Finelli, E.

English

University of San Diego

REGULATORY AGENCY ACTIONballoon payments if any agreement in-cludes a promise, representation, or sim-ilar undertaking to extend or seek the ex-tension of the term of the loan or refinanc-ing of the loan. This bill was signed by theGovernor on May 20 (Chapter 86, Statutesof 1994).The following bills died in committee:AB 3272 (Bornstein), which would haverequired all disputes with an amount incontroversy of $50,000 or less betweenbuyers and sellers, prospective buyers andsellers, and their agents, arising out of realestate contracts, to be submitted to medi-ation before the parties resort to court ac-tion; SB 945 (Hart), which would have,among other things, provided that a li-cense issued to a real estate broker operat-ing from a location outside California pur-suant to a specified exemption shall beconditioned upon the licensee agreeing inwriting to either (I) make the licensee'sbooks, accounts, and files available to theCommissioner in California, or (2) pay thereasonable expenses for travel, meals, andlodging of the Commissioner incurredduring any investigation made at thelicensee's location outside California; andSB 307 (Calderon), which, as amendedJune 22, would have provided that anyhomeowner whose home was rendereduninhabitable by the Northridge earth-quake or the October and November 1993wildfires, and who is using temporaryhousing not covered by insurance, maydelay payment of principal and interest ona mortgage for a period not to exceed sixmonths from the notification of the mort-gagee or until 12:01 a.m. on January 17,1996, whichever occurs first.DEPARTMENT OFSAVINGS AND LOANInterim Commissioner:Keith Paul Bishop(213) 897-8202T he Department of Savings and Loan(DSL) is headed by a commissionerwho has "general supervision over all as-sociations, savings and loan holding com-panies, service corporations, and otherpersons" (Financial Code section 8050).DSL is part of the larger Business, Trans-portation, and Housing Agency. The Sav-ings and Loan Association Law is in sec-tions 5000 through 10050 of the Califor-nia Financial Code. Departmental regula-tions are in Chapter 2, Title 10 of theCalifornia Code of Regulations (CCR).The Department, which has been recentlydownsized by the Wilson administration[13:4 CRLR 128], now consists of fouremployees regulating only 14 state-char-tered savings and loan institutions. TheDSL staff includes the Interim Commis-sioner, an examiner, a staff analyst, and apart-time assistant.Although recent state budgets refer toDSL as the "Office of Savings and Loan,"DSL is still officially a department. Itsresponsibilities technically include licens-ing, examination, and enforcement, butthe trend is away from state chartering ofS&L institutions, DSL no longer performsfield audits of state-chartered S&Ls, andits enforcement powers have been reducedto reviewing analyses performed by thefederal Office of Thrift Supervision.U LEGISLATIONSB 1333 (Lockyer). Existing law re-quires banks and other financial institu-tions to maintain certain information con-ceming charges and interest on accounts,and to make that information available tothe public; existing law also requiresbanks and other financial institutions tofurnish depositors with statements con-cerning charges and interest on accounts.As amended August 18, this bill autho-rizes a supervised financial organization,defined to include banks, savings associa-tions, savings banks, and credit unions, orcharge card issuer, as defined, to chargeand collect fees pursuant to a consumercredit agreement. This bill also limits thefees that a supervised financial organiza-tion may charge its credit cardholder cus-tomers under a consumer credit agreementas follows: $7 per monthly billing cycle asa late payment charge on the minimumpayment due on a consumer credit agree-ment that is not paid within five days afterthe date the payment is due; $10 permonthly billing cycle as a late paymentcharge on the minimum payment due on aconsumer credit agreement that is not paidwithin ten days after the date the paymentis due; $15 per monthly billing cycle as alate payment charge on the minimum pay-ment due that is not paid within fifteendays after the date the payment is due; and$10 on any overlimit charge that exceedsthe credit limit by $500 or 120% of thecredit limit as set forth in the consumercredit agreement, whichever is less.The bill also provides that, in lieu ofthe $7 fee described above, if the consumerhas already incurred two such late paymentfees during the preceding twelve-month pe-riod, a supervised