AB 857 — Public banks.

Summary

Existing law, the Financial Institutions Law, regulates the activities of various financial entities, including commercial banks, industrial banks, trust companies, credit unions, and savings associations. The Banking Law defines and regulates state banks and commits the enforcement of banking laws to the Commissioner of Business Oversight. Existing law prohibits a county from giving or loaning its credit to, or in aid of, any person or corporation. Existing law requires a local agency, as defined, to deposit all money belonging to, or in the custody of, that local agency into specified state or national banks, as defined. Existing law regulates the investment of public funds by local agencies. Existing law, the Nonprofit Corporation Law, regulates the formation and conduct of a nonprofit mutual benefit corporation and a nonprofit public benefit corporation. This bill would define the term "bank" for purposes of the Financial Institutions Law and the Banking Law to include a public bank. The bill would define the term "public bank" to mean a corporation, organized as either a nonprofit mutual benefit corporation or a nonprofit public benefit corporation for the purpose of engaging in the commercial banking business or industrial banking business, that is wholly owned by a local agency, as specified, local agencies, or a joint powers authority. The bill would require a public bank to obtain a certificate of authorization to transact business as a bank from the commissioner and to obtain and maintain insurance, subject to specified requirements. The bill would prohibit the commissioner from issuing more than 2 public bank licenses, as defined, in a calendar year and would prohibit the commissioner from authorizing more than 10 public banks at one time. The bill would require a public bank to include a specified purpose statement in its articles of incorporation and make conforming changes. The bill would require a local agency to conduct and approve, as specified, a study of the viability of a public bank containing specified elements before submitting an application to the commissioner to organize and establish a public bank and would require the local agency to include a copy of that study in the application submitted to the commissioner. The bill would require a local agency that is not a charter city to obtain voter approval of a motion to submit an application to the commissioner, as specified. The bill would authorize a county to lend its available funds to a public bank. The bill also would authorize a local agency to deposit funds in a public bank, and to invest in a public bank, subject to certain requirements. The bill would authorize a public bank to make distributions to its members. The bill would require, as specified, a public bank to conduct retail activities in partnership with local financial institutions and would prohibit a public bank from competing with local financial institutions. The Corporation Tax Law imposes a franchise tax on financial corporations, but provides that the tax is in lieu of all other state and local taxes and licenses, with certain exceptions. That law also exempts specified classes of entities from the franchise and income taxes imposed by that law, including state-chartered credit unions. This bill would additionally exempt from those franchise and income taxes any public bank. This bill would also exempt a public bank from all other state and local taxes and licenses, with certain exceptions. Existing law, the Ralph M. Brown Act, requires that all meetings of the legislative body, as defined, of a local agency be open and public and all persons be permitted to attend unless a closed session is authorized. This bill would authorize the governing board of a public bank or a committee of that governing board to meet in a closed session to consider and take action on matters pertaining to a loan or investment decision, a decision of the internal audit committee, the compliance committee, or the governance committee, and a meeting with a state or federal regulator. The bill would authorize a public bank to make all information received by a shareholder, member, or owner of a public bank confidential, as specified. Existing law, the California Public Records Act, requires that public records, as defined, be available to the public for inspection and made promptly available to any person. This bill would exempt specified information and records of a public bank, and related decisions of the directors, officers, and managers of the public bank, from the disclosure requirements of the act, including, among others, records related to alternative investments of the bank, as specified, meeting materials of any closed session, a record containing information regarding a portfolio position in which the public bank invests, information related to a specific account in the bank, and specified correspondence related to meetings with, or a memorandum or letter received from, state and federal banking regulators. Existing constitutional provisions require that a statute that limits the right of access to the meetings of public bodies or the writings of public officials and agencies be adopted with findings demonstrating the interest protected by the limitation and the need for protecting that interest. This bill would make legislative findings to that effect. The California Constitution requires local agencies, for the purpose of ensuring public access to the meetings of public bodies and the writings of public officials and agencies, to comply with a statutory enactment that amends or enacts laws relating to public records or open meetings and contains findings demonstrating that the enactment furthers the constitutional requirements relating to this purpose. This bill would make legislative findings to that effect.

