2021 Banking and Related Legislation
Each year, the Department of Banking (DOB) conducts an active legislative program coordinated by the Government Relations and Consumer Affairs Division. Below are highlights of the agency and related bills that passed.
Please note that the hyperlinks for the bill lead to the Connecticut General Assembly website. These links provide you with a copy of the Public Act and more detailed legislative summary of each bill.
Department of Banking Proposal
Public Act 21-138 - SB-848, An Act Implementing the Department of Banking's Recommended Changes to the Banking Statutes Concerning Financial Institutions and Consumer Credit Licenses
- Reduce regulatory burden by allowing banks and their holding companies, who are free of any regulatory restrictions, to submit a consolidated audit report on an ongoing basis instead of submitting an individual audit report for each entity and eliminating the need to obtain an annual approval.
- Incorporates new federal banking regulatory capital standards called the Community Bank Leverage Ratio (CBLR) into the Banking Law of Connecticut. CBLR was designed to apply different standards to smaller banks, those with assets under $10 billion. This bill would allow community banks to continue to take public deposits and apply the CBLR. Currently, statute does not allow for the application of this new framework.
- Reduce regulatory burden by eliminating the unnecessary step for the Commissioner to endorse a certificate of incorporation for a Connecticut credit union, since the certificate is already subject to the Commissioner’s approval.
- This bill clarifies that once a municipality sells a lien, including sewer and water liens, to a third party and no longer have an ownership stake in the debt, the debt buyer is subject to our consumer collection laws.
- Permits a start-up company engaged in the activity of money transmission to provide a statement of condition as part of the licensure application in lieu of financial statements. This corrects language requiring new companies to provide audited statements, which would make compliance impossible for new companies.
- This is a conforming change to federal law that grants mortgage loan originators temporary authority (from the time of application to when the application is either denied or approved by the Commissioner) for individuals who either are licensed as mortgage loan originators in another state or employed as federal registered loan originators.
- This section requires entities and individuals that make, originate or broker shared appreciation agreements, to become licensed by the department and subject to our consumer protection laws. These Shared Appreciation transactions advance funds to a consumer in exchange for an equity interest in residential property or the future repayment of an amount secured by a security interest in the residential property. The Department sees no distinction between these financial products and that of Home Equity Lines of Credit and second mortgages. Under these agreements, consumers in default may have liens put on their property and they face the threat of foreclosure.
- Clarifies the definition of “change in control” for purposes of filing an advance change notice with respect to a change of a director, general partner or executive for all licensees to mean any change causing the majority ownership, voting rights or control of a licensee to be held by a different control person or group of control persons. This ensures Advance Change notices are given for only change in ownership not for changes in day-to-day operations, like branch managers.
- Makes minor technical changes to the statute.
Summary of Public Act 21-138
Effective Date: October 1, 2021
Other Banking Related Legislation
Public Act 21-130 - SB-890, An Act Concerning Student Loan Servicers
This act changes the licensing requirement for federal student loans, to a simple registration with no fee attached. It preserves our ability to enforce the important consumer protection laws for federal student loans and makes no changes to those companies who service private student loans.
In 2015 Connecticut was the first state in the country to begin regulating student loan servicers. Since then, other states and territories have passed similar laws. These laws have been challenged in at least two court districts, each of whom have ruled that states cannot require a federal vendor to be licensed in their home state or territory. To continue to enforce our consumer protection laws for those consumers who hold a federal student loan, statutory changes were required.
Summary of Public Act 21-130
Effective Date: July 1, 2021, except the private right of action provision takes effect October 1, 2021