financial institutionmay charge no more than $10 per billingcycle as a late payment charge on theminimum payment due that is not paidwithin five days after the date the paymentis due. Also, the bill requires that theremust be at least 23 days between themonthly billing statement date and thedate upon which the minimum payment isdue, exclusive of the applicable late pay-ment grace period, if the issuer is chargingthe $7 fee described above; if the issuer ischarging the $10 or $15 late payment de-scribed above, there must be at leasttwenty days between the monthly billingstatement date and the date upon which theminimum payment is due, exclusive of theapplicable late payment grace period. Thelate payment grace period must be dis-closed in the consumer credit or chargecard agreement but need not be disclosedin any monthly or other billing statement.Finally, this bill authorizes supervised fi-nancial institutions to assess a financecharge at the rates set forth in the con-sumer credit agreement on the outstandingbalance, which may include any late pay-ment or overlimit fee charged on a priorbilling statement.According to an August 26 analysis bythe Senate Rules Committee, SB 1333represents major concessions by inter-ested consumer credit providers and con-sumer groups to resolve an issue whichhas been the subject of intense debate in-volving three different bills over the courseof two years (see description of AB 2830below). SB 1333 is seen as offering creditproviders with certainty regarding the va-lidity of the fees they may impose oncustomers who pay late or exceed theircredit limits, while providing Californiaconsumers with mandatory late paymentgrace periods and a reduction in the inci-dence of future overlimit fees. This billwas signed by the Governor on September28 (Chapter 1079, Statutes of 1994).H.R. 3841 (Neal), the Interstate Bank-ing and Branching Efficiency Act of 1994,is federal legislation which allows for in-terstate banking transactions, mergers, andacquisitions. Among other things, the billallows for the continuation of certain statepowers, and allows state governments toopt out of allowing branching before June1, 1997.Another provision of H.R. 3841, how-ever, will prevent federal regulators fromproceeding with negligence actions againstofficers and employees of failed S&Ls;although an early version of the bill wouldhave extended the statute of limitations forpursuing such actions, the final version ofthe bill extends the time only for actionsinvolving fraud and willful misconduct.This will effectively bar most actions,since fraud and willful misconduct ac-count for only about 20% of the failedS&Ls. This bill was signed by PresidentClinton on September 29 (Public Law No.103-328).134 California Regulatory Law Reporter • Vol. 14, No. 4 (Fall 1994)REGULATORY AGENCY ACTIONH.R. 3474 (Gonzalez), the Commu-nity Development and Regulatory Act of1994, is federal legislation which is aimedat reducing administrative requirementsfor insured depository institutions, includ-ing S&Ls, consistent with safe bankingpractices. Among other things, the bill setsstringent disclosure requirements for high-cost mortgages, requires that banks grantloans only if they first determine that apotential borrower can afford to repay thedebt, and effectively makes flood insur-ance mandatory in high-risk areas. Thisbill was signed by President Clinton onSeptember 23 (Public Law No. 103-325).The following is a status update onbills reported in detail in CRLR Vol. 14,Nos. 2 & 3 (Spring/Summer 1994) at page143:SB 1542 (Kopp), as amended August26, would have transferred the Business,Transportation and Housing Agency to theexisting Trade and Commerce Agency,and established the Office of Business andHousing in the Trade and CommerceAgency to consist of the Department ofAlcoholic Beverage Control, the Depart-ment of Corporations, the Department ofHousing and Community Development,the Department of Real Estate, the Depart-ment of Savings and Loan, the State Bank-ing Department, the Stephen P. Teale DataCenter, and the California Housing Fi-nance Agency. On September 27, Gover-nor Wilson vetoed this bill, contendingthat "the reorganization of state govern-ment is the prerogative of the executivebranch, not the legislative branch of gov-emnment." Moreover, Wilson claimed thatthe Secretary of Business, Transportationand Housing is already addressing manyof the concerns which prompted the intro-duction of this legislation.AB 2830 (Brulte), as amended May 9,would have superseded California case-law and permitted supervised financial in-stitutions to