HB 707 -- BANKS AND FINANCIAL INSTITUTIONS

SPONSOR:  Cunningham (145)

COMMITTEE ACTION:  Voted "do pass by consent" by the Committee on
Financial Institutions by a vote of 18 to 0.

This bill changes the laws regarding banking.  In its main
provisions, the bill:

(1)  Defines "financial institution" as any entity subject to
chartering, licensing, or regulation by the Division of Finance
within the Department of Economic Development;

(2)  Authorizes the division director to compel the attendance of
witnesses and the production of documents and electronic records
in an examination or investigation;

(3)  Removes the requirement that the division director must
petition the circuit court where a bank is located for an order
appointing the Federal Deposit Insurance Corporation (FDIC) as
the liquidating agent of a bank;

(4)  Allows banks when restating its article of agreement to
amend its article of incorporation at the same time;

(5)  Specifies that a drop box for deposit purposes is not
considered a branch bank;

(6)  Requires that loans or other extensions of credit to
officers and directors of banks be made in accordance with
Federal Reserve Board regulations;

(7)  Revises the language requiring banks and trust companies to
maintain reserves against aggregate deposits as provided by the
Federal Reserve Act.  A bank's required surplus fund cannot be
created or increased by the net earnings of the bank, and banks
must account for every item of income and expense to determine
the amount of net income or loss for a dividend period;

(8)  Requires that a notice be posted in the lobby, on the
entrances, and given to the division director for a branch office
of a bank to temporarily be closed for any reasonable period of
time for repairs or purposes decided by the bank's board of
directors;

(9)  Changes the term "foreign corporation" to "out-of-state bank
or trust company" and includes any thrift institution under the
jurisdiction of the Office of Thrift Supervision in the United
States Department of the Treasury.  Unless the out-of-state bank
or trust company verifies to the division that it satisfies
certain capital requirements and maintains a bond for faithful
performance of fiduciary duties, the division director can
require a bond of at least $1 million.

FISCAL NOTE:  No impact on state funds in FY 2006, FY 2007, and
FY 2008.

PROPONENTS:  Supporters say that the bill updates the definition
of "financial institution" to include entities like title loan
and payday loan companies and allows financial institutions to
use regulations set by the FDIC instead of taking the time to
establish their own rules.  The removal of the requirement that
the director petition the circuit court when a bank is being
liquidated will speed up the process.  Many times when a bank is
going to be liquidated, the FDIC already has buyers lined up.

Testifying for the bill were Representative Cunningham (145);
Deputy Commissioner of the Division of Finance; and Missouri
Bankers Association.

OPPONENTS:  There was no opposition voiced to the committee.

Marc Webb, Legislative Analyst

Missouri House of Representatives
93rd General Assembly, 1st Regular Session
Last Updated August 25, 2005 at 1:20 pm