84(R) - 2015
House Investments & Financial Services
House Investments & Financial Services
Investment & Financial Services
Relating to the regulation of state trust companies.
A fiscal note dated April 9, 2015 anticipates no fiscal implication to the State or to units of local government.
House Bill 3308 would amend the Finance Code regarding trust companies.
House Bill 3308 would define "equity capital" as the amount by which the total assets of a state trust company exceed the total liabilities of the trust company and change the threshold under which a trust company is considered an insolvent company from less than $500,000 to 50 percent or less of the amount of restricted capital the trust company is required to maintain.
It would also increase from $1 million to $2 million the minimum amount of restricted capital necessary for a trust company to be issued a charter by the banking commissioner.
House Bill 3308 would allow for the banking commissioner to examine each state trust company on any periodic basis the commissioner considers necessary -- as opposed to annually, currently.
House Bill 3308 would make statements of condition and income for state trust companies exempt under Section 182.011 and 182.019 with regard to the period of the exemption not a public record.
House Bill 3308 would amend Section 182.011 of the Finance Code regarding the exemption from statutory provisions for certain state trust companies and would focus this exemption on family trust companies that do no deal with the general public as a corporate fiduciary for hire. It would extend the definition of a "family member" from an individual related withing the 4th degree to the 7th degree of of affinity or consanguinity. It would also amend the requirements to request such an exemption, and the requirements for annual certification.
House Bill 3308 would allow for the control of an exempt state trust company to be sold or transferred and for the trust company to keep the exempt status under certain conditions. An exempt state trust company would not be permitted to operate with an exempt status granted prior to September 1, 1997 after the earlier of September 1, 2020 or the date control of the trust company is sold or transferred, but could apply to a new exemption before loss of its status.
House Bill 3308 would increase the minimum percentage of a state trust company's restricted capital that must be invested and maintained in investment securities readily marketable and that can be converted to cash within four business days from 40 to 50 percent.
House Bill 3308 would repeal Section 181.104 (b) and (c) of the Finance Code related to examination requirements. It would also repeal Section 182.013 (b) of the Finance Code that currently requires that the Texas Department of Banking return a copy of the acknowledge annual certification to the state trust company no later than the 30th day after the date the certification is filed.
A state trust company not exempt under Section 182.011 or 182.019 of the Finance Code would have until September 1, 2020, to increase its amount of restricted capital to the amount required by House Bill 3308. A state trust company exempt under Section 182.019 on September 1, 2015, that has an amount of restricted capital lower than the amount required by House Bill 3308 would have to increase its amount of restricted capital to at least $250,000 by no later than September 1, 2020.
Vote Recommendation Notes
House Bill 3308 would provide several changes to how state trust companies are regulated. It would provide increased financial constraints for state trust companies but would also somewhat loosen the requirements for state trust companies that are exempt under Section 182.011 or 182.019 of the Finance Code.
State trust companies should be allowed to function with as few regulations as possible, allowing them to adjust their own financial requirements to the demands and constraints of the market, government intervening only in cases of fraud or theft. House Bill 3308 both increases requirements on state trust companies and loosens them, so we are neutral on whether the sum of the requirements are for or against our five liberty principles. Any amendments should be left to the counsel of those within the banking and finance industries.