General Assembly: 81 (2006 Regular GA) - Chapter 1015 - Regulation of financial institutions


Published: 2006-03-29

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53 LAWS OF THE EIGHTY-FIRST G.A., 2006 SESSION CH. 1015

shall alsobe submitted a statement regardingwhether anyknownprivate burial site is situated on the property, and if a known private burial site is situated on the property, the statement shall state the approximate location of the site. The statement shall also state that no known wells are situated on the property, or if knownwells are situated on theproperty, the statement must state the approximate location of each known well and its status with respect to section 455B.190 or 460.302. The statement shall also state that noknowndisposal site for solidwaste, as defined in section 455B.301, which has been deemed to be potentially hazardous by the de- partment of natural resources, exists on the property, or if such a known disposal site does ex- ist, the location of the site on the property. The statement shall additionally state that no known underground storage tank, as defined in section 455B.471, subsection 11, exists on the property, or if a known underground storage tank does exist, the type and size of the tank, and any known substance in the tank. The statement shall also state that no known hazardous waste as defined in section 455B.411, subsection 3, or listed by the department pursuant to sec- tion 455B.412, subsection 2, or section 455B.464, exists on the property, or if knownhazardous waste does exist, that the waste is beingmanaged in accordance with rules adopted by the de- partment of natural resources. The statement shall be signed by at least one of the sellers or their agents. The county recorder shall refuse to record any deed, instrument, or writing for which a declaration of value is required under chapter 428A unless the statement required by this section has been submitted to the county recorder. A buyer of property shall be provided with a copy of the statement submitted, and, following the fulfillment of this provision, if the statement submitted reveals no private burial site, well, disposal site, underground storage tank, or hazardouswaste on the property, the county recordermay destroy the statement. The land application of sludges or soils resulting from the remediation of underground storage tank releases accomplished in compliancewith department of natural resources ruleswithout a permit is not required to be reported as the disposal of solid waste or hazardous waste.

Sec. 10. Sections 455B.220, 455B.332, 455B.333, 455B.464, and 473.40, Code 2005, are re- pealed.

Approved March 29, 2006

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CH. 1015CH. 1015

CHAPTER 1015

REGULATION OF FINANCIAL INSTITUTIONS

H.F. 2587

ANACT relating to financial institutions including the regulation of state banks, bank holding companies, and industrial loan companies, and providing for penalties.

Be It Enacted by the General Assembly of the State of Iowa:

Section 1. Section 12C.22, subsection 6, paragraph a, Code 2005, is amended to read as fol- lows: a. Investment securities and shares in which a bank is permitted to invest under section

524.901, subsections 1, 2, and 3, and 4.

Sec. 2. Section 524.217, subsection 2, Code 2005, is amended to read as follows: 2. The superintendentmay furnish to the federal deposit insurance corporation, the federal

54LAWS OF THE EIGHTY-FIRST G.A., 2006 SESSIONCH. 1015

reserve system, the office of the comptroller of the currency, the office of thrift supervision, national credit unionadministration, the federal home loanbank, the financial crimes enforce- mentnetworkof the federal department of the treasury, theUnitedStates internal revenue ser- vice, and financial institution regulatory authorities of other states, or to any official or super- vising examiner of such regulatory authorities, a copy of the report of any or all examinations made of any state bank and of any affiliate of a state bank.

Sec. 3. Section 524.220, subsection 1, Code 2005, is amended to read as follows: 1. A state bank shall render a full, clear, and accurate statement of its condition to the super-

intendent, in a format prescribed by the superintendent, verified by the oath of an officer and attested by the signatures of at least three of the directors, or verified by the oath of two of its officers, and attested by at least two of the directors. The superintendent may, in the superin- tendent’s discretion, use any form of statement of condition that is used by the federal deposit insurance corporation or the federal reserve system.

Sec. 4. Section 524.220, subsection 3, Code 2005, is amended by striking the subsection.

Sec. 5. Section 524.312, subsection 3, Code 2005, is amended to read as follows: 3. If a change in the location of the principal place of business of a state bank is proposed,

application for approval of the superintendent shall bemadeas requiredby the superintendent pursuant to this section. A change in location of the principal place of business of a state bank, including a change from one municipal corporation to another municipal corporation within anurbancomplex, requires anamendment to the articlesof incorporationpursuant to sections 524.1502, 524.1504, and 524.1506. A state bank seeking approval of a change of location pur- suant to this subsection shall publish once each week for two consecutive weeks a notice of the proposed change of location in a newspaper of general circulation in themunicipal corpo- ration or unincorporated area in which the state bank has its principal place of business, or if there is none, in a newspaper of general circulation in the county, or in a county adjoining the county, in which the state bank has its principal place of business, and in the municipal corporation in which it seeks to establish its principal place of business, or if there is none, in a newspaper of general circulation in the county, or in a county adjoining the county, in which the municipal corporation is located. The notices notice shall be published within thirty days after the application to the superintendent for approval of the change in location is accepted for processing. The notice shall set forth the name of the state bank, the present location of its principal place of business, the location to which it proposes to move its principal place of business, and the date uponwhich the applicationwas accepted for processing by the superin- tendent.

