HBA-NLM H.B. 2069 76(R) BILL ANALYSIS Office of House Bill AnalysisH.B. 2069 By: Marchant Financial Institutions 3/25/1999 Introduced BACKGROUND AND PURPOSE Section 15.103, Finance Code, directs the Credit Union Commission (commission) to periodically study Texas statutes pertaining to credit union operations. The commission undertook such a study in 1998, and as a result, the commission voted to recommend certain changes to be considered by the legislature. The purpose of this bill is to set forth the commission's recommendations. H.B. 2069 conforms various sections of the statutes with the General Appropriations Act. This bill authorizes the credit union commissioner (commissioner) to enter into agreements with other state credit union supervisory agencies that share regulatory responsibility over credit unions with operations in multiple states, and also authorizes the commissioner to establish reporting requirements for foreign credit unions doing business in this state. In addition, this bill authorizes the commission to adopt administrative rules to define what constitutes an office or service facility. This bill also permits the department and other state credit union regulators to share information while maintaining the appropriate confidentiality. RULEMAKING AUTHORITY It is the opinion of the Office of House Bill Analysis that rulemaking authority is expressly delegated to the Credit Union Commission in SECTION 7 (Section 122.012, Finance Code) of this bill. SECTION BY SECTION ANALYSIS SECTION 1. Amends Section 15.308, Finance Code, to require the Credit Union Commission (commission) to set the compensation of the credit union commissioner (commissioner) and the deputy credit union commissioner. Requires the compensation be paid according to the General Appropriations Act. Provides an exception for the commissioner and deputy commissioner from the application of Chapter 654 (Position Classification), Government Code. Deletes the provision that entitles each examiner, and each officer of the commission and department to compensation set by the commission. Deletes the application of Chapter 654, Government Code, to a department position under certain classified salary groups. Deletes the provision authorizing the legislature to determine the total amount appropriated to the department. Deletes the provision authorizing the department to use money appropriated to it for any purpose to pay the salaries determined by the commission. Deletes the provision which prohibits an employee from receiving compensation that exceeds the compensation received by the governor. SECTION 2. Amends Section 15.402(c), Finance Code, to provide for reasonable fees, rather than supervision fees, for the purposes of this section. SECTION 3. Amends Section 15.408, Finance Code, to make a conforming change. SECTION 4. Amends Subchapter E, Chapter 15, Finance Code, by adding Sections 15.411 and 15.412, as follows: Sec. 15.411. AGREEMENTS WITH OTHER REGULATORS. (a) Authorizes the commissioner to enter into an agreement with any credit union supervisory agency regarding the examination or supervision of branch offices of credit unions chartered in this state doing business in other states and foreign credit unions doing business in this state. Authorizes the commissioner to accept examinations or reports from other credit union supervisory agencies. Provides that the acceptance of the examination or reports does not waive any fee, charge, or revenue required to be paid by a credit union, including a foreign credit union doing business in this state. (b) Authorizes the commissioner to enter into any cooperative arrangement with other credit union supervisory agencies to promote the effective regulation of state credit unions doing business across state lines, including contracting to use another agency's examiners, allowing for the use of the examiners of this state by another agency, or collecting fees on behalf of or receiving payments through another agency. Sec. 15.412. FILING GROUP RETURN WITH THE INTERNAL REVENUE SERVICE. Authorizes the commissioner to file a consolidated group return form with the Internal Revenue Service on behalf of all credit unions under the department's jurisdiction. Sets forth procedural requirements to be included in the group return. Provides that the state is not liable for information contained in any form submitted. Provides that each credit union is individually responsible for the accuracy, completeness, and timeliness of the information and for any potential tax liability or penalties that may accrue. SECTION 5. Amends Section 121.002, Finance Code, by amending Subdivision (2) and by adding Subdivision (8), as follows: (2) Expands the definition of "credit union" by including a financial institution authorized to do business in