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AN ACT
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relating to modernization of the regulation of banking in this |
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state. |
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BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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SECTION 1. Subchapter B, Chapter 12, Finance Code, is |
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amended by adding Section 12.1085 to read as follows: |
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Sec. 12.1085. FINANCIAL LITERACY PROGRAM. (a) The |
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department shall seek to improve the financial literacy and |
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education of persons in this state and to encourage access to |
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mainstream financial products and services by persons who have not |
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previously participated in the conventional finance system, by: |
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(1) coordinating, encouraging, and aiding banks in the |
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development and promotion of financial literacy and education |
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programs and community outreach; |
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(2) serving as a clearinghouse of information about |
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financial literacy and education programs; |
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(3) creating and maintaining a resource bank of |
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materials pertaining to financial literacy; and |
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(4) promoting replication of best practices and |
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exemplary programs that foster financial literacy and education. |
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(b) The department may solicit and accept a gift, grant, or |
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donation from any source, including a foundation, private entity, |
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governmental entity, or institution of higher education, to assist |
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in the implementation of this section. |
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SECTION 2. Section 31.105, Finance Code, is amended to read |
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as follows: |
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Sec. 31.105. EXAMINATION REQUIRED. (a) The banking |
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commissioner shall examine each state bank annually, or on another |
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periodic basis as may be required by rule or policy, or [not less
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than once during each 12-month period, except that this examination
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is required not less than once during each 18-month period if the
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state bank:
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[(1)has total assets of less than $250 million;
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[(2) is well capitalized, as defined by Section 38,
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Federal Deposit Insurance Act (12 U.S.C. Section 1831o);
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[(3) was found to be well managed at its most recent
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examination, and its composite condition:
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[(A)was found to be outstanding; or
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[(B) was found to be outstanding or good, in the
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case of a state bank that has total assets of not more than $100
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million;
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[(4) is not currently subject to a formal enforcement
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proceeding or order by the banking commissioner or by a federal
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banking agency; and
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[(5) was not the subject of a change of control under
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Section 33.001 during the 12-month period in which a full-scope,
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on-site examination would be required but for Subdivisions (1)-(4).
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[(b) The banking commissioner may examine a state bank more
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often than required by Subsection (a)] as the commissioner |
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considers necessary to: |
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(1) safeguard the interests of depositors, creditors, |
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shareholders, participants, and participant-transferees; and |
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(2) efficiently enforce applicable law. |
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(b) [(c) The banking commissioner may defer an examination
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for not more than six months if the commissioner considers the
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deferment necessary for the efficient enforcement of applicable
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law.
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[(d)] The banking commissioner may: |
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(1) accept an examination of a state bank by a federal |
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or other governmental agency instead of an examination under this |
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section; or |
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(2) conduct an examination of a state bank jointly |
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with a federal or other governmental agency. |
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(c) [(e)] The banking commissioner may administer oaths and |
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examine persons under oath on any subject that the commissioner |
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considers pertinent to the financial condition or the safety and |
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soundness of the activities of a state bank. |
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(d) [(f)] Disclosure of information to the banking |
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commissioner pursuant to an examination request does not constitute |
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a waiver of or otherwise affect or diminish an evidentiary |
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privilege to which the information is otherwise subject. A report |
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of an examination under this section is confidential and may be |
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disclosed only under the circumstances provided by this subtitle. |
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SECTION 3. Section 34.002(a), Finance Code, is amended to |
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read as follows: |
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(a) Without the prior written approval of the banking |
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commissioner, a state bank may not directly or indirectly invest an |
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amount in excess of its unimpaired capital and [certified] surplus |
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in bank facilities, furniture, fixtures, and equipment. Except as |
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otherwise provided by rules adopted under this subtitle, in |
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computing this limitation the bank: |
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(1) shall include: |
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(A) its direct investment in bank facilities; |
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(B) an investment in equity or investment |
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securities of a company holding title to a facility used by the bank |
