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| THE GENERAL ASSEMBLY OF PENNSYLVANIA |
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| HOUSE BILL |
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| INTRODUCED BY TRUITT, HESS, KILLION, REED AND GROVE, JUNE 18, 2012 |
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| REFERRED TO COMMITTEE ON COMMERCE, JUNE 18, 2012 |
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| AN ACT |
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1 | Amending the act of May 15, 1933 (P.L.565, No.111), entitled "An |
2 | act relating to the powers and duties of the Department of |
3 | Banking and the Secretary of Banking in exercising |
4 | supervision over, and taking possession of and conducting or |
5 | liquidating the business and property of, corporations, |
6 | associations, and persons receiving deposits or otherwise |
7 | transacting a banking business, corporations acting as |
8 | fiduciaries, and building and loan associations; providing |
9 | for the payment of the expenses of the Department of Banking |
10 | by supervised corporations, associations, or persons, and |
11 | appropriating the Banking Department Fund; authorizing the |
12 | Department of Banking, under certain circumstances, to |
13 | examine corporations, associations, or persons affiliated, or |
14 | having business transactions with supervised corporations, |
15 | associations or persons; authorizing appeals to the Supreme |
16 | Court, and prescribing and limiting the powers and duties of |
17 | certain other courts and their prothonotaries, registers of |
18 | wills, recorders of deeds, and certain State departments, |
19 | commissions, and officers; authorizing certain local public |
20 | officers and State departments to collect fees for services |
21 | rendered under this act; providing penalties; and repealing |
22 | certain acts and parts of acts," further providing for |
23 | general scope of supervision and exercise of discretion, for |
24 | assessment of expenses of department upon institutions, for |
25 | disclosure of information forbidden, penalty and exceptions, |
26 | for examination of corporations or persons affiliated with |
27 | institutions and for orders by department; and providing for |
28 | implementation of the Consumer Financial Protection Act of |
29 | 2010. |
30 | The General Assembly of the Commonwealth of Pennsylvania |
31 | hereby enacts as follows: |
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1 | Section 1. Section 202D of the act of May 15, 1933 (P.L.565, |
2 | No.111), known as the Department of Banking Code, amended |
3 | December 9, 2002 (P.L.1604, No.209), is amended to read: |
4 | Section 202. General Scope of Supervision; Exercise of |
5 | Discretion.--* * * |
6 | D. The department may issue orders, statements of policy and |
7 | interpretive letters necessary and appropriate to administer |
8 | this act or any other statute within the department's |
9 | jurisdiction to administer or enforce. |
10 | * * * |
11 | Section 2. Section 204 of the act is amended by adding a |
12 | subsection to read: |
13 | Section 204. Assessment of Expenses of Department upon |
14 | Institutions.--* * * |
15 | C. This section also applies to licensees. |
16 | Section 3. Section 302A(5) of the act, amended July 8, 2008 |
17 | (P.L.827, No.58), is amended to read: |
18 | Section 302. Disclosure of Information Forbidden; Penalty; |
19 | Exceptions.--A. * * * |
20 | (5) The department may provide to any person, corporation or |
21 | Federal, State or local government agency the following |
22 | information regarding licensees, institutions and credit unions |
23 | to the extent that the department has such information in its |
24 | possession: the type of license held by the licensee; whether a |
25 | license application submitted by any person or corporation has |
26 | been denied pursuant to a final order or adjudication issued by |
27 | the department; whether and for what time period a licensee's |
28 | license is current, suspended or revoked pursuant to a final |
29 | order or adjudication issued by the department; whether and for |
30 | what time period an individual is or has been suspended or |
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1 | prohibited from working for or otherwise participating as a |
2 | licensee or in any other capacity in businesses regulated by the |
3 | department pursuant to a final order or adjudication issued by |
4 | the department; and whether and to what extent a corporation, |
5 | person, institution, credit union or licensee is or has been |
6 | subject to a fine, order or adjudication issued by the |
7 | department. |
8 | * * * |
9 | Section 4. Section 402 of the act, amended December 9, 2002 |
10 | (P.L.1604, No.209), is amended to read: |
11 | Section 402. Examination of Corporations or Persons |
12 | Affiliated with Institutions.--The department shall have the |
13 | power to supervise, regulate, examine, limit, or prohibit the |
14 | activities of corporations or persons that are subsidiaries of |
15 | or are affiliated with institutions, including credit unions, to |
16 | the same extent as such activities of corporations or persons |