Sec. 6. Section 524.606, subsection 2, unnumbered paragraph 1, Code 2005, is amended to read as follows: If, in theopinionof the superintendent, anydirector of a state bankorbankholdingcompany

has violated any law relating to such state bank or bank holding company or has engaged in unsafe or unsound practices in conducting the business of such state bank or bank holding company, the superintendent may cause notice to be served upon such director, to appear be- fore the superintendent to show cause why the director should not be removed from office. A copy of such notice shall be sent to each director of the state bank or bank holding company affected, by registered or certified mail. If, after granting the accused director a reasonable opportunity to be heard, the superintendent finds that the director violated any law relating to such state bank or bankholding company or engaged in unsafe or unsoundpractices in con- ducting the business of such state bank or bank holding company, the superintendent, in the superintendent’s discretion, may order that such director be removed from office, and that such director be prohibited from serving in any capacity in any other bank, bank holding com- pany, bank affiliate, trust company, or an entity licensed under chapter 533A, 533C, 533D, 535B, 536, or 536A. A copy of the order shall be served upon such director and upon the state

55 LAWS OF THE EIGHTY-FIRST G.A., 2006 SESSION CH. 1015

bank or bank holding company ofwhich the person is a director at which time the person shall cease to be a director of the state bankor bankholding company. The resignation, termination of employment, or separation of such director, including a separation caused by the closing of the state bank or bank holding company at which the person serves as a director, does not affect the jurisdiction and authority of the superintendent to cause notice to be served and pro- ceed under this subsection against the director, if the notice is served before the end of the six- year period beginning on the date the director ceases to be a director with the bank.

Sec. 7. Section 524.707, subsection 2, Code 2005, is amended to read as follows: 2. Section 524.606, subsection 2,which provides for the removal of directors by the superin-

tendent, shall have equal application toofficers andemployeesof abank,bankholdingcompa- ny, bank affiliate, or trust company.

Sec. 8. Section 524.1201, Code Supplement 2005, is amended by adding the following new subsection: NEW SUBSECTION. 4. A bank shall not operate a loan production office or deposit pro-

duction office in this state unless either the bank has received approval from the superinten- dent or the bank operated the loan production office or deposit production office before July 1, 2006.

Sec. 9. Section 524.1601, Code 2005, is amended to read as follows: 524.1601 PENALTIESANDCRIMINAL PROVISIONSAPPLICABLETODIRECTORS, OF-

FICERS, AND EMPLOYEES OF STATE BANKS AND BANK HOLDING COMPANIES. 1. A director, officer, or employee of a state bank or bank holding company who willfully

violates any of the provisions of subsection 4 of section 524.612, section 524.613, subsection 2 of section 524.706, insofar as such subsection incorporates subsection 4 of section 524.612, or section 524.710, shall be guilty of a serious misdemeanor, plus, in the following circum- stances, an additional fine or fines equal to: a. The amount ofmoney or the value of the propertywhich the director, officer, or employee

received for procuring, or attempting to procure, a loan, extension of credit, or investment by the state bank or bank holding company, upon conviction of a violation of subsection 1 of sec- tion 524.613, or of subsection 1 of section 524.710. b. The amount by which the director’s, officer’s, or employee’s deposit account in the state

bank or bank holding company is overdrawn, upon conviction of a violation of subsection 2 of section 524.613, or of subsection 2 of section 524.710. c. The amount of any profit which the director, officer, or employee receives on the transac-

tion, upon conviction of a violation of subsection 4 of section 524.612, or of subsection 2 of sec- tion 524.706, insofar as each applies to purchases from and sales to a state bank or bank hold- ing company upon terms more favorable to such director, or officer, or employee than those offered to other persons. d. The amount of profit, fees or other compensation received, upon conviction of a violation

of section 524.710, subsection 1, paragraph “b”. 2. A director or officer who willfully makes or receives a loan in violation of subsection 1

of section 524.612, or subsection 1 of section 524.706, shall be guilty of a seriousmisdemeanor and shall be subject to an additional fine equal to that amount of the loan in excess of the limita- tion imposed by such subsections, and shall be forever disqualified from acting as a director or officer of any state bank or bank holding company. For the purpose of this subsection, amounts which are treated as obligations of an officer or director pursuant to subsection 5 of section 524.612, shall be considered in determining whether the loan or extension of credit is in violation of subsection 1 of section 524.612 and subsection 1 of section 524.706. 3. A director, officer, or employee of a state bank or bank holding company who willfully

makes or receives a loan or extension of credit of funds held by the state bank or bank holding company as fiduciary, in violation of subsection 4 of section 524.1002, shall be guilty of a seri- ousmisdemeanor and shall be subject to a further fine equal to the amount of the loanor exten-

56LAWS OF THE EIGHTY-FIRST G.A., 2006 SESSIONCH. 1015

sion of credit made in violation of subsection 4 of section 524.1002, and shall be forever dis- qualified fromacting as a director, officer, or employee of any state bank or bankholding com- pany. 4. A director, officer, or employee of a state bank or bank holding company who willfully

violates, or participates in the violation of, section 524.814, or section 524.819, shall be guilty of a serious misdemeanor.

