2011 Banking and Related Legislation
Each year, the Department of Banking, with the coordination of the Government Relations and Consumer Affairs Division, conducts an active legislative program. The following bills represent banking-related legislation for 2011.
Please note that the hyperlinks for each bill lead to the Connecticut General Assembly website. These links provide you with copies of the Public Acts and more detailed legislative summaries of the bills.
Department of Banking Proposals
Public Act 11-50 - SB 1109, AN ACT CONCERNING BANKS
The act is necessary to clarify the fees for out-of-state branch relocations and to delete a redundant and confusing provision. The act allows the agency to grant investors conditional preliminary approval to organize more than one bank to acquire failed banks. It is unnecessary and unduly burdensome to have investors file another application for preliminary conditional approval in order to organize additional banks to acquire failed banks.
Public Act 11-216 - SB 1110, AN ACT CONCERNING CONSUMER CREDIT LICENSES (Renamed: An Act Concerning Consumer Credit Licenses and the Connecticut Uniform Securities Act)
The bill impacts, in different ways, all of the industries licensed by the Consumer Credit Division. With regard to mortgage licensees, the proposal addresses the following:
- it requires certain individuals engaged in loan processing or underwriting to obtain a loan processor or underwriter license;
- it creates an ability for entities exempt from licensing requirements as mortgage lenders, correspondent lenders, or mortgage brokers to register as exempt registrants on the NMLS for purposes of sponsoring and bonding individuals required to hold mortgage loan originator licenses;
- it clarifies bonding requirements for mortgage loan originators and their sponsoring entities.
With regard to debt negotiator licenses, the proposal requires certain individuals who are engaged in such activity in connection with residential mortgage loans to obtain mortgage loan originator licenses under the mortgage chapter. The proposal further addresses attendant bonding requirements and exempt entity registration capability for debt negotiators, as applicable.
Another agency proposal, HB 6285, AAC THE CONNECTICUT UNIFORM SECURITIES ACT was merged into SB 1110. It conforms Connecticut law with federal law exempting all investment advisors from the requirement that investment advisers are exempted from the registration requirements set forth in the Connecticut General Statutes. The legislation would put the agency in conformity with federal definitions.
Public Act 11-110 - HB 6284, AN ACT CONCERNING REVISIONS TO THE BANKING STATUTES TO REFLECT CHANGES MADE PURSUANT TO THE DODD-FRANK WALL STREET REFORM AND CONSUMER PROTECTION ACT
The legislation adds references to the federal Bureau of Consumer Financial Protection to various provisions of the banking laws and Uniform Commercial Code, as well as certain other sections of the general statutes concerning consumer credit transactions. The addition of these references reflects the transfer of consumer financial protection functions from several federal entities to the bureau, which is scheduled to take place on July 21, 2011.
The act also allows the banking commissioner to exempt any person or class of people from registration requirements and related provisions of the Uniform Securities Act, upon finding that the exemption is in the public interest and consistent with investor protection and the act.
Other Banking Legislation
The act expands the type of conduct that constitutes an identity theft crime in order to protect children from possible I.D. theft.
This legislation authorizes the Attorney General to bring a civil action in a court of competent jurisdiction to enforce the provisions of the federal Dodd-Frank Act. The act also allows the attorney general to seek any relief that the Dodd-Frank Act authorizes all other state attorneys general to seek.
Public Act 11-201
HB 6351 - AN ACT CONCERNING FORECLOSURE MEDIATION AND ASSISTANCE PROGRAMS, THE HIGHLY COMPENSATED EMPLOYEE EXEMPTION FOR MORTGAGE LOAN ORIGINATORS, GENERAL-USE PREPAID CARDS AND NEIGHBORHOOD PROTECTION
This final version of this act combines the foreclosure mediation bill along with three other bills. The foreclosure meditation bill sections of the act make changes in several programs and laws.
The legislation’s key points included (1) extending the program's sunset date by two years, until July 1, 2014, for foreclosure actions with return dates on or after July 1, 2009; (2) extending the program to properties owned by religious organizations; (3) generally prohibiting the parties from making motions, other than those related to the mediation, for the eight months following the return date; and (4) increasing documentation requirements.
The other three pieces of legislation are as follows:
- SB 957 - AN ACT CONCERNING NEIGHBORHOOD PROTECTION - allows towns to more effectively monitor foreclosed residential buildings.
- SB 1078 - AN ACT ENHANCING COMMUNITY BANK COMPETITIVENESS AND FRAUD PREVENTION ON CERTAIN PRODUCTS - To permit community banks to offer open-loop gift cards and to reduce potential fraud by allowing expiration dates on such gift cards while preserving the underlying funds indefinitely.
- HB 6454 - AN ACT ADOPTING THE FEDERAL HIGHLY COMPENSATED EMPLOYEE EXEMPTION FOR MORTGAGE LOAN ORIGINATORS. - To allow for Connecticut's adoption of the federal exemption for highly compensated employees from overtime requirements for mortgage loan originators that applies in the surrounding states.
The act creates a mechanism for specified business entities to change their entity type through mergers, conversions, and interest exchanges. The act is based on the Model Entity Transactions Act.
This act was budget bill for the state of Connecticut. Section 134 of the legislation states all fines collected by the Department of Banking will now be deposited in the General Fund. Previously, fines collected were placed in the Banking Fund.
The act eliminates the requirement that landlords pay tenants a higher interest rate on security deposits than landlords may obtain from depositing security deposits in a financial institution.