17 | that are subsidiaries of or are affiliated with national banking |
18 | associations, Federal savings associations or Federal credit |
19 | unions, or with members of a Federal Reserve Bank, are, or shall |
20 | be, supervised, regulated, examined, limited, or prohibited by |
21 | general law, by Federal statutes or by regulations issued by any |
22 | Federal authority pursuant to law, but in no event shall the |
23 | department's examination and enforcement authority over |
24 | subsidiaries and affiliates be less than is permissible for |
25 | banking institutions under the act of November 30, 1965 |
26 | (P.L.847, No.356), known as the "Banking Code of 1965," savings |
27 | associations under the act of December 14, 1967 (P.L.746, |
28 | No.345), known as the "Savings Association Code of 1967," or |
29 | credit unions under 17 Pa.C.S. (relating to credit unions). |
30 | Section 5. Section 501 B of the act, amended December 9, |
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1 | 2002 (P.L.1604, No.209), is amended and the section is amended |
2 | by adding a subsection to read: |
3 | Section 501. Orders by Department.--* * * |
4 | B. Whenever it shall appear to the department that an |
5 | [attorney, officer,] officer or employe of an institution, and |
6 | in the case of an incorporated institution, a director or |
7 | trustee thereof, [shall have continued to violate] has violated |
8 | any law or order relating to such institution, or [shall have |
9 | continued] has engaged in any unsafe or unsound [practices] |
10 | practice or breach of fiduciary duty in conducting the business |
11 | of such institution, [after having been warned by the department |
12 | to discontinue such violations of law or such unsafe or unsound |
13 | practices,] the department may issue an order directing such |
14 | [attorney,] officer, employe, director, or trustee to appear on |
15 | the day fixed in such order before the department and show cause |
16 | why he should not be removed from his office or position at such |
17 | institution and such office or position declared vacant. A copy |
18 | of such order shall be sent to the institution of which such |
19 | person is an [attorney,] officer, employe, director, or trustee. |
20 | The office or position of any [attorney,] officer, employe, |
21 | director, or trustee, so ordered by the department to appear, |
22 | who does not appear on the day fixed in such order, shall, |
23 | unless the date for his appearance shall previously have been |
24 | extended by the department, upon such failure to appear, be |
25 | declared vacant. |
26 | On the day fixed in the department's order such [attorney,] |
27 | officer, employe, director, or trustee shall be heard, in person |
28 | or by counsel, by the department. If, after such hearing, it |
29 | shall appear to the department that such [attorney,] officer, |
30 | employe, director, or trustee has not shown cause why he should |
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1 | not be removed from his office or position at such institution |
2 | and such office or position declared vacant, the department |
3 | shall, within sixty days of such hearing, issue an order |
4 | [directing the institution to remove] removing such [attorney,] |
5 | officer, employe, director, or trustee from his office or |
6 | position, and declare such office or position vacant. A copy of |
7 | such order shall be sent to the [attorney,] officer, employe, |
8 | director, or trustee so removed. |
9 | The department shall set forth in its order the date upon |
10 | which any such removal and declaration of vacancy shall become |
11 | effective. |
12 | The department may immediately suspend any officer, employe, |
13 | director or trustee of an institution from his or her position |
14 | at the institution and from any further participation in the |
15 | conduct of the institution if, in the opinion of the department, |
16 | the institution or its shareholders or depositors have suffered |
17 | or may suffer any significant financial harm or other prejudice |
18 | by the officer, employe, director or trustee's continued |
19 | involvement in the affairs of the institution. To suspend an |
20 | officer, employe, director or trustee immediately, the |
21 | department shall provide a notice containing a statement of the |
22 | facts constituting grounds for removal and shall state a time |
23 | and place for a hearing. The hearing shall be fixed for a date |
24 | between thirty days and sixty days from the date of service of |
25 | notice unless an earlier or later date is set by the department |
26 | at the request of the affected officer, employe, director or |
27 | trustee. |
28 | If the institution, of which such person, ordered by the |
29 | department to appear is an [attorney,] officer, employe, |
30 | director, or trustee, is an interstate bank or is a member of a |
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1 | Federal Reserve Bank, the Federal Deposit Insurance Corporation |
2 | or the Federal Home Loan Bank, the department may notify such |
3 | Federal Reserve Bank, Federal Deposit Insurance Corporation, |
