Part 1.
FINANCE COMMISSION OF TEXAS
Chapter 4.
CURRENCY EXCHANGE
7 TAC §§4.7, 4.9, 4.12, 4.21
(Editor's note: The text of the following sections proposed for
repeal will not be published. The sections may be examined in the offices
of the Finance Commission of Texas or in the Texas Register office, Room 245,
James Earl Rudder Building, 1019 Brazos Street, Austin.)
The Finance Commission of Texas (commission), on
behalf of the Texas Department of Banking (department), proposes the repeal
of §4.7, concerning bond requirements and deposits in lieu of bond, §4.9,
concerning misrepresentation of correction and enforcement actions for continuing
and repeat violations, §4.12, concerning currency exchange license applications,
notices to applicants, application processing times, abandoned filings, and
appeals, and §4.21, concerning information to consumers on how to file
a complaint.
Prior to September 1, 2005, Texas law regulated money services businesses
under two separate chapters of the Finance Code. Chapter 152, the Texas Sale
of Checks Act, regulated businesses that issue and sell checks, money orders,
stored value cards, and other payment instruments used to transfer money from
one person to another. Finance Code, Chapter 153, regulated businesses that
conduct currency exchange, transmission and transportation transactions.
During the 79th Regular Session, the Texas Legislature enacted the Money
Services Act (Act of May 26, 2005, 79th Leg., R.S., H.B. 2218, §1), effective
September 1, 2005. The Money Services Act (MSA), codified as Finance Code,
Title 3, Subtitle E, Chapter 151, consolidates the regulation of persons engaged
in the money transmission and currency exchange business in Texas into one
act. The MSA repeals Finance Code, Chapters 152 and 153, also effective September
1, 2005.
Chapter 4 consists of the administrative rules the commission adopted to
implement now-repealed Finance Code, Chapter 153. In response to the enactment
of the MSA, the commission has undertaken a rulemaking project to enact new
regulations under the MSA and has recently adopted two new sections, one a
transition section and the other an agent exclusion section. The new MSA sections
are located in Chapter 33 of this title (Money Services Businesses). As new
Chapter 33 sections are proposed and adopted, the commission will propose
and adopt the repeal of existing sections of Chapter 4 as appropriate. Ultimately,
all sections of existing Chapter 4 will be repealed.
The sections of Chapter 4 that the commission at this time proposes for
repeal fall into two general categories. The first category includes §4.12
and §4.21, sections whose substance has been incorporated into new sections
of Chapter 33 of this title (Money Services Businesses) that the commission
is simultaneously proposing in this issue of the
Texas Register
. Specifically, the substance of §4.12, which pertains
to new license applications, the remedy available to an applicant if the department
fails to comply with certain application processing times, abandoned applications,
and appeals of license denials, will be included in proposed new §33.13
and 33.15. Similarly, the substance of §4.21, which specifies how a license
holder must tell its customers how to file complaints, will be included in
proposed new §33.51.
The second category of sections that are proposed for repeal consists of
§4.7 and §4.9. These sections are obsolete because their substance
has been moved into or is rendered unnecessary by the MSA. Section 4.7, which
establishes the requirements related to the bond or other security a currency
exchange, transmission or transportation business licensed under Finance Code,
Chapter 153, must satisfy, is unnecessary. All money transmission is now regulated
under the MSA, and the security requirements for money transmitters and currency
exchangers are set out in Finance Code, §151.308 and §151.506, respectively.
Section 4.9, concerning the correction of violations and imposition of administrative
penalties for continuing and repeat violations, is rendered unnecessary by
Finance Code, §151.707. Section 151.707 authorizes the banking commissioner
to impose an administrative penalty upon a person who violates the MSA or
a rule adopted or order issued under the statute and fails to correct with
violation within 30 days after the department sends notice of the violation,
or who engages in a pattern of violations or demonstrates a willful disregard
for the requirements of the law.
Ms. Stephanie Newberg, Deputy Commissioner, Texas Department of Banking,
has determined that for the first five year period the repeal is in effect,
there will be no fiscal implications for state or local governments as a result
of enforcing or administering the repeal of this section.
Ms. Newberg has also determined that, for each of the first five years
the repeal as proposed will be in effect, the anticipated public benefit will
be deletion of regulations that are unnecessary or obsolete. The repealed
sections will be replaced, as necessary, with new, updated regulations that
conform to current law. No economic costs will be incurred by a person required
to comply with the repeal of this section. There will be no adverse economic
effect on small businesses.
To be considered, comments on the proposed repeal must be submitted not
later than 30 days after the date of publication of this notice. Comments
should be addressed to Sarah Shirley, Assistant General Counsel, Texas Department
of Banking, 2601 North Lamar Boulevard, Suite 300, Austin, Texas 78705-4294,
or by e-mail to: sarah.shirley@banking.state.tx.us.
The repeal is proposed under Finance Code, §151.102, which
authorizes the commission to adopt rules to administer and enforce Finance
Code, Chapter 151.
Finance Code, Chapter 151, is affected by the proposed repeal.
§4.7.Bond Requirements; Deposits in Lieu of Bond.
§4.9.Misrepresentation of Correction; Enforcement Actions for Continuing and Repeat Violations.
§4.12.Currency Exchange License Applications; Notices to Applicants; Application Processing Times; Abandoned Filings; Appeals.
§4.21.How Do I Provide Information to Consumers on How to File a Complaint?
This agency hereby certifies that the proposal has been
reviewed by legal counsel and found to be within the agency's legal authority
to adopt.
Filed with the Office of
the Secretary of State on February 17, 2006.
TRD-200600875
Everette D. Jobe
Certifying Official
Finance Commission of Texas
Proposed date of adoption: April 28, 2006
For further information, please call: (512) 475-1300
Chapter 29.
SALE OF CHECKS ACT
7 TAC §§29.3, 29.4, 29.6 - 29.10, 29.12
(Editor's note: The text of the following sections proposed for
repeal will not be published. The sections may be examined in the offices
of the Texas Department of Banking or in the Texas Register office, Room 245,
James Earl Rudder Building, 1019 Brazos Street, Austin.)
The Finance Commission of Texas (commission), on
behalf of the Texas Department of Banking (department), proposes the repeal
of §29.3, concerning application for new sale of check license, §29.4,
concerning violation of application processing times, §29.6, concerning
net worth and bonding requirements for a license holder that conducts currency
exchange, transportation or transmission transactions, §29.7, concerning
exemption from licensing, §29.8, concerning license renewal, §29.9,
concerning extension of time to file annual financial statement, §29.10,
concerning correction of violations and imposition of administrative remedy,
and §29.12, concerning notice to customers regarding complaints.
Prior to September 1, 2005, Texas law regulated money services businesses
under two separate chapters of the Finance Code. Chapter 152, the Texas Sale
of Checks Act, regulated businesses that issue and sell checks, money orders,
stored value cards, and other payment instruments used to transfer money from
one person to another. Finance Code, Chapter 153, regulated businesses that
conduct currency exchange, transmission and transportation transactions.
During the 79th Regular Session, the Texas Legislature enacted the Money
Services Act (Act of May 26, 2005, 79th Leg., R.S., H.B. 2218, §1), effective
September 1, 2005. The Money Services Act (MSA), codified as Finance Code,
Title 3, Subtitle E, Chapter 151, consolidates the regulation of persons engaged
in the money transmission and currency exchange business in Texas into one
act. The MSA repeals Finance Code, Chapters 152 and 153, also effective September
1, 2005.
Chapter 29 consists of the administrative rules the commission adopted
to implement now-repealed Finance Code, Chapter 152. In response to the enactment
of the MSA, the commission has undertaken a rulemaking project to enact new
regulations under the MSA and has recently adopted two new sections, one a
transition second and the other an agent exclusion section. The new MSA sections
are located in Chapter 33 of this title (Money Services Businesses). As new
Chapter 33 sections are proposed and adopted, the commission will propose
and adopt the repeal of existing sections of Chapter 29 as appropriate. Ultimately,
all sections of existing Chapter 29 will be repealed.
