7 TAC §12.33
The Finance Commission of Texas (the commission) adopts new §12.33,
concerning debt cancellation contracts (DCCs) and debt suspension agreements
(DSAs) without changes to the proposed text as published in the February 28,
2003, issue of the
Texas Register
(28 TexReg
1707). The text will not be republished.
A DCC is a loan term or a contractual arrangement modifying loan terms
linked to a bank's extension of credit, under which the bank agrees to cancel
all or part of a customer's obligation to repay an extension of credit from
that bank upon the occurrence of a specified event. A DSA is a loan term or
a contractual arrangement modifying loan terms linked to a bank's extension
of credit, under which the bank agrees to suspend all or part of a customer's
obligation to repay an extension of credit from that bank upon the occurrence
of a specified event.
The Department of Banking (department) has long recognized that state banks
may provide DCCs as permissible banking products. See Opinion No. 94-74 (November
14, 1994). The Banking Commissioner (commissioner) more recently reiterated
that position in his letter of November 7, 2002, granting a parity request
relating to the sale of DCCs and DSAs by state banks. This parity request
was based on the regulations of the Office of Comptroller of the Currency
at 12 C.F.R. Part 37 which established standards for the offer and sale of
DCCs and DSAs by national banks. In his letter, the commissioner also noted
that a state bank's use of DCCs and DSAs is incidental or complementary to
a financial activity under Finance Code, §32.001(b)(6). The adopted rule,
which codifies the department's position, states the authority of state banks
under Finance Code, §32.001, to enter into both DCCs and DSAs as authorized
bank products and to charge a fee for these products. It establishes standards
governing DCCs and DSAs in order to ensure that state banks provide such products
consistent with safe and sound banking practices and subject to appropriate
consumer protections.
The commission received no comments regarding the proposal.
The new section is proposed under Finance Code, §32.001,
which authorizes a state bank to engage in the financial activity of lending
money and to engage in an activity that is incidental or complementary to
such financial activity.
Finance Code, Chapter 32, is affected by the adopted section.
This agency hereby certifies that the adoption has been reviewed
by legal counsel and found to be a valid exercise of the agency's legal authority.
Filed with the Office of
the Secretary of State on April 11, 2003.
TRD-200302373
Everette D. Jobe
Certifying Official
Texas Department of Banking
Effective date: May 1, 2003
Proposal publication date: February 28, 2003
For further information, please call: (512) 475-1300