HCS HB 221 -- BANKING

SPONSOR:  Luetkemeyer

COMMITTEE ACTION:  Voted "do pass" by the Committee on Financial
Services by a vote of 19 to 0.

This substitute makes several changes to the laws governing
banking.  The substitute:

(1)  Allows the Missouri Higher Education Loan Authority (MOHELA)
to originate PLUS loans (Parent Loans for Undergraduate Students)
and increases the term of the bonds the loan authority may sell
from 30 years to 40 years;

(2)  Allows the Division of Finance to obtain information filed
with federal regulatory agencies, rather than requiring banks to
file reports of condition directly with the division;

(3)  Allows the division access to the work papers used in a
certified public accountant's audit of a bank and requires the
certified public accountant to maintain these records for three
years after the report to the bank is issued;

(4)  Requires banks to get prior approval from the division when
the bank seeks to purchase real property for an amount that
exceeds its loan limit or when the bank seeks to purchase
property from an officer, shareholder, or other person with a
similar relationship to the bank;

(5)  Prohibits the division and the State Banking Board from
setting conditions or requirements on deposit account fees or
service charges assessed by financial institutions that are more
restrictive than those allowed by federal law;

(6)  Creates the business entity called "trust holding company";

(7)  Sets forth a process for establishing the entity under state
law;

(8)  Clarifies that these entities will not be subject to Federal
Reserve examination;

(9)  Requires any acquisition of a nondepository trust company by
a trust holding company to be first approved by the division;

(10)  Allows the division to pursue joint actions and
investigations of trust holding companies with other state and
federal regulatory authorities;

(11)  Amends the Uniform Commercial Code so that transactions
that comply with Articles 3, 4, and 9 will not be subject to any
common law claims and, instead, will be subject only to statutory
provisions specifically provided for in the chapter;

(12)  Clarifies that when there exists a conflict between
provisions found in Articles 3 and 4, the more specific provision
governs;

(13)  Amends Article 3 so that transactions that comply with the
article will not be subject to common law claims, as long as the
bank has acted in good faith for the benefit of the bank's
customers;

(14)  Amends Article 9 so that, in defaults of a secured
transaction, consumer transactions are governed by the same rules
as other transactions.  Current law allows the court to determine
appropriate rules in these consumer transactions;

(15)  Allows creditors to convert a contract into a different
loan contract or a times sales agreement when the debtor requests
an extension of credit or refinancing;

(16)  Clarifies the process required for the proper release of a
deed of trust;

(17)  Repeals several sections of law setting forth requirements
and restrictions on variable-rate unsecured loans;

(18)  Repeals the provision requiring a lender to provide notice
to the borrower before disposing of property that was given as
collateral for the loan;

(19)  Repeals the limit on fees that financial institutions may
charge for check overdrafts;

(20)  Gives priority to Article 9 securities over liens on deeds
of trust and other instruments affecting real property, in first
classification counties which have two recorders' offices, for
the time period from June 30, 2001 to August 28, 2003;

(21)  Adds $1 to the $5 additional recording fee that recorders
charge for every deed or other document regarding real property
recorded;

(22)  Adds $1 to the recording fee for marriage certificates,
birth certificates, and official bonds required by law.
Additional moneys are to be sent to the county employees'
retirement fund or to the general revenue fund of charter
counties without a county employees' retirement fund;

(23)  Abolishes the Uniform Commercial Code Transition Fee Trust
Fund; and

(24)  Allows electronic filing with the Office of the Secretary
of State of certain filings of initial financing statements and
establishes a $5 fee for these filings.  The substitute contains
an effective date of July 1, 2003, for this section.

FISCAL NOTE:  No impact on state funds.

PROPONENTS:  Supporters say that the bill is primarily clean-up
and clarifying language requested by the Division of Finance and
several financial institutions.  The changes to the Uniform
Commercial Code are needed to comply with a recent court
decision.  Access to the work papers of certified public
accountants is necessary to get a complete analysis of a bank's
financial status.  The bill also repeals provisions governing
some types of variable rate loans that are not made anymore,
because of changes in the industry.

Testifying for the bill were Representative Luetkemeyer; Missouri
Bankers Association; Missouri Independent Bankers Association;
Missouri Society of Certified Public Accountants; Missouri Higher
Education Loan Authority; and Missouri Credit Union Association.

OPPONENTS:  There was no opposition voiced to the committee.

Richard Smreker, Senior Legislative Analyst

Missouri House of Representatives
Last Updated July 25, 2003 at 10:11 am