The sections of Chapter 29 that the commission at this time proposes for
repeal fall into two general categories. The first category includes §§29.3,
29.4, 29.8, 29.9 and 29.12. The substance of these sections has been incorporated
into new sections of Chapter 33 of this title (Money Services Businesses),
which the commission is simultaneously proposing in this issue of the
The second category of sections proposed for repeal consists of §§29.6,
29.7, and 29.10. These sections are obsolete because their substance has been
moved into or is rendered unnecessary by the MSA. Section 29.6, which establishes
the net worth and bond requirements for a Finance Code, Chapter 152, sale
of checks license holder that conducts currency-based transactions generally
regulated under Finance Code, Chapter 153, is unnecessary. All money transmission
is now regulated under the MSA, and the security requirements for both money
transmitters and currency exchangers are set out in Finance Code, §151.308
and §151.506, respectively. The exemptions from licensing recognized
in §29.7 are now set out in Finance Code, §151.103, and §33.3
of this title (relating to Agent Exclusion). Finally, §29.10, concerning
the correction of violations and imposition of administrative penalties, is
rendered unnecessary by Finance Code, §151.707. Section 151.707 authorizes
the banking commissioner to impose an administrative penalty upon a person
who violates the MSA or a rule adopted or order issued under the statute and
fails to correct with violation within 30 days after the department sends
notice of the violation, or who engages in a pattern of violations or demonstrates
a willful disregard for the requirements of the law.
Ms. Stephanie Newberg, Deputy Commissioner, Texas Department of Banking,
has determined that for the first five year period the repeal is in effect,
there will be no fiscal implications for state or local governments as a result
of enforcing or administering the repeal of this section.
Ms. Newberg has also determined that, for each of the first five years
the repeal as proposed will be in effect, the anticipated public benefit will
be deletion of regulations that are unnecessary or obsolete. The repealed
sections will be replaced, as necessary, with new, updated regulations that
conform to current law. No economic costs will be incurred by a person required
to comply with the repeal of this section. There will be no adverse economic
effect on small businesses.
To be considered, comments on the proposed repeal must be submitted not
later than 30 days after the date of publication of this notice. Comments
should be addressed to Sarah Shirley, Assistant General Counsel, Texas Department
of Banking, 2601 North Lamar Boulevard, Suite 300, Austin, Texas 78705-4294,
or by e-mail to: sarah.shirley@banking.state.tx.us.
The repeal is proposed under Finance Code, §151.102, which
authorizes the commission to adopt rules to administer and enforce Finance
Code, Chapter 151.
Finance Code, Chapter 151, is affected by the proposed repeal.
§29.3.Application for New Sale of Checks License.
§29.4.Violation of Application Processing Time.
§29.6.Net Worth and Bonding Requirements for License Holder that Conducts Currency Exchange, Transportation or Transmission Transactions.
§29.7.Exemption from Licensing.
§29.8.License Renewal.
§29.9.Extension of Time to File Annual Statement.
§29.10.Correction of Violations and Imposition of Administrative Penalty.
§29.12.Notice to Customers Regarding Complaints.
This agency hereby certifies that the proposal has been
reviewed by legal counsel and found to be within the agency's legal authority
to adopt.
Filed with the Office of
the Secretary of State on February 17, 2006.
TRD-200600876
Everette D. Jobe
Certifying Official
Texas Department of Banking
Proposed date of adoption: April 28, 2006
For further information, please call: (512) 475-1300
7 TAC §§33.13, 33.15, 33.21, 33.51
The Finance Commission of Texas (commission), on behalf of
the Texas Department of Banking (department), proposes to adopt new §33.13,
concerning new license applications, §33.15, concerning violation of
new license application processing times, §33.21, concerning license
renewals, and §33.51, concerning providing information to customers about
how to file a complaint. The new sections are proposed under the recently
enacted Money Services Act (Act of May 26, 2005, 79th Leg., R.S., H.B. 2218,
§1) ("MSA"), which took effect September 1, 2005.
The MSA, codified as Finance Code, Title 3, Subtitle E, Chapter 151, regulates
persons that engage in the money services business in Texas, specifically
the money transmission and the currency exchange businesses. Prior to the
enactment of the MSA, Texas law regulated money services businesses under
two separate chapters of the Finance Code. Chapter 152, the Texas Sale of
Checks Act, regulated businesses that issue and sell checks, money orders,
stored value cards and other payment instruments used to transfer money from
one person to another. Chapter 153 regulated businesses that conduct currency
exchange, transmission and transportation transactions. The MSA consolidates
the regulation of persons engaged in these businesses in Texas into one statute
and repeals Finance Code, Chapters 152 and 153, effective September 1, 2005.
In response to the enactment of the MSA, the commission has undertaken
a rulemaking project to enact new regulations under the MSA, which new sections
are located in this Chapter 33. As new sections are proposed and adopted under
Chapter 33, the commission will repeal, as appropriate, the existing regulations
in Chapter 29 of this title (Sale of Checks Act) and Chapter 4 of this title
(Currency Exchange), which sections were adopted to implement the now-repealed
Finance Code, Chapter 152, and Finance Code, Chapter 153, respectively. Ultimately,
all sections of Chapter 29 and Chapter 4 will be repealed.
As explained in this preamble, the proposed new sections, if adopted, will
replace existing Chapter 29 and Chapter 4 sections, the repeal of which the
commission is simultaneously proposing in this issue of the
Texas Register
. Proposed new §§33.13, 33.15 and 33.51 are
substantively similar to the sections that will be repealed, but conform to
the provisions of the new MSA. Proposed new §33.21 reflects the requirements
of the MSA with respect to license renewals and will replace existing Chapter
29 sections that are now obsolete. The proposed sections are set out in question
and answer format.
Proposed new §33.13 sets out the requirements an applicant for a new
license under the MSA must satisfy and procedures for accepting, evaluating
and granting or denying an application. The proposed new section will replace
§29.3 of this title (regarding Application for new Sale of Checks License)
and §4.12(a)-(e) of this title (regarding Currency Exchange License Applications;
Notices to Applicants; Application Processing Times; Abandoned Filings; Appeals),
which existing sections the commission proposes to repeal.
Proposed new §33.15 establishes the process by which an applicant
for a new license under the MSA may complain to the banking commissioner if
the department fails to comply with the application processing times specified
in proposed new §33.13(e) or (h). The proposed new section, adopted pursuant
to Government Code, §2005.003, will replace §29.4 of this title
(regarding Violation of Application Processing Times) and §4.12(g) and
(h) of this title (regarding Currency Exchange License Applications; Notices
to Applicants; Application Processing Times; Abandoned Filings; Appeals),
which sections are proposed for repeal.
Proposed new §33.21, which pertains to license renewals, will replace
existing §29.8 of this title (regarding License Renewal) and §29.9
of this title (regarding Extension of Time to File Annual Statement), both
of which have been rendered obsolete by the MSA. The proposed new section
expands upon and reflects the requirements of Finance Code, §151.207,
regarding the renewal of money transmission and currency exchange licenses.
Section 33.21 applies to a person that holds a valid money transmission or
currency exchange license issued under the MSA, and also to a person that
holds a license under repealed Finance Code, Chapter 152 or Chapter 153, that
expires on August 15, 2006, and must be renewed in accordance with the MSA.
The proposed new section specifies what a license holder must file to renew
its license and the applicable statutory deadlines. It also establishes the
procedure by which a license holder may request an extension of time to file
its renewal report or pay its renewal fee and explains what is required to
demonstrate the "good cause" required to justify the extension.