charge and collect any fee forlate payments, over-the-limit usage, andbounced checks which is stated in theircustomer credit agreement and is "com-mercially reasonable," defined as "less thanor equal to a comparable fee used by atleast one of the ten largest lenders head-quartered outside of California providinga similar type of open-end credit." Thisbill contained the provisions formerly inSB 1145 (Boatwright), which was rejectedon a 5-4 vote by the Senate JudiciaryCommittee in January; AB 2830 died incommittee, in favor ofSB 1333 (Lockyer),which took a compromise position be-tween the interests of consumers and creditproviders (see above).AB 1756 (Tucker), as amended June9, 1993, would have prohibited state, city,and county governments from contractingfor services with financial institutionswith $ 100 million dollars or more in assetsunless those companies file CommunityReinvestment Act reports annually withthe Treasurer. The Treasurer would havebeen required to annually submit a reportto the legislature and to make summariesavailable to the public. These reports wouldhave included specified information re-garding the nature of the governance of thecompanies, and their lending and invest-ment practices, with regard to race, ethnic-ity, gender, and income of the governingboards and of the recipients of loans andcontracts from the institutions. This billdied in committee.U LITIGATIONAt this writing, the California SupremeCourt is still reviewing the Second DistrictCourt of Appeal's decision in People v.Charles H. Keating, 16 Cal. App. 4th 280(1993). Keating was found guilty on 17counts for defrauding investors by encour-aging them to purchase worthless junkbonds instead of government-insured cer-tificates; in his appeal (No. S033855),Keating contends that he never personallyinteracted with investors, and that criminalliability for violations of CorporationsCode sections 25401 and 25540 is limitedto direct solicitors and sellers. [14:2&3CRLR 143-44] The action has been fullybriefed; at this writing, however, oral argu-ment has not yet been scheduled.DEPARTMENT OFINDUSTRIAL RELATIONSCAL-OSHAExecutive Director:Steven Jablonsky(916) 322-3640C alifornia's Occupational Safety andHealth Administration (Cal-OSHA)is part of the cabinet-level Department ofIndustrial Relations (DIR). The agencyadministers California's programs ensur-ing the safety and health of Californiaworkers.Cal-OSHA was created by statute inOctober 1973 and its authority is outlinedin Labor Code sections 140-49. It is ap-proved and monitored by, and receivessome funding from, the federal OSHA.Cal-OSHA's regulations are codified inTitles 8, 24, and 26 of the California Codeof Regulations (CCR).The Occupational Safety and HealthStandards Board (OSB) is a quasi-legisla-tive body empowered to adopt, review,amend, and repeal health and safety orderswhich affect California employers andemployees. Under section 6 of the FederalOccupational Safety and Health Act of1970, California's safety and health stan-dards must be at least as effective as thefederal standards within six months of theadoption of a given federal standard. Cur-rent procedures require justification forthe adoption of standards more stringentthan the federal standards. In addition,OSB may grant interim or permanent vari-ances from occupational safety and healthstandards to employers who can show thatan alternative process would provide equalor superior safety to their employees.The seven members of the OSB areappointed to four-year terms. Labor Codesection 140 mandates the composition ofthe Board, which is comprised of twomembers from management, two fromlabor, one from the field of occupationalhealth, one from occupational safety, andone from the general public. At this writ-ing, OSB is functioning with a labor rep-resentative vacancy.The duty to investigate and enforce thesafety and health orders rests with the Divi-sion of Occupational Safety and Health(DOSH). DOSH issues citations and abate-ment orders (granting a specific time pe-riod for remedying the violation), and lev-ies civil and criminal penalties for serious,willful, and repeated violations. In addi-tion to making routine investigations,DOSH is required by law to investigateemployee complaints and any accidentcausing serious injury, and to make fol-low-up inspections at the end of the abate-ment period.California Regulatory Law Reporter • Vol. 14, No. 4 (Fall 1994)

Department of Savings and Loan

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Department of Savings and Loan

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