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for a purpose specified by Section 34.001; |
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(C) a loan made by the bank to or on the security |
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of equity or investment securities issued by a company holding |
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title to a facility used by the bank; and |
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(D) any indebtedness incurred on bank facilities |
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by a company: |
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(i) that holds title to the facility; |
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(ii) that is an affiliate of the bank; and |
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(iii) in which the bank is invested in the |
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manner described by Paragraph (B) or (C); and |
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(2) may exclude an amount included under Subdivisions |
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(1)(B)-(D) to the extent a lease of a facility from the company |
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holding title to the facility is capitalized on the books of the |
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bank. |
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SECTION 4. Subchapter A, Chapter 34, Finance Code, is |
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amended by adding Section 34.004 to read as follows: |
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Sec. 34.004. PASSIVE INVESTMENT IN MINERAL INTERESTS. (a) |
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Notwithstanding Section 34.003(a), a state bank may hold nonworking |
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mineral or royalty interests if: |
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(1) the state bank acquires the interest pursuant to |
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Section 34.003(a)(3); |
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(2) the interest is not subject to expenses of |
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exploration, development, production, operation, maintenance, or |
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abandonment, or any other expense associated with extracting and |
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marketing the minerals subject to the rights or interest; |
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(3) the interest is reasonably valued on the books of |
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the state bank for not more than a nominal amount, and the aggregate |
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amount of earnings from such interests is separately disclosed in |
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the annual financial statements of the state bank; |
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(4) the state bank does not make any new investments |
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relating to the rights or interests without the approval of the |
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banking commissioner; and |
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(5) the banking commissioner determines that the |
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possession of such rights and interests is not inconsistent with |
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the safety and soundness of the state bank. |
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(b) The banking commissioner may order a state bank that |
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holds nonworking mineral or royalty interests to divest such |
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interests at any time if the banking commissioner determines that |
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continued ownership of such interests is detrimental to the state |
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bank. |
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(c) Subject to compliance with this section, nonworking |
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mineral or royalty interests are not considered to be real property |
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for purposes of this subtitle. |
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SECTION 5. Sections 34.101(c) and (f), Finance Code, are |
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amended to read as follows: |
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(c) A state bank may purchase investment securities for its |
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own account under limitations and restrictions prescribed by rules |
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adopted under this subtitle. Except as otherwise provided by this |
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section, the amount of the investment securities of any one obligor |
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or maker held by the bank for its own account may not exceed an |
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amount equal to [the lesser of] 15 percent of the bank's unimpaired |
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capital and [certified] surplus [or the bank's total equity
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capital]. The banking commissioner may authorize investments in |
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excess of this limitation on written application if the banking |
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commissioner determines that: |
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(1) the excess investment is not prohibited by other |
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applicable law; and |
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(2) the safety and soundness of the requesting state |
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bank is not adversely affected. |
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(f) A state bank may not invest more than an amount equal to |
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[the lesser of] 25 percent of the bank's unimpaired capital and |
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[certified] surplus [or the bank's total equity capital] in |
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investment grade adjustable rate preferred stock and money market |
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(auction rate) preferred stock. |
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SECTION 6. Section 34.103(b), Finance Code, is amended to |
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read as follows: |
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(b) Except for investment in a subsidiary engaging solely in |
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activities that may be engaged in directly by the bank and that are |
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conducted on the same terms and conditions that govern the conduct |
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of the activities by the bank, a state bank without the prior |
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written approval of the banking commissioner may not invest more |
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than an amount equal to 10 percent of [the lesser of] its unimpaired |
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capital and [certified] surplus [or the bank's total equity
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capital] in a single subsidiary. For purposes of this subsection, |
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the amount of a state bank's investment in a subsidiary is the sum |
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of the amount of the bank's investment in securities issued by the |
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subsidiary and any loans and extensions of credit from the bank to |
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the subsidiary. |
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SECTION 7. Section 34.104(c), Finance Code, is amended to |
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read as follows: |
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(c) The bank may invest not more than an amount equal to 15 |
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percent of the bank's unimpaired capital and [certified] surplus in |
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an investment company described by Subsection (a) the portfolio of |
