person to no
  9 14 more than $75 per person.
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