HBA-LJP S.B. 314 77(R)    BILL ANALYSIS


Office of House Bill AnalysisS.B. 314
By: Sibley
Financial Institutions
4/17/2001
Engrossed



BACKGROUND AND PURPOSE 

The Department of Banking (department) was created in 1923 by the 38th
Legislature to oversee the safety and soundness of the financial system of
Texas.  The department charters, supervises, and examines statechartered
banks.  The department also oversees depository institutions and their
affiliates, companies selling money orders and checks, foreign currency
exchange and transmission businesses, perpetual care cemetery funds, and
prepaid funeral contract sellers.  Currently, the department is subject to
the Texas Sunset Act and will be abolished on September 1, 2001, unless
continued by the legislature.  Senate Bill 314 provides for the
continuation of the department and incorporates the recommendations of the
Sunset Advisory Commission. 

RULEMAKING AUTHORITY

It is the opinion of the Office of House Bill Analysis that rulemaking
authority is expressly delegated to the Finance Commission of Texas in
SECTION 6 (Section 154.151, Finance Code), SECTION 8 (Section 154.252,
Finance Code), and SECTION 11 (Section 712.008, Health and Safety Code) of
this bill. 

ANALYSIS

Senate Bill 314 amends the Finance Code to continue the Texas Department of
Banking until September 1, 2013 and to set forth standard Sunset Advisory
Commission recommendations regarding conflicts of interest, the development
of an equal employment policy, standards of conduct, and the maintaining of
written complaints. 

The bill requires the banking commissioner or banking commissioner's
designee to provide to agency employees information and training on the
benefits and methods of participation in the state employee incentive
program (Sec. 12.113).  The bill authorizes the banking commissioner to
place on probation a permit holder whose permit relating to prepaid funeral
services is suspended and to require the permit holder to report regularly
to the Texas Department of Banking and to limit their activities as
prescribed by the banking commissioner (Sec. 154.109). 

The bill requires the Finance Commission of Texas (commission) by rule to
establish a standard disclosure that must be included in each contract to
inform purchasers of the goods and services that will be provided or
excluded under the contract and the circumstances under which the contract
may be modified after the death of the beneficiary (Sec. 154.151). 

The bill provides that the purchaser of prepaid funeral benefits is
entitled to receive the actual amount paid by the purchaser and half of the
earnings attributable to that money (Sec. 154.155).  The bill authorizes
the seller of a trust-funded prepaid funeral benefits contract to retain up
to one-half of all money collected or paid until the seller has received an
amount equal to the lesser of the amount spent by the seller as determined
and documented according to rules adopted by the commission (Sec. 154.252). 

The bill authorizes the banking commissioner to impose an administrative
penalty on persons who engage in a pattern of violations, as determined by
the banking commissioner, or who violates a rule of the  commission.  In
determining the amount of the penalty, the bill requires the banking
commissioner to consider the person's history of violations.  The bill
provides that the imposition of a penalty by the banking commissioner is
subject to judicial review (Sec. 154.406). 

The bill amends the Health and Safety Code to authorize the commission to
adopt rules to enforce and administer provisions relating to perpetual care
cemeteries, including rules establishing fees to defray the costs of
enforcement and administration (Sec. 712.008).  The bill authorizes, rather
than requires, the banking commissioner to examine the books and records of
a corporation relating to its fund and operation of a perpetual care
cemetery annually or more often as necessary to protect plot owners.  The
bill also removes provisions relating to the required period of time
covered by the examination of the books and records of the corporation
(Sec. 712.044). 

After a notice and opportunity for a hearing, the bill authorizes the
banking commissioner to impose an administrative penalty, not to exceed
$1,000 for each violation, on a person who violates certain provisions
relating to perpetual care cemeteries, a final order of the banking
commissioner, or a rule of the commission and does not correct the
violation within a specified time period or a person who engages in a
pattern of violations as determined by the banking commissioner.  The bill
also provides guidelines under which the banking commissioner determines
the amount of the penalty (Sec. 712.0441). 

EFFECTIVE DATE

September 1, 2001.