PRINTER'S NO.  3774

  

THE GENERAL ASSEMBLY OF PENNSYLVANIA

  

HOUSE BILL

 

No.

2369

Session of

2012

  

  

INTRODUCED BY TRUITT, HESS, KILLION, REED AND GROVE, JUNE 18, 2012

  

  

REFERRED TO COMMITTEE ON COMMERCE, JUNE 18, 2012  

  

  

  

AN ACT

  

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

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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

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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

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certain acts and parts of acts," further providing for

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general scope of supervision and exercise of discretion, for

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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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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

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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

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information regarding licensees, institutions and credit unions 

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to the extent that the department has such information in its

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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

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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

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or are affiliated with institutions, including credit unions, to

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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 

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subsidiaries and affiliates be less than is permissible for

25

banking institutions under the act of November 30, 1965

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(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

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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:

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Section 501.  Orders by Department.--* * *

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B.  Whenever it shall appear to the department that an

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[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

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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

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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

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of such order shall be sent to the institution of which such

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person is an [attorney,] officer, employe, director, or trustee.

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The office or position of any [attorney,] officer, employe,

21

director, or trustee, so ordered by the department to appear,

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who does not appear on the day fixed in such order, shall,

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unless the date for his appearance shall previously have been

24

extended by the department, upon such failure to appear, be

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declared vacant.

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On the day fixed in the department's order such [attorney,]

27

officer, employe, director, or trustee shall be heard, in person

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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

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[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,

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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

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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

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and place for a hearing. The hearing shall be fixed for a date

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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

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at the request of the affected officer, employe, director or

27

trustee.

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If the institution, of which such person, ordered by the

29

department to appear is an [attorney,] officer, employe,

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director, or trustee, is an interstate bank or is a member of a

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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,

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of its order directing such [attorney,] officer, employe,

7

director, or trustee to appear before the department and of its

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decisions issued in such a case. At such hearing, any duly

9

authorized representative of such Federal Reserve Bank, Federal

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Deposit Insurance Corporation, Federal Home Loan Bank or other

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bank supervisory agencies having jurisdiction over such

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interstate bank, as the case may be, may appear as a witness.

13

Except as otherwise specifically provided in this act, the

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proceedings of the department and its decisions regarding

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institutions shall not be published or divulged to anyone.

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Any [attorney,] officer, employe, director, or trustee, who

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is removed from his office or position as provided in this

18

section, shall thereafter be disqualified from acting as an

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[attorney,] officer, employe, director, or trustee of any

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institution, credit union or licensee in this Commonwealth, for

21

such period as the department shall prescribe.

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* * *

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H.  The department may impose a civil penalty of up to

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twenty-five thousand dollars ($25,000) for each violation

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against an institution, or any officer, employe, director or

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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.

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Section 6.  The act is amended by adding a section to read:

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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

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initiate proceedings only upon the request of, or with the

17

approval of, the department. If the Attorney General refuses to

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bring a civil action at the request of the department, the

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Office of General Counsel may initiate the action on behalf of

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the Commonwealth.

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C.  The department is authorized to receive reports of

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examinations by the bureau as authorized under section 1022(c)

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(6)(C) of the Consumer Financial Protection Act (12 U.S.C. §

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5512(c)(6)(C)) and to enter into agreements with the bureau

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regarding the coordination of examinations as authorized under

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section 1025(e)(2) of the Consumer Financial Protection Act (12

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U.S.C. § 5515(e)(2)). The reports shall be subject to the

28

requirements of section 302, except that the department may

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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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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

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visitorial powers with respect to institutions, credit unions,

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licensees, foreign financial institutions or their subsidiaries,

14

or with respect to the subsidiaries of national banks or Federal

15

savings associations.

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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,

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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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To the extent the department determines that such actions may

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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

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administrative proceedings, or to request that the Attorney

11

General initiate or participate in judicial proceedings, to

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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

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this section may not be exercised by any other agency of the

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Commonwealth, or political subdivision, except upon the request

17

of the department, or as expressly authorized by the department

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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

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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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