Proposed new §33.51 specifies the manner in which a license holder
must provide information to its customers about how to file a complaint with
the department. The proposed new section is substantively similar to the existing
sections it will replace, §29.12 of this title (regarding Notice to Customers
regarding complaints) and §4.21 of this title (regarding Information
to Consumers on How to File a Complaint), which sections are proposed for
repeal. However, the notice language in the proposed new section differs slightly
from that in existing §29.12 and §4.21.
As proposed, the §33.51 notice provides that a customer with a complaint
about a license holder's money transmission or currency exchange activity
should contact the department if the complaint remains unresolved after the
customer has complained to the license holder. The proposed new language is
intended to benefit license holders and customers by encouraging direct communication
between the two, and should also reduce unnecessary calls to the department.
The proposed new section has an effective date of July 1, 2006, the date
by which the MSA requires license holders to file their renewal reports. However,
proposed §33.51 permits a license holder to use the notice set out in
the section or a notice that substantially conforms to the language and form
of the section's notice. The department will consider the notices license
holders are currently using under existing §29.12 and §4.21 of this
title to be substantially conforming for purposes of compliance with the proposed
section. However, the department encourages and expects license holders to
transition to the new notice language within a reasonable period of time.
Stephanie Newberg, Deputy Commissioner of the Texas Department of Banking,
has determined that for the period the proposed new sections are in effect,
there will be no fiscal implications for state or local governments as a result
of enforcing or administering the proposed new sections.
Ms. Newberg has also determined that, for each of the years the new sections
as proposed will be in effect, the anticipated public benefit will be new,
updated regulations that conform to and reflect the requirements of the MSA.
Further, Ms. Newberg has determined that no economic cost will be incurred
by a person required to comply with the proposed new sections because the
department will allow license holders a reasonable time within which to revise
their customer notices. There will be no adverse impact on small businesses
or microbusinesses.
To be considered, comments on the proposed new section must be submitted
in writing not later than 30 days after the date of publication of this notice.
Comments should be addressed to Sarah Shirley, Assistant General Counsel,
Texas Department of Banking, 2601 North Lamar Boulevard, Suite 300, Austin,
Texas 78705-4294, or by email to sarah.shirley@banking.state.tx.us.
The new sections are proposed under Finance Code, §151.101,
which authorizes the commission to adopt rules to administer and enforce Finance
Code, Chapter 151. The new sections are also proposed under Finance Code,
§151.101, which authorizes the commission to prescribe time periods for
the processing of new license applications, and Finance Code, §11.307,
which directs the commission to adopt rules regarding consumer complaint notices.
Finance Code, Chapter 151, is affected by the proposed new section.
§33.13.How Do I Obtain a New License?
(a)
Does this section apply to me? This section applies if
you seek a new money transmission or currency exchange license under Finance
Code, Chapter 151.
(b)
What must I do to apply for a license? To apply for a new
money transmission or currency exchange license, you must:
(1)
submit an application on the form prescribed by the department;
and
(2)
fully complete the application form and provide the information
and documentation as specified in the application and the department's instructions.
(c)
What does the application process generally involve? The
banking commissioner will review your application and, as authorized by Finance
Code, Chapter 151, investigate you, your principals, and all related facts
to determine if you possess the qualifications and satisfy the requirements
for the license for which you apply. At any time during the review and investigation
process, the commissioner may require such information as the commissioner
considers necessary to evaluate your application, including an opinion of
counsel or an opinion, review or compilation prepared by a certified public
accountant. It is your responsibility to provide or cause to be provided all
the information the commissioner requires.
(d)
What is required for the department to begin processing
my application?
(1)
Your application must provide and be accompanied by the
following at the time you submit the application to the department:
(A)
your signature or the signature of your duly authorized
officer, as applicable, sworn to before a notary, affirming that the information
in the application and accompanying documentation is true;
(B)
an application fee, in the amount established by commission
rule, in the form of a check payable to the Texas Department of Banking; and
(C)
if you are applying for a money transmission license:
(i)
security in the amount of at least $300,000 that complies
with Finance Code, §151.308, and an undertaking to increase the amount
of the security if additional security is required under that section; and
(ii)
an audited financial statement demonstrating that you
satisfy the minimum net worth requirement established by Finance Code, §151.307(a),
and that, if the license is issued, you are likely to maintain the required
minimum; or
(D)
if you are applying for a currency exchange license:
(i)
security in the amount of $2,500 that complies with Finance
Code, §151.308; and
(ii)
a financial statement demonstrating your solvency.
(2)
The department may refuse to process and may return to
you an application submitted without all the items identified in paragraph
(1) of this section. If you submit your application fee, but fail to include
one or more of the other items identified in paragraph (1), the department
will return or refund the fee or, if you promptly submit an application that
includes the missing items, apply the fee to your subsequent application.
(e)
When will the department tell me if my application is complete
and accepted for filing? On or before the 15th day after the date the department
receives your application, and if the application is not returned as provided
for in subsection (d)(2) of this section, the department will notify you in
writing that:
(1)
your application is incomplete and the additional information
specified in the notice is required before the department will accept your
application for filing; or
(2)
your application is complete and accepted for filing.
(f)
When must I provide the additional information the department
requires to consider my application complete and to accept it for filing?
(1)
Subject to paragraphs (2), (3) and (4) of this subsection,
the department must receive all information required to consider your application
complete and to accept it for filing on or before the 61st day after the date
the department receives your initial application.
(2)
The banking commissioner may give you a 30-day extension
to submit the required information if the department receives a written extension
request from you before the expiration of the initial 60-day period.
(3)
Upon a finding of good cause, the banking commissioner
may give you an additional extension if the department receives a written
request from you before the expiration of the 30-day period authorized in
paragraph (2) of this subsection. Your request must explain in detail the
reasons you need the additional extension. The commissioner will notify you
of the decision by letter mailed to you on or before the 10th day after the
date the department receives your request.
(4)
After reviewing the information you provide in response
to the department's initial request for additional information, the department
may determine that still more information is required to consider your application
complete and to accept it for filing. The department will notify you in writing
if further information is required and specify the date by which the department
must receive the information.
(g)
What happens if I do not provide the required information?
(1)
The banking commissioner may determine that your application
is abandoned, without prejudice to your right to file a new application, if
the department does not receive the information required in the application
and department's instructions or the additional information required by the
department within the time specified in subsection (f) of this section or
as otherwise requested by the commissioner in writing to you.
(2)
The banking commissioner will notify you in writing if
your application is considered abandoned. The commissioner's determination
is effective the date the department mails you the notice and may not be appealed.
The department will not refund the fee you paid in connection with the abandoned
application.
(h)
After the department accepts my application for filing,
when will I know if the application is approved? On or before the 45th day
after the date the department accepts your application for filing, the banking
commissioner will approve or deny your application and advise you in writing
of the decision.
(i)
May I appeal the denial of my application? Yes. If the
banking commissioner denies your application, you may appeal the denial in
accordance with Finance Code, §151.205(b).
(j)
What if the department does not comply with the application
processing times? If the department fails to comply with the application processing
times specified in subsections (e) or (h) of this section, you may file a
complaint under §33.15 of this title (relating to Failure to Comply with
Application Processing Times).
§33.15.What May I Do If the Department Does Not Comply with the New License Application Processing Times?
(a)
Does this section apply to me? This section applies if
you applied for a new money transmission or currency exchange license under
Finance Code, Chapter 151, and you believe that the department failed to comply
with the application processing times specified in §33.13(e) or (h) of
this title (relating to Application for New License).
(b)
May I file a complaint? Yes. If the department does not
process your application for a new money transmission or currency exchange
license within the time periods specified in §33.13(e) or (h) of this
title (relating to Application for New License), you may file a written complaint
with the banking commissioner. The complaint must set out the facts regarding
the delay and the specific relief you seek. The department must receive your
complaint on or before the 30th day after the date the commissioner approves
or denies your license application.
