Bill Text: TX SB1714 | 2021-2022 | 87th Legislature | Introduced
Bill Title: Relating to the Texas Community Reinvestment Act; authorizing a fee.
Spectrum: Partisan Bill (Democrat 1-0)
Status: (Introduced - Dead) 2021-03-26 - Referred to Business & Commerce [SB1714 Detail]
Download: Texas-2021-SB1714-Introduced.html
87R11032 SRA-F | ||
By: West | S.B. No. 1714 |
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relating to the Texas Community Reinvestment Act; authorizing a | ||
fee. | ||
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: | ||
SECTION 1. Subtitle Z, Title 3, Finance Code, is amended by | ||
adding Chapter 282 to read as follows: | ||
CHAPTER 282. TEXAS COMMUNITY REINVESTMENT ACT | ||
SUBCHAPTER A. GENERAL PROVISIONS | ||
Sec. 282.001. SHORT TITLE. This chapter may be cited as the | ||
Texas Community Reinvestment Act. | ||
Sec. 282.002. DEFINITIONS. In this chapter: | ||
(1) "Banking commissioner" means the banking | ||
commissioner of Texas. | ||
(2) "Covered financial institution" means: | ||
(A) a bank, savings bank, or credit union | ||
chartered under the laws of this state; | ||
(B) an entity licensed in this state to make or | ||
originate residential mortgage loans that lent or originated 50 or | ||
more residential mortgage loans in the previous calendar year; and | ||
(C) any other financial institution under the | ||
jurisdiction of the department as designated by rule by the banking | ||
commissioner. | ||
(3) "Department" means the Texas Department of | ||
Banking. | ||
Sec. 282.003. APPLICABILITY OF CHAPTER. This chapter does | ||
not apply to a bank, savings bank, savings and loan association, or | ||
credit union chartered under the laws of the United States. | ||
Sec. 282.004. CONFLICT WITH OTHER LAW. To the extent this | ||
chapter conflicts with other law, this chapter prevails. | ||
Sec. 282.005. RULES. (a) The banking commissioner may | ||
adopt rules necessary and appropriate to implement and enforce this | ||
chapter, including rules that: | ||
(1) promote access for all communities in this state | ||
to appropriate financial services from covered financial | ||
institutions; | ||
(2) define fair lending practices in connection with | ||
the activities of covered financial institutions; | ||
(3) define the terms used in this chapter and | ||
interpret the provisions of this chapter; and | ||
(4) create a public comments process. | ||
(b) To implement this chapter, the banking commissioner | ||
shall adopt rules incorporating the regulations applicable to | ||
covered financial institutions under federal law. The banking | ||
commissioner may make adjustments and exceptions to the rules as | ||
necessary. | ||
SUBCHAPTER B. ASSESSMENT OF COVERED FINANCIAL INSTITUTIONS' | ||
SERVICE TO LOCAL COMMUNITIES | ||
Sec. 282.051. OBLIGATIONS OF COVERED FINANCIAL | ||
INSTITUTIONS. (a) Each covered financial institution has a | ||
continuing and affirmative obligation to meet the financial | ||
services needs of the communities in which the institution's | ||
offices, branches, and other facilities are maintained that is: | ||
(1) consistent with the safe and sound operation of | ||
the financial institution; and | ||
(2) for a credit union, consistent with the credit | ||
union's common bond. | ||
(b) Each covered financial institution that provides all or | ||
a majority of the institution's products and services through | ||
mobile and other digital channels has a continuing and affirmative | ||
obligation to help meet the financial services needs of | ||
deposit-based assessment areas, including areas contiguous to | ||
those areas, low-income and moderate-income neighborhoods, and | ||
areas where there is a lack of access to safe and affordable banking | ||
and lending services, that is: | ||
(1) consistent with the safe and sound operation of | ||
the financial institution; and | ||
(2) for a credit union, consistent with a credit | ||
union's common bond. | ||
Sec. 282.052. ASSESSMENT OF COVERED FINANCIAL | ||
INSTITUTIONS. (a) The banking commissioner shall assess the | ||
record of each covered financial institution in satisfying the | ||
financial institution's obligations under Section 282.051. | ||
(b) The banking commissioner by rule shall provide for an | ||
assessment of the following factors relating to whether covered | ||
financial institutions are meeting the financial services needs of | ||
local communities: | ||
(1) activities to ascertain the financial services | ||
needs of the community, including communication with community | ||
members regarding financial services provided; | ||
(2) extent of marketing activities to make members of | ||
the community aware of the financial services offered; | ||
(3) origination of mortgage loans, including home | ||
improvement and rehabilitation loans, and other efforts to assist | ||
existing low-income and moderate-income residents to be able to | ||
remain in affordable housing in the their neighborhoods; | ||
(4) for small business lenders, the origination of | ||
loans to businesses with gross annual revenues of $1,000,000 or | ||
less, particularly those in low-income and moderate-income | ||
neighborhoods; | ||
(5) participation, including investments, in | ||