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which contains an investment or obligation that is subject to the |
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limitations of Section 34.101(d) or 34.201(a). |
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SECTION 8. Section 34.105(a), Finance Code, is amended to |
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read as follows: |
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(a) A state bank may purchase for its own account equity |
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securities of any class issued by: |
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(1) a bank service corporation, except that the bank |
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may not invest more than an amount equal to 15 percent of the bank's |
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unimpaired capital and [certified] surplus in a single bank service |
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corporation or more than an amount equal to five percent of its |
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assets in all bank service corporations; |
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(2) an agricultural credit corporation, except that |
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the bank may not invest more than an amount equal to 30 percent of |
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the bank's unimpaired capital and [certified] surplus in the |
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agricultural credit corporation unless the bank owns at least 80 |
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percent of the equity securities of the agricultural credit |
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corporation; |
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(3) a small business investment company if the |
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aggregate investment does not exceed an amount equal to 10 percent |
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of the bank's unimpaired capital and [certified] surplus; |
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(4) a banker's bank if the aggregate investment does |
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not exceed an amount equal to 15 percent of the bank's unimpaired |
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capital and [certified] surplus or result in the bank acquiring or |
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retaining ownership, control, or power to vote more than five |
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percent of any class of voting securities of the banker's bank; or |
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(5) a housing corporation if the sum of the amount of |
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investment and the amount of loans and commitments for loans to the |
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housing corporation does not exceed an amount equal to 10 percent of |
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the bank's unimpaired capital and [certified] surplus. |
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SECTION 9. Section 34.106(d), Finance Code, is amended to |
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read as follows: |
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(d) A bank's aggregate investments under this section, |
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including loans and commitments for loans, may not exceed an amount |
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equal to 10 percent of the bank's unimpaired capital and |
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[certified] surplus. The banking commissioner may authorize |
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investments in excess of this limitation in response to a written |
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application if the banking commissioner concludes that: |
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(1) the excess investment is not precluded by other |
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applicable law; and |
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(2) the safety and soundness of the requesting bank |
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would not be adversely affected. |
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SECTION 10. Section 34.201(a), Finance Code, is amended to |
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read as follows: |
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(a) Without the prior written approval of the banking |
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commissioner, the total loans and extensions of credit by a state |
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bank to a person outstanding at one time may not exceed an amount |
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equal to 25 percent of [the lesser of] the bank's unimpaired capital |
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and [certified] surplus [or the bank's total equity capital]. This |
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limitation does not apply to: |
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(1) liability as endorser or guarantor of commercial |
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or business paper discounted by or assigned to the bank by its owner |
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who has acquired it in the ordinary course of business; |
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(2) indebtedness evidenced by bankers' acceptances as |
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described by 12 U.S.C. Section 372 and issued by other banks; |
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(3) indebtedness secured by a bill of lading, |
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warehouse receipt, or similar document transferring or securing |
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title to readily marketable goods, except that: |
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(A) the goods must be insured if it is customary |
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to insure those goods; and |
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(B) the aggregate indebtedness of a person under |
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this subdivision may not exceed an amount equal to 50 percent of |
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[the lesser of] the bank's unimpaired capital and [certified] |
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surplus [or the bank's total equity capital]; |
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(4) indebtedness evidenced by notes or other paper |
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secured by liens on agricultural products in secure and properly |
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documented storage in bonded warehouses or elevators if the value |
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of the collateral is not less than 125 percent of the amount of the |
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indebtedness and the bank's interest in the collateral is |
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adequately insured against loss, except that the aggregate |
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indebtedness of a person under this subdivision may not exceed an |
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amount equal to 50 percent of [the lesser of] the bank's unimpaired |
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capital and [certified] surplus [or the bank's total equity
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capital]; |
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(5) indebtedness of another depository institution |
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arising out of loans with settlement periods of less than one week; |
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(6) indebtedness arising out of the daily transaction |
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of the business of a clearinghouse association in this state; |
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(7) liability under an agreement by a third party to |
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repurchase from the bank an investment security listed in Section |
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34.101(d) to the extent that the agreed repurchase price does not |
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exceed the original purchase price to the bank or the market value |
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of the investment security; |