(c)
How will the banking commissioner evaluate my complaint?
(1)
The department division responsible for complying with
the applicable time period must submit a written response to the banking commissioner
regarding your complaint that includes any facts on which the division relies
to show that good cause existed for exceeding the applicable time period.
(2)
The banking commissioner will review your written complaint
and the division's response. If the commissioner deems it necessary, a hearing
may be held to take evidence on the matter.
(3)
The banking commissioner will determine, based upon your
complaint and the division's response, if the department exceeded the applicable
time period and, if so, whether the responsible division established good
cause for the delay.
(d)
When will the banking commissioner notify me of the decision?
The banking commissioner will notify you of the decision regarding your complaint
on or before the 60th day after the date the commissioner receives your written
complaint. The commissioner's decision is final and may not be appealed.
(e)
What happens if the banking commissioner decides in my
favor? If the banking commissioner decides that the department exceeded the
applicable time period without good cause, the department will reimburse you
all of your application fees.
(f)
Does the banking commissioner's decision regarding my complaint
affect the decision on my application? No. A decision in your favor under
this section does not affect any decision by the banking commissioner to grant
or deny your license application. The decision to grant or deny your license
application is based upon applicable substantive law without regard to whether
the department timely processed your application.
§33.21.How Do I Renew My License?
(a)
Does this section apply to me? This section applies if
you hold a valid money transmission or currency exchange license issued by
the department under Finance Code, Chapter 151. This section also applies
if you hold a license issued under Finance Code, Chapter 152, or Finance Code,
Chapter 153, that expires on August 15, 2006 and must be renewed in accordance
with Finance Code, Chapter 151.
(b)
What must I file with the department to renew my license?
To renew your money transmission or currency exchange license, you must:
(1)
submit a renewal report that is:
(A)
on the form and in the medium required by the department;
(B)
signed and sworn to before a notary; and
(C)
fully completed in accordance with the department's instructions,
and includes as attachments the documentation specified in Finance Code, §151.207(b)
and the renewal report form and instructions; and
(2)
pay a renewal fee in the amount established by commission
rule.
(c)
When must I file my renewal report and pay my renewal fee?
Under Finance Code, §151.207, you must file your renewal report and pay
your renewal fee on or before July 1 of each year following initial licensing.
If you do not file your report and pay your fee by that date, you must pay
the late charge established by commission rule for each business day, up to
and including August 15, that your report or fee is late. If you do not file
your report and pay your fee and any late fees that are due by 5:00 p.m. central
daylight time on August 15, your money services license expires as of that
date and time and you must then immediately cease and desist from engaging
in the money transmission or currency exchange business.
(d)
May I obtain an extension of time to file my renewal report
and pay my renewal fee? Compliance with the August 15 deadline is necessary
for the department to orderly and efficiently administer and enforce Chapter
151. However, Finance Code, §151.207(f), authorizes the banking commissioner
to allow you to file or complete the filing of your renewal report or pay
your renewal fee at a date later than August 15 for good cause. You have the
burden to demonstrate good cause.
(e)
What is "good cause"?
(1)
For purposes of this section, "good cause" means that you
have acted diligently and taken the steps reasonably necessary to enable you
to file your complete renewal report and pay your renewal fee in a timely
manner, but that circumstances beyond your control prevent you from doing
so.
(2)
You are expected to know and comply with the requirements
of Finance Code, §151.207, and this section. "Good cause" cannot be based
upon your ignorance of the law or facts that you could have learned through
the exercise of due diligence, or your failure to take the actions necessary
to ensure timely and complete filing and payment. For example, you should
know the time and information requirements necessary to obtain an audited
financial statement. The inability or failure of your accountant to timely
produce an audited financial statement is generally not considered to be a
circumstance beyond your control.
(f)
How do I ask for an extension? You must ask for the extension
in writing, and the department must receive your request on or before July
1. The request must:
(1)
state in detail the facts that support your claim that
good cause exists for the extension;
(2)
be accompanied by sworn affidavits to support the claimed
facts; and
(3)
state the period of time from which the extension is sought.
(g)
What happens after I submit my request?
(1)
The banking commissioner will review your request and determine
if you have demonstrated good cause. The commissioner will notify you of the
decision regarding your extension request by letter mailed to you on or before
the 21st day after the department receives the request. The commissioner's
decision is final and may not be appealed.
(2)
As a condition of granting your extension request, the
banking commissioner may require you to pay the late charge established by
commission rule for each business day after August 15 that your complete renewal
report or renewal fee remains due and impose such other conditions as the
commissioner deems reasonably necessary.
§33.51.How do I Provide Information to My Customers about How to File a Complaint?
(a)
Does this section apply to me? This section applies if
you hold a money transmission or currency exchange license issued by the department
under Finance Code, Chapter 151. Prior to August 15, 2006, this section also
applies if you hold a license issued under Finance Code, Chapter 152, or Finance
Code, Chapter 153.
(b)
Definitions. Words used in this section that are defined
in Finance Code, Chapter 151, have the same meaning as defined in the Finance
Code. The following words and terms, when used in this section, shall have
the following meanings unless the text clearly indicates otherwise.
(1)
"Conspicuously posted"--Displayed so that a customer with
20/20 vision can read it from the place where he or she would typically conduct
business with you or, alternatively, on a bulletin board, in plain view, on
which you post notices to the general public (such as equal housing posters,
licenses, Community Reinvestment Act notices, etc.).
(2)
"Customer"--Any person to whom, either directly or through
an authorized delegate, you provide or have provided money transmission or
currency exchange products or services or for whom you conduct or have conducted
a money transmission or currency exchange transaction.
(3)
"Privacy notice"--Any notice regarding a person's right
to privacy that you are required to give under a specific state or federal
law.
(4)
"Required notice"--The notice described in subsection (d).
(c)
Must I provide notice to customers about how to file complaints?
Yes. You must tell each of your Texas customers how to file a complaint concerning
the money transmission or currency exchange business you conduct under Finance
Code, Chapter 151, in accordance with this section.
(d)
What must the notice say?
(1)
Effective July 1, 2006, you must use the following notice
or a notice that substantially conforms to the language and form of the following
notice with respect to your money transmission or currency exchange business:
After first contacting (Name of License Holder), if you still have an unresolved
complaint regarding the company's money transmission or currency exchange
activity, please direct your complaint to: Texas Department of Banking, 2601
North Lamar Boulevard, Austin, Texas 78705, 1-877-276-5554 (toll free), www.banking.state.tx.us.
(2)
You must provide the required notice in the language in
which the transaction is conducted.
(e)
How and where must I provide the required notice?
(1)
If a state or federal law requires you to send a privacy
notice to your customers, you must include the required notice with each privacy
notice.
(2)
If you maintain a website by which a customer may remit
money for transmission or obtain information about you or the customer's transaction
or an existing account, you must include the required notice on your website.
The notice must be prominently displayed on the initial page the customer
uses to initiate the remittance or access the information, or on a page available
no more than one link from the initial page. The link must clearly describe
the information available by clicking the link, e.g., "Texas customers click
here for information about filing complaints about our money transmission
or currency exchange product or service."
(3)
In addition to including the required notice in a privacy
notice in accordance with paragraph (1) and on your website in accordance
with paragraph (2) of this subsection, you must tell customers how to file
complaints by one or more of the following methods:
(A)
You may include the required notice in at least 8 point
type, on each payment instrument or other access device or receipt used in
connection with your money transmission or currency exchange business, provided
that:
(i)
the payment instrument or other access device constitutes
the only means of accessing the money received for transmission; or
(ii)
you issue a receipt for every money transmission or currency
exchange transaction you conduct.