Sec. 10. Section 524.1602, unnumbered paragraph 1, Code 2005, is amended to read as fol- lows: The superintendent may impose a penalty on a state bank of up to one hundred thousand

dollars for each day:

Sec. 11. Section 524.1603, subsection 2, Code 2005, is amended to read as follows: 2. The superintendentmay impose a penalty on a state bank of up to one hundred thousand

dollars for each day that it violates the provisions of section 524.1201.

Sec. 12. Section 536A.2, Code 2005, is amended by adding the following new subsections: NEW SUBSECTION. 1A. “Affiliate” means the same as defined in 12 U.S.C. § 1841(k). NEW SUBSECTION. 1B. “Commercial activities” means activities in which an industrial

loan company is not specifically authorized to engage under the provisions of this chapter. NEW SUBSECTION. 1C. “Control” means the same as provided in 12 U.S.C. § 1841(a)(2).

Sec. 13. Section 536A.4, Code 2005, is amended to read as follows: 536A.4 LIMITATIONS. No A license shall not be issued to any individual, partnership, nonprofit organization, or

unincorporated association. A license shall not be issued to an applicant that engages in com- mercial activities directly or through an affiliate. Not more than one place of business where loans are made shall be maintained under the same license but the superintendent may issue more than one license to the same licensee upon compliance, for each such additional license, with all the provisions of this chapter governing an original issuance of a license.

Sec. 14. Section 536A.5, subsection 6, Code 2005, is amended by striking the subsection.

Sec. 15. Section 536A.12, subsection 3, paragraph a, Code 2005, is amended to read as fol- lows: a. For purposes of this section, “control”means control as defined in section 524.103. How-

ever, a changeof control doesnot occurwhenamajority shareholderof an industrial loancom- pany transfers the shareholder’s shares of the industrial loan company to a revocable trust, so long as the transferor retains the power to revoke the trust and take possession of such shares.

Sec. 16. Section 536A.21, Code 2005, is amended to read as follows: 536A.21 OTHER BUSINESS IN SAME OFFICE. A licensee engaged in the business of operating an industrial loan company under the provi-

sions of this chapter may not conduct its business within any office, room, suite, or place of business in which any other business is engaged in or conducted, unless specifically autho- rized to do so inwriting by the superintendent upon the superintendent’s finding that the char- acter of the other business is such that its operation by the licensee would not facilitate eva- sions of this chapter or any other statute of the state of Iowa relating to the making of loans, or premises in which commercial activities are conducted, unless the place where its business is conducted by the industrial loan company is physically separated from the location where commercial activities are conducted and has a separate entrance. The prohibition of this sec- tion shall not apply to the conduct of business if, prior to January 1, 2006, the superintendent has determined in writing that the character of the other business is such that its operation by the licensee would not facilitate evasions of the provisions of this chapter or any other provi- sion of the Code relating to the making of loans.

57 LAWS OF THE EIGHTY-FIRST G.A., 2006 SESSION CH. 1015

Sec. 17. Section 536A.22, unnumbered paragraph 3, Code 2005, is amended by striking the unnumbered paragraph.

Sec. 18. Section 536A.23, Code 2005, is amended by adding the following new subsection: NEW SUBSECTION. 6. Engage in commercial activities or have an affiliate that engages

in commercial activities. This subsection shall not apply to an industrial loan company with an affiliate that is engaged in commercial activities prior to January 1, 2006, if control of the industrial loan company is not thereafter transferred to an entity that engages in commercial activities directly or through an affiliate.

Sec. 19. NEW SECTION. 536A.32 ACQUISITIONS. Neither an out-of-state banknor an out-of-state bankholding company shall directly or indi-

rectly acquire control of, or directly or indirectly acquire all or substantially all of the assets of, an industrial loan company located in this state, unless the industrial loan company has been in continuous existence and operation for at least five years.

Sec. 20. NEW SECTION. 536A.33 ACQUISITIONS AND BRANCHES BY OUT-OF- STATE COMPANIES. An out-of-state industrial loan company, industrial bank, or similar institution as provided

in 12 U.S.C. § 1841(c)(2)(H), shall not do any of the following: 1. Establish or operate a branch in this state. 2. Directly or indirectly acquire control of an industrial loan company located in this state. 3. Directly or indirectly acquire all or substantially all of the assets of an industrial loan com-

pany in this state.

Sec. 21. NEW SECTION. 536A.34 ACTIVITIES OF BRANCHES OF OUT-OF-STATE COMPANIES. A branch of an out-of-state industrial loan company, industrial bank, or similar institution

as provided in 12 U.S.C. § 1841(c)(2)(H), shall not engage in any activity in this state in which an industrial loan company is not specifically permitted to engage under the provisions of this chapter, and shall not conduct operations at any location where an industrial loan company is not permitted to conduct operations under this chapter.

Sec. 22. Section 524.1803, Code 2005, is repealed.

Approved March 29, 2006