community development and redevelopment programs, small business | ||
technical assistance programs, minority-owned depository | ||
institutions, community development financial institutions, and | ||
mutually-owned financial institutions; | ||
(6) efforts working with delinquent customers to | ||
facilitate a resolution of the delinquency; | ||
(7) origination of loans that show an undue | ||
concentration and a systematic pattern of lending resulting in the | ||
loss of affordable housing units; | ||
(8) evidence of discriminatory and prohibited | ||
practices; and | ||
(9) other factors that reasonably bear on the extent | ||
to which a covered financial institution is meeting the financial | ||
services needs of the institution's entire community, including | ||
responsiveness to community needs as reflected by public comments. | ||
Sec. 282.053. EXAMINATIONS; FEES. (a) The banking | ||
commissioner, in consultation with state and federal agencies with | ||
appropriate regulatory authority, may examine each covered | ||
financial institution for compliance with this chapter and other | ||
applicable state and federal fair lending laws, including: | ||
(1) the Texas Fair Housing Act (Chapter 301, Property | ||
Code); | ||
(2) the Equal Credit Opportunity Act (15 U.S.C. | ||
Section 1691 et seq.); and | ||
(3) the Home Mortgage Disclosure Act of 1975 (12 | ||
U.S.C. Section 2801 et seq.). | ||
(b) The banking commissioner may adopt rules with respect to | ||
the frequency and manner of examination, including the imposition | ||
of examination fees. | ||
(c) The banking commissioner shall appoint a suitable | ||
person to perform the examination. The banking commissioner or the | ||
commissioner's appointees may: | ||
(1) examine the books, records, documents, and | ||
operations of each covered financial institution or the | ||
institution's parent company, subsidiaries, affiliates, or agents; | ||
and | ||
(2) examine under oath any officers, directors, | ||
employees, and agents of the covered financial institution or the | ||
institution's parent company, subsidiaries, affiliates, or agents. | ||
(d) Any document or record prepared or obtained in | ||
connection with or relating to the examination, and any record | ||
prepared or obtained by the banking commissioner, to the extent | ||
that the record summarizes or contains information derived from any | ||
document or record described by this section, is not public | ||
information subject to disclosure under Chapter 552, Government | ||
Code, unless otherwise provided by this chapter. | ||
Sec. 282.054. WRITTEN EVALUATION. (a) On completion of an | ||
examination of a covered financial institution under Section | ||
282.053, the banking commissioner shall prepare a written | ||
evaluation of the covered financial institution's record of | ||
performance under this chapter. | ||
(b) Each evaluation must have: | ||
(1) a public section that includes, at a minimum, the | ||
information that would be disclosed in a written evaluation under | ||
the Community Reinvestment Act of 1977 (12 U.S.C. Section 2901 et | ||
seq.); and | ||
(2) a confidential section. | ||
(c) After the banking commissioner gives the covered | ||
financial institution an opportunity to comment on the evaluation, | ||
the banking commissioner shall make the public section of the | ||
evaluation open to public inspection on request. | ||
(d) The written evaluation must include: | ||
(1) the assessment factors used to determine the | ||
covered financial institution's descriptive rating; | ||
(2) the banking commissioner's conclusions with | ||
respect to each assessment factor; | ||
(3) a discussion of the facts supporting those | ||
conclusions; | ||
(4) the covered financial institution's descriptive | ||
rating and the basis for the rating; and | ||
(5) a summary of public comments. | ||
Sec. 282.055. RATINGS FOR RECORD OF PERFORMANCE. (a) Based | ||
on an examination under Section 282.053, the banking commissioner | ||
shall assign a covered financial institution one of the following | ||
ratings in regard to the institution's record of performance in | ||
meeting the institution's community financial service needs: | ||
(1) outstanding; | ||
(2) satisfactory; | ||
(3) needs to improve; or | ||
(4) substantial noncompliance. | ||
(b) Notwithstanding the provisions of this chapter, the | ||
banking commissioner may establish an alternative examination | ||
procedure for any covered financial institution that, as of its | ||
most recent examination, has been assigned a rating of outstanding | ||
or satisfactory for the institution's record of performance in | ||
meeting the institution's community financial services needs. | ||
Sec. 282.056. PUBLIC NOTICE. Each covered financial | ||
institution shall provide, in the public lobby in each of the | ||
institution's offices and on the institution's Internet website, a | ||
public notice that is substantially similar to the following: | ||
"STATE OF TEXAS | ||
COMMUNITY REINVESTMENT NOTICE | ||
The Texas Department of Banking (department) evaluates our | ||
performance in meeting the financial services needs of this | ||
community, including the needs of low-income to moderate-income | ||
households. The department takes this evaluation into account when | ||