(B)
If you personally receive all the funds paid by your customers,
you may conspicuously post the required notice where you conduct money transmission
or currency exchange activities with customers on a face to face basis.
(C)
You may provide each customer with the required notice
separately, provided that:
(i)
not later than the time the transaction is conducted, you
deliver the required notice in a form that your customer can retain, in at
least 10 point type; or
(ii)
if you use an access device, such as a stored value card,
in your money services business and mail the device to your customer, you
include the required notice in the mailing; and
(iii)
if the same access device may be used continuously, such
as a reloadable stored value card, you also deliver the required notice to
your customer at least once every twelve months. You may include the required
notice with a privacy statement, with or on another statement, or by another
means so long as the customer actually receives the notice within each twelve-month
period.
(4)
If your business is entirely internet based, so that account
relationships and transactions are initiated solely by means of the internet,
the additional disclosures described in paragraph (3) of this subsection are
not required.
(f)
How do I provide the required notice if I conduct business
through authorized delegates?
(1)
If you conduct business through one or more authorized
delegates, each authorized delegate must provide the required notice by one
or more of the methods described in subsection (e)(3) of this section. You
must specify the method or methods to be used by your authorized delegate
and provide your authorized delegate with the means by which to give the notice
you select.
(2)
If your authorized delegate personally receives all funds
paid by your customers and you require your authorized delegate to post the
required notice described in subsection (e)(3)(B) of this section, you may
use one posted notice to provide the required notice and the authorized delegate
designation required under Finance Code, §151.403(a)(6).
(g)
Am I subject to an enforcement action if I do not provide
the required notice? Yes. You are subject to enforcement sanctions under Finance
Code, Chapter 151, Subchapter H, if you:
(1)
fail to provide the required notice in accordance with
this section; or
(2)
fail to specify the method and provide the means by which
your authorized delegate must give the required notice in accordance with
subsection (f)(1) of this section.
(h)
Is my authorized delegate subject to an enforcement action
if the delegate does not provide the required notice? Yes, if you have complied
with subsection (f)(1) of this section. If you have specified the method and
provided the means by which your authorized delegate must give the required
notice, your authorized delegate is subject to enforcement sanctions if the
delegate fails to provide the required notice as directed.
This agency hereby certifies that the proposal has been reviewed
by legal counsel and found to be within the agency's legal authority to adopt.
Filed with the Office of
the Secretary of State on February 17, 2006.
TRD-200600877
Everette D. Jobe
Certifying Official
Texas Department of Banking
Proposed date of adoption: April 28, 2006
For further information, please call: (512) 475-1300
Chapter 77.
LOANS, INVESTMENTS, SAVINGS, AND DEPOSITS
Subchapter B. SAVINGS AND DEPOSITS
7 TAC §77.116
The Finance Commission of Texas ("Finance Commission") proposes
to adopt new 7 TAC §77.116, Pledging of Assets to Secure Deposits of
Certain Public Purpose Entities. The new section is proposed to implement
amendments to
Finance Code
§93.001(c)(5)
to define member-owned utilities (such as electric cooperatives and water
supply corporations) and certain economic development corporations as "entities
that serve a public purpose" for purposes of the amended statute.
Prior to September 1, 2005,
Finance Code
§93.001(c)(5)
permitted a state charted savings bank to pledge its assets to secure the
deposits of any state or of a political corporation or political subdivision
of any state. This provision allowed a state savings bank to pledge savings
bank assets to secure the deposits of public funds which were in excess of
the limits on deposit account insurance provided by the Federal Deposit Insurance
Corporation. The authority to pledge assets to secure the uninsured portion
of large deposits did not extend to non-profit non-governmental entities which
provide necessary public services such as utility services or economic development
assistance. H.B. 955 as passed by the 79th Texas Legislature amended
Danny Payne, Savings and Mortgage Lending Commissioner, has determined
that for the first five-year period that the new section, as proposed, will
be in effect, there will be no fiscal implications for state and local government
as a result of enforcing or administering this section and is not expected
to increase or decrease the net revenue of the Department from the industry.
Mr. Payne estimates that for the first five years that the proposed new
section is in effect, the public will benefit by the state savings bank being
authorized to provide the same kind of security to back deposits of these
special public purpose entities as that provided to back the uninsured portion
of deposits of public funds. No difference will exist between the cost of
compliance for small business and the cost of compliance for the largest business
affected by the new section. This further insures that a failure of the savings
bank would not impair the ability of these public purpose entities to carry
out their essential functions because of a loss of their deposits.
Comments on the proposed new rule may be submitted in writing to Danny
Payne, Commissioner, Department of Savings and Mortgage Lending, 2601 North
Lamar, Suite 201, Austin, Texas 78705-4294, or e-mailed to SMLinfo@sml.state.tx.us
no later than 30 days from the date that this proposed new rule is published
in the
Texas Register
.
The new section is proposed under the
Finance Code
§11.302(a) which authorizes the Finance Commission
to adopt rules applicable to savings associations and savings banks.
The section of the
Finance Code
affected
by the proposed new rule is
Finance Code
§93.001.
§77.116.Pledging of Assets to Secure Deposits of Certain Public Purpose Entities.
A savings bank may pledge its assets to secure the deposits of an entity
that serves a public purpose. For purpose of this section, an entity serves
a public purpose if it is:
(1)
an electrical cooperative organized under Chapter 161 of
the
Utilities Code
;
(2)
a telephone cooperative organized under Chapter 162 of
the
Utilities Code
;
(3)
a nonprofit water supply or sewer service corporation organized
under Chapter 67 of the
Water Code
;
(4)
a not for profit business development corporation organized
under Chapter 23, Subchapter B of the
Business Organizations
Code
; or
(5)
any other member owned cooperative or not for profit corporation
organized under a special statute to provide utility service or economic development
assistance or whose purpose the commissioner determines is similar to those
entities listed in paragraphs (1) - (4) of this section.
This agency hereby certifies that the proposal has been
reviewed by legal counsel and found to be within the agency's legal authority
to adopt.
Filed with the Office of
the Secretary of State on February 17, 2006.
TRD-200600889
John Fleming
General Counsel
Texas Department of Savings and Mortgage Lending
Earliest possible date of adoption: April 9, 2006
For further information, please call: (512) 475-1353
Chapter 91.
CHARTERING, OPERATIONS, MERGERS, LIQUIDATIONS
Subchapter J. CHANGES IN CORPORATE STATUS
7 TAC §91.1004
(Editor's note: The text of the following section proposed for
repeal will not be published. The section may be examined in the offices of
the Credit Union Department or in the Texas Register office, Room 245, James
Earl Rudder Building, 1019 Brazos Street, Austin.)
The Credit Union Commission proposes to repeal §91.1004
concerning conversion of charter. This rule is being replaced by §§91.1005,
91.1006, 91.1007, and 91.1008 which update the rule and divide the rule into
four distinct rules for ease of use and clarity.
The repeal of the rule is proposed as a result of the Department's general
rule review and comments from interested parties. Since there had recently
been some controversy surrounding two credit union conversions to mutual savings
institutions, the Commission's Legislative Advisory Committee directed the
Department to seek input from interested parties and develop a more comprehensive
and reasoned proposal regarding charter conversions. The Department participated
in six private meetings with over 50 credit union presidents, conducted a
public forum for credit unions and their members, and held a public hearing
for all interested persons. Currently, § 91.1004 addresses five different
types of conversions. The Department believes that greater clarity and ease
of use could be achieved if the existing §91.1004 were separated into
four distinct rules.
Kerri T. Galvin, General Counsel, has determined that for the first five
year period the rule is repealed there will be no fiscal implications for
state or local government as a result of enforcing or administering the proposed
rule.