4 | Federal Home Loan Bank, or other bank supervisory agencies |
5 | having jurisdiction over an interstate bank, as the case may be, |
6 | of its order directing such [attorney,] officer, employe, |
7 | director, or trustee to appear before the department and of its |
8 | decisions issued in such a case. At such hearing, any duly |
9 | authorized representative of such Federal Reserve Bank, Federal |
10 | Deposit Insurance Corporation, Federal Home Loan Bank or other |
11 | bank supervisory agencies having jurisdiction over such |
12 | interstate bank, as the case may be, may appear as a witness. |
13 | Except as otherwise specifically provided in this act, the |
14 | proceedings of the department and its decisions regarding |
15 | institutions shall not be published or divulged to anyone. |
16 | Any [attorney,] officer, employe, director, or trustee, who |
17 | is removed from his office or position as provided in this |
18 | section, shall thereafter be disqualified from acting as an |
19 | [attorney,] officer, employe, director, or trustee of any |
20 | institution, credit union or licensee in this Commonwealth, for |
21 | such period as the department shall prescribe. |
22 | * * * |
23 | H. The department may impose a civil penalty of up to |
24 | twenty-five thousand dollars ($25,000) for each violation |
25 | against an institution, or any officer, employe, director or |
26 | trustee of an institution, for a violation of any law or order |
27 | relating to the institution or for any unsafe and unsound |
28 | practice or breach of fiduciary duty in conducting the business |
29 | of the institution. |
30 | Section 6. The act is amended by adding a section to read: |
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1 | Section 506. Implementation of the Consumer Financial |
2 | Protection Act of 2010.--A. This section applies to matters |
3 | relating to institutions, credit unions, licensees, national |
4 | banks, Federal savings associations, foreign financial |
5 | institutions and other persons subject to the jurisdiction of |
6 | the bureau doing business in this Commonwealth. |
7 | B. The Attorney General is authorized to initiate |
8 | proceedings before courts of competent jurisdiction to enforce |
9 | requirements of the Consumer Financial Protection Act or |
10 | regulations adopted by the bureau to the extent authorized to do |
11 | so by sections 1042(a) and 1047 of the Consumer Financial |
12 | Protection Act (12 U.S.C. §§ 5552(a) and 25b(i)) except that |
13 | with respect to institutions, credit unions, licensees, foreign |
14 | financial institutions, national banks, Federal savings |
15 | associations or their subsidiaries, the Attorney General may |
16 | initiate proceedings only upon the request of, or with the |
17 | approval of, the department. If the Attorney General refuses to |
18 | bring a civil action at the request of the department, the |
19 | Office of General Counsel may initiate the action on behalf of |
20 | the Commonwealth. |
21 | C. The department is authorized to receive reports of |
22 | examinations by the bureau as authorized under section 1022(c) |
23 | (6)(C) of the Consumer Financial Protection Act (12 U.S.C. § |
24 | 5512(c)(6)(C)) and to enter into agreements with the bureau |
25 | regarding the coordination of examinations as authorized under |
26 | section 1025(e)(2) of the Consumer Financial Protection Act (12 |
27 | U.S.C. § 5515(e)(2)). The reports shall be subject to the |
28 | requirements of section 302, except that the department may |
29 | disclose, to the extent permitted by the bureau, the contents of |
30 | the reports relating to allegations of criminal conduct to the |
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1 | Attorney General. |
2 | D. No agency of this Commonwealth, nor political |
3 | subdivision, may engage in the exercise of visitorial powers |
4 | with respect to a national bank or Federal savings association, |
5 | except in a manner consistent with Federal law, including |
6 | section 1047 of the Consumer Financial Protection Act (12 U.S.C. |
7 | § 25b(i)), and upon the request of, or as expressly and on a |
8 | case-by-case basis, authorized by the Office of the Comptroller |
9 | of the Currency. |
10 | E. The department, to the extent otherwise authorized by the |
11 | laws of this Commonwealth, may engage in the exercise of |
12 | visitorial powers with respect to institutions, credit unions, |
13 | licensees, foreign financial institutions or their subsidiaries, |
14 | or with respect to the subsidiaries of national banks or Federal |
15 | savings associations. |
16 | F. Nothing in this section may prevent an agency of this |
17 | Commonwealth, or political subdivision, from engaging in a civil |
18 | investigation, administrative enforcement action, examination, |
19 | information collection or any other administrative proceeding or |
20 | commencing civil proceedings before a court of competent |
21 | jurisdiction to determine compliance with or enforce a statute |
22 | of this Commonwealth, a regulation or order of a Commonwealth |
23 | agency, an ordinance or resolution of a political subdivision or |
24 | a Federal law or regulation, to the extent authorized by Federal |