Bill Text

• Chaptered 10/02/19 - Chaptered Current pdf October 02, 2019
• Enrolled 09/20/19 - Enrolled pdf September 20, 2019
• Amended 09/06/19 - Amended Senate pdf September 06, 2019
• Amended 08/30/19 - Amended Senate pdf August 30, 2019
• Amended 07/09/19 - Amended Senate pdf July 09, 2019
• Amended 06/20/19 - Amended Senate pdf June 20, 2019
• Amended 05/17/19 - Amended Assembly pdf May 17, 2019
• Amended 04/29/19 - Amended Assembly pdf April 29, 2019
• Amended 03/19/19 - Amended Assembly pdf March 19, 2019
• Introduced 02/20/19 - Introduced pdf February 20, 2019
• AB857 View text html

Action History

1. October 02, 2019

   Chaptered by Secretary of State - Chapter 442, Statutes of 2019.

2. October 02, 2019

   Approved by the Governor.

3. September 26, 2019

   Enrolled and presented to the Governor at 4 p.m.

4. September 13, 2019

   Senate amendments concurred in. To Engrossing and Enrolling. (Ayes 42. Noes 29. Page 3538.).

5. September 11, 2019

   In Assembly. Concurrence in Senate amendments pending.

6. September 11, 2019

   Read third time. Passed. Ordered to the Assembly. (Ayes 25. Noes 11. Page 2807.).

7. September 09, 2019

   Read second time. Ordered to third reading.

8. September 06, 2019

   Read third time and amended. Ordered to second reading.

9. September 03, 2019

   Read second time. Ordered to third reading.

10. August 30, 2019

    Read second time and amended. Ordered returned to second reading.

11. August 30, 2019

    From committee: Amend, and do pass as amended. (Ayes 5. Noes 2.) (August 30).

12. August 12, 2019

    In committee: Referred to APPR. suspense file.

13. July 09, 2019

    Read second time and amended. Re-referred to Com. on APPR.

14. July 08, 2019

    From committee: Amend, and do pass as amended and re-refer to Com. on APPR. (Ayes 4. Noes 3.) (July 3).

15. June 20, 2019

    Read second time and amended. Re-referred to Com. on GOV. & F.

16. June 19, 2019

    From committee: Amend, and do pass as amended and re-refer to Com. on GOV. & F. (Ayes 4. Noes 2.) (June 19).

17. June 12, 2019

    Referred to Coms. on B. & F.I. and GOV. & F.

18. May 30, 2019

    In Senate. Read first time. To Com. on RLS. for assignment.

19. May 30, 2019

    Read third time. Passed. Ordered to the Senate. (Ayes 41. Noes 29. Page 2158.)

20. May 20, 2019

    Read second time. Ordered to third reading.

21. May 17, 2019

    Read second time and amended. Ordered returned to second reading.

22. May 16, 2019

    From committee: Amend, and do pass as amended. (Ayes 11. Noes 5.) (May 16).

23. May 08, 2019

    In committee: Set, first hearing. Referred to APPR. suspense file.

24. April 30, 2019

    Re-referred to Com. on APPR.

25. April 29, 2019

    Read second time and amended.

26. April 25, 2019

    From committee: Amend, and do pass as amended and re-refer to Com. on APPR. (Ayes 5. Noes 2.) (April 24).

27. April 23, 2019

    From committee: Do pass and re-refer to Com. on L. GOV. (Ayes 7. Noes 3.) (April 22). Re-referred to Com. on L. GOV.

28. April 11, 2019

    (pending re-referral to Com. on L. GOV.)

29. April 11, 2019

    Assembly Rule 56 suspended. (Page 1150.)

30. March 20, 2019

    Re-referred to Com. on B. & F.

31. March 19, 2019

    From committee chair, with author's amendments: Amend, and re-refer to Com. on B. & F. Read second time and amended.

32. March 18, 2019

    Referred to Coms. on B. & F. and L. GOV.

33. February 21, 2019

    From printer. May be heard in committee March 23.

34. February 20, 2019

    Read first time. To print.

Sponsors

• Chiu · Primary
• Santiago · Cosponsor
• Chu · Cosponsor
• Friedman · Cosponsor
• Mike A. Gipson · Cosponsor
• Ash Kalra · Cosponsor
• McCarty · Cosponsor
• Nazarian · Cosponsor
• Ting · Cosponsor
• Buffy Wicks · Cosponsor
• Beall · Cosponsor
• Hill · Cosponsor
• Hueso · Cosponsor
• Skinner · Cosponsor
• Wieckowski · Cosponsor
• Scott D. Wiener · Cosponsor
• Robert Rivas · Cosponsor
• Juan Carrillo · Cosponsor
• Mia Bonta · Cosponsor
• Jeff Gonzalez · Cosponsor
• Mark Stone · Cosponsor

Votes

Subjects