Ms. Galvin has also determined that for each year of the first five years
the rule is repealed, the public benefits anticipated as a result of repealing
the rule will be ease of use by credit unions and the public with the new
rule replacing the repealed rule. There is no anticipated effect on small
businesses as a result of repealing the rule. There is no economic cost anticipated
to credit unions or individuals for repealing the rule.
Written comments on the proposal must be submitted within 30 days after
its publication in the
Texas Register
to Kerri
T. Galvin, General Counsel, Credit Union Department, 914 East Anderson Lane,
Austin, Texas 78752-1699. Oral comments on the proposal can be made at the
Commission's Legislative Advisory Committee meeting on Friday, May 19, 2006
at 9:00 am at 914 East Anderson Lane, Austin, Texas 78752.
The repeal is proposed under the provision of the Texas Finance
Code, §15.402, which authorizes the Commission to adopt reasonable rules
for administering Title 2, Chapter 15 and Title 3, Subchapter D of the Texas
Finance Code and under Texas Finance Code §§123.003, which allows
a credit union to engage in any activity or exercise any power it could if
it were operating as a federal credit union; 122.201, which authorizes the
Commission to adopt rules regarding conversions to a federal credit union;
122.202, which authorizes the Commission to adopt rules regarding conversions
to an out-of-state credit union; and 122.203, which authorizes the Commission
to adopt rules regarding conversions to a state credit union.
The specific sections affected by the proposed repeal are Texas Finance
Code, §§123.003, 122.201, 122.202, 122.203.
§91.1004.Conversion of Charter.
This agency hereby certifies that the proposal has been
reviewed by legal counsel and found to be within the agency's legal authority
to adopt.
Filed with the Office of
the Secretary of State on February 21, 2006.
TRD-200600915
Harold E. Feeney
Commissioner
Credit Union Department
Earliest possible date of adoption: April 9, 2006
For further information, please call: (512) 837-9236
7 TAC §91.1005
The Credit Union Commission proposes new §91.1005, concerning
conversion to a Texas credit union. The new rule updates and replaces §91.1004,
concerning conversion of charter.
The new rule is proposed as a result of the Department's general rule review
and comments from interested parties. Since there had recently been some controversy
surrounding two credit union conversions to mutual savings institutions, the
Commission's Legislative Advisory Committee directed the Department to seek
input from interested parties and develop a more comprehensive and reasoned
proposal regarding charter conversions. The Department participated in six
private meetings with over 50 credit union presidents, conducted a public
forum for credit unions and their members, and held a public hearing for all
interested persons. Currently, §91.1004 addresses five different types
of conversions. The Department believes that greater clarity and ease of use
could be achieved if the existing §91.1004 were separated into four distinct
rules. Accordingly, new §91.1005 is being proposed to deal exclusively
with conversions to a state credit union.
Kerri T. Galvin, General Counsel, has determined that for the first five
year period the new rule is in effect there will be no fiscal implications
for state or local government as a result of enforcing or administering the
proposed rule.
Ms. Galvin has also determined that for each year of the first five years
the proposed new rule is in effect, the public benefits anticipated as a result
of enforcing the rule will be greater clarity and ease of use of the rule.
There is no anticipated effect on small businesses as a result of adopting
the new rule. There is no economic cost anticipated to credit unions or individuals
for complying with the new rule if adopted.
Written comments on the proposal must be submitted within 30 days after
its publication in the
Texas Register
to Kerri
T. Galvin, General Counsel, Credit Union Department, 914 East Anderson Lane,
Austin, Texas 78752-1699. Oral comments on the proposal can be made at the
Commission's Legislative Advisory Committee meeting on Friday, May 19, 2006
at 9:00 a.m. at 914 East Anderson Lane, Austin, Texas 78752.
The new rule is proposed under the provision of the Texas Finance
Code, §15.402, which authorizes the Commission to adopt reasonable rules
for administering Title 2, Chapter 15 and Title 3, Subchapter D of the Texas
Finance Code and under Texas Finance Code §122.203, which authorizes
the Commission to adopt rules regarding conversions to a state credit union.
The specific section affected by the proposed rule is Texas Finance Code,
§122.203.
§91.1005.Conversion to a Texas Credit Union.
(a)
Authority to convert. A federal credit union or an out
of state credit union is authorized to convert to a credit union incorporated
under the laws of this state by Section 122.203 of the Act.
(b)
Requirements for conversion. A credit union wishing to
convert to a credit union incorporated under the laws of this state shall
comply with the following requirements:
(1)
Submit a complete application on a form and in a manner
prescribed by the commissioner;
(2)
Furnish evidence that the current federal or state regulatory
agency having jurisdiction over the applicant has no preliminary objection
to the conversion plan;
(3)
Submit to a conversion examination by the department and
pay the supplemental examination fee prescribed in §97.113 of this title
(relating to Operating Fees). The commissioner may waive the examination or
the fee, upon finding good cause;
(4)
Furnish evidence confirming that the applicant has complied
with all applicable requirements of and has completed the conversion in a
manner satisfactory to the insuring organization and the current federal or
state regulatory agency; and
(5)
Furnish evidence that the applicant has established or
will relocate its principal place of business in a specific location in the
State of Texas.
(c)
Approval. The commissioner shall approve the conversion
once the conditions required by this section have been met and the commissioner
finds that the applicant:
(1)
is financially sound;
(2)
has no material supervisory problems; and
(3)
can reasonably be expected to conduct its operations in
a safe and sound manner and in accordance with the laws of this state. The
commissioner may approve the conversion conditioned upon specific requirements
being met, but the certificate of incorporation shall not be issued unless
such conditions have been met.
(d)
Effective date. The conversion shall become effective immediately
upon the issuance of the certificate of incorporation or on a stipulated date
within 90 days of the conversion approval. On request and for good cause shown,
the commissioner may grant a reasonable extension of the effective date.
This agency hereby certifies that the proposal has been reviewed
by legal counsel and found to be within the agency's legal authority to adopt.
Filed with the Office of
the Secretary of State on February 21, 2006.
TRD-200600919
Harold E. Feeney
Commissioner
Credit Union Department
Earliest possible date of adoption: April 9, 2006
For further information, please call: (512) 837-9236
7 TAC §91.1006
The Credit Union Commission proposes new §91.1006, concerning
conversion to a federal or out-of-state credit union. The new rule updates
and replaces §91.1004, concerning conversion of charter.
The new rule is proposed as a result of the Department’s general
rule review and comments from interested parties. Since there had recently
been some controversy surrounding two credit union conversions to mutual savings
institutions, the Commission’s Legislative Advisory Committee directed
the Department to seek input from interested parties and develop a more comprehensive
and reasoned proposal regarding charter conversions. The Department participated
in six private meetings with over 50 credit union presidents, conducted a
public forum for credit unions and their members, and held a public hearing
for all interested persons. Currently, §91.1004 addresses five different
types of conversions. The Department believes that greater clarity and ease
of use could be achieved if the existing §91.1004 were separated into
four distinct rules. Accordingly, new §91.1006 is being proposed to deal
exclusively with conversions to a federal or out-of-state credit union.
Kerri T. Galvin, General Counsel, has determined that for the first five
year period the new rule is in effect there will be no fiscal implications
for state or local government as a result of enforcing or administering the
proposed rule.
Ms. Galvin has also determined that for each year of the first five years
the proposed new rule is in effect, the public benefits anticipated as a result
of enforcing the rule will be greater clarity and ease of use of the rule.
There is no anticipated effect on small businesses as a result of adopting
the new rule. There is no economic cost anticipated to credit unions or individuals
for complying with the new rule if adopted.
Written comments on the proposal must be submitted within 30 days after
its publication in the
Texas Register
to Kerri
T. Galvin, General Counsel, Credit Union Department, 914 East Anderson Lane,
Austin, Texas 78752-1699. Oral comments on the proposal can be made at the
Commission’s Legislative Advisory Committee meeting on Friday, May 19,
2006 at 9:00 a.m. at 914 East Anderson Lane, Austin, Texas 78752.
