HBA-TYH H.B. 1295 76(R)    BILL ANALYSIS


Office of House Bill AnalysisH.B. 1295
By: Smith
Financial Institutions
3/5/1999
Introduced



BACKGROUND AND PURPOSE 

Currently, financial institutions send any accounts that are presumed
abandoned by the account owners to the comptroller's unclaimed money fund.
However, many financial institutions wrongfully presume that  these
accounts have been abandoned and during the time the accounts are in the
control of the comptroller they are not earning the interest that they
should have been collecting.   

Additionally, the comptroller currently deducts from such accounts a
handling fee of one percent on claims of $100 to $5,000, and a fee of one
and one-half percent for claims in excess of $5,000. These fees currently
are deposited in the unappropriated general revenue fund and are not used
to support the unclaimed money fund. 

H.B. 1295 requires financial institutions who wrongfully turn over accounts
to the comptroller to pay the interest that those accounts should have been
earning during the time that they are held by the comptroller.  This bill
also repeals the section of the Property Code authorizing the comptroller
to charge a handling fee for the money held. 

RULEMAKING AUTHORITY

It is the opinion of the Office of House Bill Analysis that this bill does
not expressly delegate any additional rulemaking authority to a state
officer, department, agency, or institution. 

SECTION BY SECTION ANALYSIS

SECTION 1.  Amends Subchapter F, Chapter 74, Property Code, by adding
Section 74.510, as follows: 

Sec. 74.510.  INTEREST PAYABLE ON CLAIM FOR ACCOUNT WRONGFULLY PRESUMED
ABANDONED BY FINANCIAL INSTITUTION.  (a) Defines "account" and
"depository." 
 
(b)  Requires the depository to pay to the owner of the account  the
interest accrued on the money from the date interest was last credited to
the account or, if the account is not an interest-bearing account, the date
on which the property was delivered to the comptroller until the date on
which the claim is paid, as soon as possible after the comptroller or a
depository pays a claim filed under this subchapter for money in an account
wrongfully presumed abandoned under Subchapter B, Chapter 73 (Presumption
of Abandonment).  
 
(c)  Provides that the amount of interest due under Subsection (b) is
computed  by multiplying the amount on which interest is payable by the
greater of the interest rate applicable to the account or the applicable
federal funds rate and multiplying the product by the number of days for
which interest is payable.  Provides that the applicable federal funds rate
is the average of the federal funds rates published by the Federal Reserve
Bank of New York for each of the days for which interest is payable divided
by 360.  Provides that the federal funds rate for any day on which a
published rate is not available  is the same as the published rate for the
next preceding day for which there is a published rate.  

 SECTION 2.  Repealer: Section 74.509, Property Code (Handling Fee for
Processing Unclaimed Property), which authorizes a handling fee to be
deducted from the amount of the claim payment if the payment is at least
$100. 

SECTION 3.Effective date: September 1, 1999.
  Makes application of this Act prospective.

SECTION 4.  Emergency clause.