deciding on certain applications submitted by us for approval by | ||
the department. Your involvement is encouraged. You may obtain a | ||
copy of our evaluation. You may also submit signed, written | ||
comments about our performance in meeting community financial | ||
services needs to the department." | ||
Sec. 282.058. CORPORATE ACTIVITIES AND RENEWAL | ||
APPLICATIONS. (a) The banking commissioner shall consider the | ||
record of performance of the covered financial institution and the | ||
institution's parent company, including subsidiaries, relative to | ||
this chapter in considering an application for: | ||
(1) the establishment of a branch office or other | ||
facility; | ||
(2) the relocation of a main office, branch office, or | ||
other facility; | ||
(3) a license renewal; | ||
(4) a change in control of a covered financial | ||
institution; or | ||
(5) a merger or consolidation with, the acquisition of | ||
assets of, or the assumption of liabilities of: | ||
(A) a covered financial institution; | ||
(B) an out-of-state bank, credit union, or | ||
residential mortgage licensee; | ||
(C) a national bank or credit union; or | ||
(D) a foreign financial institution. | ||
(b) The record of performance of the covered financial | ||
institution may be the basis for the denial of an application | ||
described by Subsection (a). | ||
SUBCHAPTER C. COOPERATIVE AGREEMENTS | ||
Sec. 282.101. COOPERATIVE AGREEMENTS. (a) For purposes of | ||
this chapter, the banking commissioner may: | ||
(1) conduct any examinations under this chapter with | ||
state, other state, or federal regulators; | ||
(2) enter into cooperative agreements regarding: | ||
(A) the coordination of or joint participation in | ||
the examinations; | ||
(B) the amount and assessment of examination | ||
fees; or | ||
(C) enforcement actions related to the | ||
examinations; and | ||
(3) accept reports of examinations by other regulators | ||
under those agreements. | ||
(b) Any coordination or joint participation under this | ||
section: | ||
(1) may seek to promote efficient regulation and | ||
effect cost reductions for the department and covered financial | ||
institutions; and | ||
(2) may not limit public participation as permitted | ||
under certain federal regulations. | ||
Sec. 282.102. CONFIDENTIALITY; PRIVILEGES. Any | ||
information or material shared for purposes of coordination or | ||
joint participation under this subchapter continues to be subject | ||
to the requirements under any federal or state law regarding the | ||
privacy or confidentiality of the information or material. Any | ||
privilege arising under federal or state law, including the rules | ||
of any federal or state court, with respect to the information or | ||
material, continues to apply to the information or material. | ||
Sec. 282.103. AUTHORITY NOT LIMITED. This subchapter may | ||
not be construed as limiting the authority of the banking | ||
commissioner to independently conduct examinations of and | ||
enforcement actions against a covered financial institution. | ||
SECTION 2. Subchapter C, Chapter 404, Government Code, is | ||
amended by adding Section 404.0213 to read as follows: | ||
Sec. 404.0213. CONSIDERATION OF FINANCIAL INSTITUTION'S | ||
COMMITMENT TO COMMUNITY. (a) In addition to any other requirements | ||
under law, the comptroller shall consider a financial institution's | ||
record and current level of financial commitment to the | ||
institution's local community when deciding whether to deposit | ||
state funds in the financial institution. The comptroller may | ||
consider: | ||
(1) for financial institutions subject to the | ||
Community Reinvestment Act of 1977 (12 U.S.C. Section 2901 et | ||
seq.), the current and historical ratings that the financial | ||
institution has received, to the extent that those ratings are | ||
publicly available, under that law; | ||
(2) any changes in ownership, management, policies, or | ||
practices of the financial institution that may affect the level of | ||
the financial institution's commitment to the institution's | ||
community; | ||
(3) the financial impact that the withdrawal or denial | ||
of deposits of state funds might have on the financial institution; | ||
and | ||
(4) the financial impact to the state as a result of | ||
withdrawing state funds or refusing to deposit additional state | ||
funds in the financial institution. | ||
(b) State funds may not be deposited in a financial | ||
institution subject to the Community Reinvestment Act of 1977 (12 | ||
U.S.C. Section 2901 et seq.) unless the institution has a current | ||
rating of satisfactory or outstanding under that law. | ||
(c) When investing or depositing state funds, the | ||
comptroller may give preference to financial institutions that have | ||
a current rating of outstanding under the Community Reinvestment | ||
Act of 1977 (12 U.S.C. Section 2901 et seq.). | ||
(d) This section may not be construed as authorizing the | ||
comptroller to conduct an examination or investigation of a | ||
financial institution or to receive information that is not | ||
publicly available and the disclosure of which is otherwise | ||
prohibited by law. | ||
SECTION 3. This Act takes effect September 1, 2021. |