25 | law, not relating to or incidental to the banking or financial |
26 | activities, operations or condition of an institution, credit |
27 | union, licensee, national bank, Federal savings association or |
28 | foreign financial institution and not otherwise preempted by |
29 | Federal law, but prior to doing so, the agency or political |
30 | subdivision shall give notice and consult with the department. |
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1 | To the extent the department determines that such actions may |
2 | affect the banking or financial activities, operations or |
3 | condition, including safety and soundness, of any institution, |
4 | credit union, licensee, national bank, Federal savings |
5 | association, foreign financial institution or a subsidiary of |
6 | the foregoing; or interfere with the regulation of such entities |
7 | by the department, Federal regulatory agencies or regulatory |
8 | agencies of other states, the department shall have sole and |
9 | exclusive jurisdiction to initiate or participate in |
10 | administrative proceedings, or to request that the Attorney |
11 | General initiate or participate in judicial proceedings, to |
12 | enforce such laws or to determine that such proceedings are not |
13 | in the public interest. |
14 | G. Powers and responsibilities granted to the department by |
15 | this section may not be exercised by any other agency of the |
16 | Commonwealth, or political subdivision, except upon the request |
17 | of the department, or as expressly authorized by the department |
18 | on a case-by-case basis. |
19 | H. Nothing in this section may limit or restrict the power |
20 | of the Attorney General or law enforcement agencies of |
21 | municipalities to commence criminal proceedings. |
22 | I. Consumer financial laws of this Commonwealth not |
23 | preempted by Federal law pursuant to section 1044 or 1046 of the |
24 | Consumer Financial Protection Act (12 U.S.C. §§ 256 and 1461) or |
25 | other provision of Federal law, including statutes, regulations |
26 | adopted by Commonwealth agencies, orders issued by Commonwealth |
27 | agencies, ordinances or resolutions enacted by political |
28 | subdivisions or orders issued by political subdivisions, shall |
29 | apply to national banks, Federal savings associations and their |
30 | subsidiaries, only to the extent those laws apply to State- |
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1 | chartered banks and savings associations and their subsidiaries. |
2 | J. Consumer financial laws of this Commonwealth applicable |
3 | to the activities of foreign financial institutions and their |
4 | subsidiaries, including statutes, regulations adopted by |
5 | Commonwealth agencies, orders issued by Commonwealth agencies, |
6 | ordinances or resolutions enacted by political subdivisions or |
7 | orders issued by political subdivisions, shall apply to foreign |
8 | financial institutions and their subsidiaries, only to the |
9 | extent those laws apply to State-chartered banks and savings |
10 | associations and their subsidiaries. |
11 | K. The following terms shall be construed in this section to |
12 | have the following meanings, except in those instances where the |
13 | context clearly indicates otherwise: |
14 | "Bureau." The Federal Bureau of Consumer Financial |
15 | Protection. |
16 | "Consumer Financial Protection Act." Title X of the Dodd- |
17 | Frank Wall Street Reform and Consumer Financial Protection Act |
18 | (Public Law 111-203, 12 U.S.C. § 5301 et seq.) or the Consumer |
19 | Financial Protection Act of 2010. |
20 | "Foreign financial institution." A person licensed, |
21 | registered or regulated by a state other than the Commonwealth |
22 | or a foreign country that provides financial services to or for |
23 | the benefit of persons in this Commonwealth. |
24 | "State." Any state, territory, or possession of the United |
25 | States, the District of Columbia, the Commonwealth of Puerto |
26 | Rico, the Commonwealth of the Northern Mariana Islands, Guam, |
27 | American Samoa or the United States Virgin Islands or any |
28 | federally recognized Indian tribe as defined by the Secretary of |
29 | the Interior under section 104(a) of the Federally Recognized |
30 | Indian Tribe List Act of 1994 (Public Law 103-454, 25 U.S.C. § |
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1 | 479a-1(a)). |
2 | "Visitorial powers." The conduct of a civil investigation, |
3 | administrative enforcement action, examination or any other |
4 | administrative proceeding, or a request for a report or |
5 | information, to determine compliance with or enforce a statute |
6 | of this Commonwealth, a regulation or order of a Commonwealth |
7 | agency, an ordinance or resolution of a political subdivision or |
8 | a Federal law or regulation relating or incidental to the |
9 | banking or the financial activities, operation or condition of |
10 | an institution, credit union, licensee, national bank, Federal |
11 | savings association or foreign financial institution. |
12 | Section 7. This act shall take effect in 60 days. |
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