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(8) the portion of an indebtedness that this state, an |
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agency or political subdivision of this state, the United States, |
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or an instrumentality of the United States has unconditionally |
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agreed to repay, purchase, insure, or guarantee; |
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(9) indebtedness secured by securities listed in |
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Section 34.101(d) to the extent that the market value of the |
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securities equals or exceeds the indebtedness; |
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(10) the portion of an indebtedness that is fully |
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secured by a segregated deposit account in the lending bank; |
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(11) loans and extensions of credit arising from the |
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purchase of negotiable or nonnegotiable installment consumer paper |
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that carries a full recourse endorsement or unconditional guarantee |
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by the person transferring the paper if: |
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(A) the bank's files or the knowledge of its |
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officers of the financial condition of each maker of the consumer |
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paper is reasonably adequate; and |
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(B) an officer of the bank designated for that |
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purpose by the board certifies in writing that the bank is relying |
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primarily on the responsibility of each maker for payment of the |
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loans or extensions of credit and not on a full or partial recourse |
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endorsement or guarantee by the transferor; |
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(12) the portion of an indebtedness in excess of the |
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limitation of this subsection that is fully secured by marketable |
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securities or bullion with a market value at least equal to the |
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amount of the overage, as determined by reliable and continuously |
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available price quotations, except that the exempted indebtedness |
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or overage of a person under this subdivision may not exceed an |
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amount equal to 15 percent of [the lesser of] the bank's unimpaired |
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capital and [certified] surplus [or the bank's total equity
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capital]; |
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(13) indebtedness of an affiliate of the bank if the |
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transaction with the affiliate is subject to the restrictions and |
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limitations of 12 U.S.C. Section 371c; |
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(14) indebtedness of an operating subsidiary of the |
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bank other than a subsidiary described by Section 34.103(c)(2); and |
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(15) the portion of the indebtedness of a person |
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secured in good faith by a purchase money lien taken by the bank in |
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exchange for the sale of real or personal property owned by the bank |
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if the sale is in the best interest of the bank. |
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SECTION 11. Section 34.304(b), Finance Code, is amended to |
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read as follows: |
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(b) A state bank may pledge its assets to secure a deposit |
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of: |
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(1) any state or an agency, political subdivision, or |
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instrumentality of any state; |
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(2) the United States or an agency or instrumentality |
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of the United States; |
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(3) any federally recognized Indian tribe; or |
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(4) another entity to the same extent and subject to |
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the same limitations as may be authorized by the law of this state |
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or of the United States for any other depository institution doing |
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business in this state [this state, an agency or political
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subdivision of this state, the United States, or an instrumentality
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of the United States]. |
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SECTION 12. Chapter 37, Finance Code, is amended by adding |
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Sections 37.007 and 37.008 to read as follows: |
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Sec. 37.007. TEMPORARY BRANCH OR OFFICE. (a) If the |
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banking commissioner determines that an emergency has affected and |
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will continue to affect one or more particular bank offices for an |
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extended period, either as a result of the emergency or subsequent |
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recovery operations, the banking commissioner may authorize the |
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bank or banks affected to open temporary branch offices or other |
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facilities required for bank operations for the purpose of prompt |
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restoration of access by the public to banking services. |
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(b) A temporary bank office opened under the authority of |
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Subsection (a) may remain open only for the period specified in the |
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banking commissioner's order, except that the banking commissioner |
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may extend the period the office may remain open on a finding that |
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the conditions requiring the temporary office continue to exist. |
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The bank may convert a temporary branch office to a permanent bank |
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location only by obtaining the prior written approval of the |
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banking commissioner under Section 32.203. |
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(c) If requested by the state bank regulatory agency of |
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another state that is experiencing an emergency and is contiguous |
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to this state, the banking commissioner may authorize a bank or |
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banks located in the state to open temporary offices in this state |
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for the purpose of prompt restoration of banking services to the |
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existing customers of the bank or banks, as the circumstances of |
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such emergency may require. A temporary bank office opened under |
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the authority of this subsection may remain open only for the period |