this state for developing and providing to its members alternative methods of financing their purchases at reasonable costs. Redesignates existing Paragraph (D) to (E). (8) Defines "law enforcement agency." SECTION 6. Amends Section 122.003(c), Finance Code, to prohibit a person who is not an authorized credit union or related entity from using a name or title containing the words "credit union" or any derivation of that term that indicates or implies or is calculated to lead a person to believe that certain business being conducted is the type of business carried on or transacted by a credit union. Redesignates existing Paragraphs (A) and (B) to Subdivisions (1) and (2). SECTION 7. Amends Section 122.012, Finance Code, by amending Subsection (b) and by adding Subsection (c), to require the credit union to notify the commissioner in writing of the date that the new office or service facility begins operating. Authorizes the commission, by rule, to prescribe what constitutes an office or service facility. SECTION 8. Amends Section 122.013, Finance Code, by adding Subsection (d), as follows: (d) Authorizes the commission to require a foreign credit union operating in this state to submit periodic reports. Requires the reports to be provided by the foreign credit union or by the credit union supervisory agency having primary responsibility for that credit union. Sets forth reporting requirements. SECTION 9. Amends Section 122.101, Finance Code, as follows: Sec. 122.101. New title: CALL REPORTS. (a) Requires a credit union to submit to the department on a semiannual basis a call report that states the credit union's financial condition. Deletes the requirement that a credit union report to the department not later than February 1 each year. Makes nonsubstantive changes. (b) Provides that the credit union must submit the call report on or before the date stated on the form supplied by the department. Deletes the provision relating to the filing of the report and a filing fee. Makes a conforming change. (c) Provides that a report must be filed on or before the due date, rather than before the 31st day after the due date. SECTION 10. Amends Section 122.261(b), Finance Code, to include an instrumentality of another state among the entities to which the commissioner is authorized to disclose the information in this section. SECTION 11. Amends Section 123.107, Finance Code, to provide that a credit union is authorized to provide insurance for the benefit of its members in accordance with applicable law or rules adopted by the commission. SECTION 12. Amends Section 123.201(a), Finance Code, to authorize a credit union to engage in any other type of financing transaction authorized by applicable law or rules adopted by the commission, rather than in accordance with applicable law. SECTION 13. Amends Section 126.002, Finance Code, by amending Subsections (a) and (c) and by adding Subsection (d), as follows: (a) Provides that certain information obtained directly or indirectly by the credit union department (department) relating to the financial condition or business affairs of a credit union and related files and records are confidential. (c) Authorizes the commissioner to disclose the information described by Subsection (a) to another instrumentality of another state or a law enforcement agency, rather than to the Texas Share Guaranty Credit Union, (d) Prohibits the disclosure of information obtained by the department from a federal or state supervisory agency that is confidential under federal law or the laws of that state, except as provided by the applicable federal or state law. SECTION 14. Amends Section 126.054, Finance Code, by adding Subsection (c), to provide that the report of examination is confidential. Authorizes the commissioner to provide a copy of the report to other parties as described in the Section 126.002(c) (Confidentiality of Information), Finance Code. SECTION 15. Amends Section 126.055, Finance Code, to authorize the commission to establish and to require the credit union to pay a fee based on the cost of performing an examination of the credit union. Makes nonsubstantive changes. SECTION 16. (a) Effective date: September 1, 1999. (b) Provides that in accordance with Section 311.031(c) (Saving Provisions), Government Code, which gives effect to a substantive amendment enacted by the same legislature that codifies the amended statute, the text of Section 15.408, Finance Code, as set out in Section 3 of this Act, gives effect to changes made by Chapter 338, Act of the 75th Legislature, Regular Session, 1997. (c) Provides that to the extent of any conflict, this Act prevails over another Act of the 76th Legislature, Regular Session, 1999, relating to nonsubstantive additions and corrections in enacted codes. SECTION 17. Emergency clause.