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
 
 
 
A BILL TO BE ENTITLED
 
AN ACT
  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.
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