The new rule is proposed under the provision of the Texas Finance
Code, §15.402, which authorizes the Commission to adopt reasonable rules
for administering Title 2, Chapter 15 and Title 3, Subchapter D of the Texas
Finance Code and under Texas Finance Code §122.201, which authorizes
the Commission to adopt rules regarding conversions to a federal credit union;
and §122.202, which authorizes the Commission to adopt rules regarding
conversions to an out-of-state credit union.
The specific sections affected by the proposed rule are Texas Finance Code,
§122.201 and §122.202.
§91.1006.Conversions to a Federal or Out-of-State Credit Union.
(a)
Authority to Convert. A credit union organized under the
laws of this state is authorized to convert to a federal credit union or an
out-of-state credit union by Sections 122.201 and 122.202 of the Act.
(b)
Requirements for Conversion. A credit union wishing to
convert to a federal credit union or an out-of-state credit union shall comply
with the following requirements:
(1)
Furnish evidence to the department that a conversion proposal
has been approved by a two-thirds vote of the board of directors;
(2)
Submit copies of all filings made with any state or federal
regulatory agency and insuring organization with jurisdiction over any aspect
of the conversion process;
(3)
Furnish evidence confirming that the insuring organization
and the acquiring state or federal regulatory agency have no preliminary objections
to the plan;
(4)
Submit a vote certification as required by §91.1008(c)
of this chapter showing that the conversion proposal was approved by an affirmative
vote of a majority of the eligible members of the credit union voting; and
(5)
Furnish written evidence confirming that the credit union
has met all of the conversion requirements of the insuring organization and
the acquiring state or federal regulatory agency.
(c)
Approval. The commissioner shall approve the conversion
if all of the conditions required by this section have been met, unless the
commissioner determines the conversion is being made to circumvent a pending
supervisory action that is about to be or has been initiated by the commissioner
because of a concern over the safety and soundness of the credit union.
(d)
Effective Date. Once the commissioner has approved the
conversion, it shall become effective upon the issuance of a charter or certificate
of incorporation from the acquiring state or federal regulatory agency.
This agency hereby certifies that the proposal has been reviewed
by legal counsel and found to be within the agency's legal authority to adopt.
Filed with the Office of
the Secretary of State on February 21, 2006.
TRD-200600918
Harold E. Feeney
Commissioner
Credit Union Department
Earliest possible date of adoption: April 9, 2006
For further information, please call: (512) 837-9236
7 TAC §91.1007
The Credit Union Commission proposes new §91.1007 concerning
conversion to a mutual savings institution. The new rule updates and replaces
§91.1004 concerning conversion of charter.
The new rule is proposed as a result of the Department’s general
rule review and comments from interested parties. Since there had recently
been some controversy surrounding two credit union conversions to mutual savings
institutions, the Commission’s Legislative Advisory Committee directed
the Department to seek input from interested parties and develop a more comprehensive
and reasoned proposal regarding charter conversions. The Department participated
in six private meetings with over 50 credit union presidents, conducted a
public forum for credit unions and their members, and held a public hearing
for all interested persons. Currently, §91.1004 addresses five different
types of conversions. The Department believes that greater clarity and ease
of use could be achieved if the existing §91.1004 were separated into
four distinct rules. Accordingly, new §91.1007 is being proposed to deal
exclusively with conversions to a mutual savings institution.
Kerri T. Galvin, General Counsel, has determined that for the first five
year period the new rule is in effect there will be no fiscal implications
for state or local government as a result of enforcing or administering the
proposed rule.
Ms. Galvin has also determined that for each year of the first five years
the proposed new rule is in effect, the public benefits anticipated as a result
of enforcing the rule will be greater clarity and ease of use of the rule.
There is no anticipated effect on small businesses as a result of adopting
the new rule. There is no economic cost anticipated to credit unions or individuals
for complying with the new rule if adopted.
Written comments on the proposal must be submitted within 30 days after
its publication in the
Texas Register
to Kerri
T. Galvin, General Counsel, Credit Union Department, 914 East Anderson Lane,
Austin, Texas 78752-1699. Oral comments on the proposal can be made at the
Commission’s Legislative Advisory Committee meeting on Friday, May 19,
2006 at 9:00 a.m. at 914 East Anderson Lane, Austin, Texas 78752.
The new rule is proposed under the provision of the Texas Finance
Code, §15.402, which authorizes the Commission to adopt reasonable rules
for administering Title 2, Chapter 15 and Title 3, Subchapter D of the Texas
Finance Code and under Texas Finance Code §123.003, which allows a credit
union to engage in any activity or exercise any power it could if it were
operating as a federal credit union.
The specific section affected by the proposed rule is Texas Finance Code,
§123.003.
§91.1007.Conversion to a Mutual Savings Institution.
(a)
Authority to convert. A credit union organized under the
laws of this state is authorized to convert to a mutual savings bank or association
by §123.003 of the Act.
(b)
Requirements for conversion. A credit union that is considering
converting to a mutual savings bank or association must comply with the following
requirements:
(1)
Preliminary communication with membership and department.
At least thirty days prior to a final vote by the board of directors to formally
adopt a conversion proposal, the credit union shall send notice to the department
and each member advising that the board is considering a possible conversion
to a mutual savings bank or association. The notice shall, at a minimum, contain
the following information:
(A)
a prominent legend in bold-face type that advises members
of a potential conversion;
(B)
the electronic availability of information related to a
potential conversion;
(C)
a telephone number and e-mail address that members may
use to request copies of the potential conversion information that is available
by electronic means;
(D)
the ability of members to submit written comments on the
potential conversion; and
(E)
a clear, concise, and impartial description of the potential
conversion to be considered by the board.
(2)
Information posted on Internet web site. The credit union
shall post information related to a potential conversion on the credit union’s
principal Internet web site at least thirty days prior to a vote by the board
of directors to adopt a proposal of conversion. The posted information shall,
at a minimum, discuss:
(A)
The business purposes that might be accomplished by a conversion;
(B)
The differences between and similarities of a credit union
and a mutual savings institution;
(C)
An estimate of the anticipated conversion expenses;
(D)
The methods by which a member may request a copy of the
posted information;
(E)
The method and timeline for members to submit written comments
on the potential conversion; and
(F)
The process that will be followed if the board formally
adopts a conversion proposal.
(3)
Written comments from members. The board shall provide
members a reasonable opportunity to submit written comments relating to a
potential conversion. The board may hold a special meeting to receive member
input regarding the potential conversion. It is within the board’s discretion
to determine the type, number, duration, and location of any special meeting(s).
Before taking a final vote on a conversion proposal, the board should consider
all written comments and any other member input received at any special meeting.
(4)
Adoption of a conversion proposal by the board. Subsequent
to the written comment period, the credit union may adopt, by the affirmative
vote of at least two-thirds of the members of its board of directors, a conversion
proposal consistent with this section. The credit union shall notify the department
of the board’s approval of the proposal within 5 days of the approval.
In addition, the following documents must be sent to the department as soon
as reasonably practical:
(A)
Copies of any filings made with any state or federal regulatory
agency and insuring organization with jurisdiction over any aspect of the
conversion process;
(B)
A copy of the disclosure materials and the ballot to be
sent to eligible members relative to voting on the conversion proposal;
(C)
An estimated budget of the anticipated conversion expenses
including legal, postage and mailing, advertising, printing, consulting fees,
examination and operating fees, and any overtime or other employee compensation
to be paid exclusively as a result of the conversion; and
(D)
Any other information reasonably requested by the commissioner.