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specified in the banking commissioner's order, except that the |
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banking commissioner may extend the period the office may remain |
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open on a finding that the conditions requiring the temporary |
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office continue to exist. A bank may convert a temporary branch |
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office to a permanent bank location if permitted by and subject to |
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the conditions and requirements of Chapter 203. |
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Sec. 37.008. REGULATORY COORDINATION. (a) To ensure |
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effective coordination among and between the department and other |
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state and federal agencies and the banking industry, and to further |
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rapid restoration of banking services after an emergency, the |
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banking commissioner may: |
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(1) enter into cooperative, coordinating, or |
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information-sharing agreements with other state or federal |
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agencies or with or through organizations affiliated with or |
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representing one or more state or federal agencies; |
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(2) enter into cooperative, coordinating, or |
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information-sharing agreements with banks or banking trade |
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associations or other organizations affiliated with or |
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representing one or more banks; and |
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(3) issue interpretive statements or opinions to |
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temporarily waive or suspend regulatory requirements that threaten |
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to impede recovery and restoration of financial services. |
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(b) Disclosure of information by or to the banking |
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commissioner under this section does not constitute a waiver of or |
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otherwise affect or diminish an evidentiary privilege to which the |
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information is otherwise subject, regardless of whether the |
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disclosure is governed by a confidentiality agreement. |
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Notwithstanding other law, a party to an agreement described by |
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Subsection (a) may execute, honor, and comply with an agreement to |
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maintain confidentiality and oppose disclosure of information |
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obtained from the banking commissioner, and shall treat as |
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confidential any information obtained from the banking |
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commissioner that is entitled to confidential treatment under |
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applicable state or federal law. |
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(c) The banking commissioner shall coordinate and cooperate |
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with and assist the office of the governor in the performance of |
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duties under this chapter and other state or federal law as required |
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by Section 421.071, Government Code. |
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SECTION 13. Section 204.105(b), Finance Code, is amended to |
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read as follows: |
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(b) Among other exceptions to Subsection (a) that may be |
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required or authorized by the commissioner provided by this |
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subchapter or by rules adopted under this subtitle: |
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(1) a Texas state branch may not accept deposits of |
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less than $100,000 from citizens or residents of the United States, |
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other than credit balances that are incidental to or arise out of |
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its exercise of other lawful banking powers, unless the Federal |
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Deposit Insurance Corporation determines that specific deposit |
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taking activities in lesser amounts do not constitute domestic |
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retail deposit activities requiring deposit insurance protection |
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within the meaning of Section 6, International Banking Act (12 |
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U.S.C. Section 3104); |
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(2) a Texas state agency may not accept deposits from |
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citizens or residents of the United States, other than credit |
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balances that are incidental to or arise out of its exercise of |
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other lawful banking powers, but may accept deposits from persons |
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who are neither citizens nor residents of the United States; and |
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(3) a limitation or restriction based on the capital |
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and [certified] surplus of a Texas state bank is considered to |
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refer, as applied to a Texas state branch or agency, to the dollar |
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equivalent of the capital and surplus of the foreign bank, and if |
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the foreign bank has more than one Texas state branch or agency in |
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this state, the business transacted by all the branches and |
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agencies must be aggregated in determining compliance with the |
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limitation. |
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SECTION 14. Sections 31.002(a)(10) and 33.105(b), Finance |
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Code, are repealed. |
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SECTION 15. This Act takes effect September 1, 2007. |
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____________________________________________________________ |
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President of the SenateSpeaker of the House |
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I certify that H.B. No. 2007 was passed by the House on April |
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12, 2007, by the following vote: Yeas 145, Nays 0, 1 present, not |
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voting. |
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______________________________ |
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Chief Clerk of the House |
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I certify that H.B. No. 2007 was passed by the Senate on May |
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3, 2007, by the following vote: Yeas 31, Nays 0. |
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______________________________ |
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Secretary of the Senate |
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APPROVED: _____________________ |
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APPROVED: _____________________ |
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Date |
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_____________________ |
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Governor |