HB 2537

Present law requires the commissioner of financial institutions ("commissioner"") to visit and examine every bank under the commissioner's supervision at least once each year and to conduct a full scope examination at least once every three years. This bill, instead, authorizes the commissioner to determine the scope of the examination and does not provide a requirement for the frequency of a full scope examination. Further, the requirement that every bank be examined at least once each year may be extend ed to up to 24 months or for such longer period as determined by the commissioner . In making such a determination, the commissioner must consider the bank's quality of management, capitalization, risk profile and internal controls, the examination cycle imposed by any applicable federal banking regulatory authority, and any other factors the commissioner deems relevant . SHARE INSURANCE REQUIREMENTS FOR STATE CREDIT UNIONS Present law requires credit unions to obtain and maintain insurance for its share and deposit balances by membership in either the state credit union share insurance corporation or the National Credit Union Association. This bill, instead, authorizes th e commissioner to determine the type, amounts, and other characteristics of share insurance required to be maintained by each state credit union. The commissioner must consider (i) the safety and soundness of the state credit union; (ii) the ability of t he state credit union to promote the economic progress of this state; (iii) public confidence in the credit union system; (iv) the views of the credit union industry in this state; and (v) any other factors deemed relevant. CREDIT UNION EXAMINATIONS Present law requires the commissioner to visit and examine every credit union under the commissioner's supervision at least once each year but allows the frequency of examination to be extended to 18 months. This bill allows the frequency of examination to be extended up to 24 months or a longer period as determined by the commissioner. In making such determination, the commissioner should consider the credit union's quality of management, capitalization, internal controls, the examination cycle imposed by any applicable federal credit union regulatory authority, and any other factors deemed relevant . Further, this bill clarifies that this examination requirement also applies to the volunteer corporate credit union. STATE CREDIT UNION SHARE INSURANCE CORPORATION Present law creates the state credit union share insurance corporation for the purposes of aiding and assisting member credit unions that liquidate or incur financial difficulty, and for the purpose of advancing the general welfare of credit unions in th is state and other states where credit unions become members. This bill terminates the state credit union share insurance corporation entirely. RULEMAKING This bill authorizes the commissioner to promulgate rules to effectuate this bill ."