(5)
Membership approval. The members of the credit union must
approve the conversion proposal by an affirmative vote of a majority of those
eligible members who vote on such proposal, unless the bylaws require a higher
vote threshold. The credit union shall submit a vote certification as required
by §91.1008(c) of this chapter showing that the conversion proposal was
approved by the members of the credit union;
(6)
Insuring organization requirements. The credit union must
furnish written evidence of its compliance with any voting procedures and
disclosure requirements imposed by its insuring organization; and
(7)
Other regulatory oversight. The credit union must furnish
written evidence that it has met all conversion requirements of the acquiring
state or federal regulatory agency.
(c)
Notice, disclosure materials, and ballot mailed to members.
The credit union shall mail to each eligible member, as defined in §91.1008
of this Chapter, a notice advising the member of the adoption and filing of
the conversion proposal. The notice must include a prominent statement that
the conversion will be decided by a majority of eligible members who vote
on the issue (unless the bylaws require a higher vote threshold), and that
each eligible member is only entitled to vote once. Also, incorporated with
the mailing of the notice, eligible members shall be provided with plain language
disclosures of material facts and information to be used as a basis for reaching
an informed decision to vote on the conversion. The disclosures and ballot
shall be submitted to the commissioner for approval. The commissioner may
require changes in the disclosures and ballot provided to eligible members
to assure full and adequate disclosure prior to the documents being mailed
to eligible members.
(d)
Conflict of interest. A director, officer, committee member,
agent, or senior management employee of the credit union, and immediate family
members of such individuals shall not, directly or indirectly, receive a fee,
commission, or other consideration, other than that person’s usual salary
or compensation, for aiding, promoting, or assisting in a conversion under
this section.
(e)
Continuity of existence. The corporate existence of a credit
union converting under this rule shall continue in its successor. Each member
shall be entitled to receive a share or deposit account or accounts in the
converted institution equal in amount to the value of accounts held in the
former credit union subject to any lien or right of offset held by the credit
union.
(f)
Approval. The commissioner shall approve the conversion
if all of the conditions required by this section have been met, unless the
commissioner determines the conversion is being made to circumvent a pending
supervisory action that is about to be or has been initiated by the commissioner
because of a concern over the safety and soundness of the credit union.
(g)
Effective date. Once the commissioner has approved the
conversion, it shall become effective upon the issuance of a charter or certificate
of incorporation from the acquiring state or federal regulatory agency.
This agency hereby certifies that the proposal has been reviewed
by legal counsel and found to be within the agency's legal authority to adopt.
Filed with the Office of
the Secretary of State on February 21, 2006.
TRD-200600917
Harold E. Feeney
Commissioner
Credit Union Department
Earliest possible date of adoption: April 9, 2006
For further information, please call: (512) 837-9236
7 TAC §91.1008
The Credit Union Commission proposes new §91.1008 concerning
conversion voting procedures and restrictions and filing requirements. The
new rule updates and replaces §91.1004 concerning conversion of charter.
The new rule is proposed as a result of the Department’s general
rule review and comments from interested parties. Since there had recently
been some controversy surrounding two credit union conversions to mutual savings
institutions, the Commission’s Legislative Advisory Committee directed
the Department to seek input from interested parties and develop a more comprehensive
and reasoned proposal regarding charter conversions. The Department participated
in six private meetings with over 50 credit union presidents, conducted a
public forum for credit unions and their members, and held a public hearing
for all interested persons. Currently, §91.1004 addresses five different
types of conversions. The Department believes that greater clarity and ease
of use could be achieved if the existing §91.1004 were separated into
four distinct rules. Accordingly, new §91.1008 is being proposed to address
the vote procedures, restrictions, and filing requirements for all conversions.
Kerri T. Galvin, General Counsel, has determined that for the first five
year period the new rule is in effect there will be no fiscal implications
for state or local government as a result of enforcing or administering the
proposed rule.
Ms. Galvin has also determined that for each year of the first five years
the proposed new rule is in effect, the public benefits anticipated as a result
of enforcing the rule will be greater clarity and ease of use of the rule.
There is no anticipated effect on small businesses as a result of adopting
the new rule. There is no economic cost anticipated to credit unions or individuals
for complying with the new rule if adopted.
Written comments on the proposal must be submitted within 30 days after
its publication in the
Texas Register
to Kerri
T. Galvin, General Counsel, Credit Union Department, 914 East Anderson Lane,
Austin, Texas 78752-1699. Oral comments on the proposal can be made at the
Commission’s Legislative Advisory Committee meeting on Friday, May 19,
2006 at 9:00 a.m. at 914 East Anderson Lane, Austin, Texas 78752.
The new rule is proposed under the provision of the Texas Finance
Code, §15.402, which authorizes the Commission to adopt reasonable rules
for administering Title 2, Chapter 15 and Title 3, Subchapter D of the Texas
Finance Code and under Texas Finance Code §§123.003, which allows
a credit union to engage in any activity or exercise any power it could if
it were operating as a federal credit union; 122.201, which authorizes the
Commission to adopt rules regarding conversions to a federal credit union;
122.202, which authorizes the Commission to adopt rules regarding conversions
to an out-of-state credit union; and 122.203, which authorizes the Commission
to adopt rules regarding conversions to a state credit union.
The specific sections affected by the proposed rule are Texas Finance Code,
§§122.201, 122.202, 122.203, and 123.003.
§91.1008.Conversion Voting Procedures and Restrictions; Filing Requirements.
(a)
Voting procedures. Eligible members may vote on a plan
of conversion by written ballot either filed in person at a special meeting
held on the date set for the vote or mailed by the member. The vote on a conversion
proposal must be by secret ballot. Mail balloting must be conducted in accordance
with §91.302 of this Chapter.
(b)
Definitions.
(1)
"Eligible Member" means a member of a credit union who
is approved and fully qualified for membership in accordance with the credit
union’s bylaws and written policies as of the eligibility record date.
(2)
"Eligibility Record Date" means the cut off date for determining
eligible members, which shall be deemed to be the last day of the month immediately
preceding the date the credit union’s board of directors notifies members
or the public that it is contemplating a conversion.
(c)
Voting ballots. All ballots must include the following:
(1)
The name of the credit union and the name of the proposed
institution if the conversion is approved. This information may be incorporated
into the body of the voting options;
(2)
The date and time by which the ballot must be received
if mailed; and
(3)
The following statements, printed in a manner acceptable
to the commissioner:
(A)
The conversion will be decided by a majority of credit
union members who vote on the issue (unless the bylaws require a higher vote
threshold);
(B)
Once a vote has been cast, it may not be changed; and
(C)
A "yes" vote means the credit union will become a (insert
conversion entity type) and a "no" vote means the credit union will remain
a (insert state or federal) credit union.
(D)
Vote certification. Within ten business days following
a vote on a plan of conversion, the credit union shall file with the department
a certified copy of a resolution of the board of directors stating that voting
on the conversion has been completed in accordance with this section and setting
out the following information:
(i)
The total number of members eligible to vote;
(ii)
The number of eligible members who voted (either at the
special meeting or by mail); and
(iii)
The total number of votes cast in favor and against the
plan of conversion.
This agency hereby certifies that the proposal
has been reviewed by legal counsel and found to be within the agency's legal
authority to adopt.
Filed with the Office of
the Secretary of State on February 21, 2006.
TRD-200600916
Harold E. Feeney
Commissioner
Credit Union Department
Earliest possible date of adoption: April 9, 2006
For further information, please call: (512) 837-9236
Subchapter B. GENERAL RULES
Part 2.
TEXAS DEPARTMENT OF BANKING
Chapter 33.
MONEY SERVICES BUSINESSES
Part 4.
TEXAS DEPARTMENT OF SAVINGS AND MORTGAGE LENDING
Part 6.
CREDIT UNION DEPARTMENT
Chapter 93.
ADMINISTRATIVE PROCEEDINGS