CBA Publications >> Members' Only Publications >> Current Events

Current Events - 04/7/2003

Call to action: Please contact your state legislators regarding Credit Union Study
Assembly Bill 1226 (Montanez)

Now is the time to contact your state Senator and Assembly Member to ask them to support AB 1226 (Montanez), which directs the Legislative Analyst to undertake a study of the anti-competitive effects of the credit union's tax subsidy on community banks in California. The California Credit Union League will be conducting their Legislative Day in Sacramento on April 8, 2003. They will send hundreds of credit union members to the Capitol to lobby their representatives to vote against AB 1226. Accordingly, it is imperative that you contact your legislator by phone, fax or mail to urge them to support our bill as soon as possible (see attached roster). The first policy committee hearing for the bill will take place in the Assembly Banking and Finance Committee. It would be very helpful to also send a copy of your letter to the Committee members as identified below. Three sample letters are provided for your information, however, be sure to personalize your letter with your own bank's experience with the competitive disadvantage it faces in the marketplace. Please forward a copy of your letter or the results of any telephone conversations with your legislator to the CBA Sacramento office: Attention Maurine Padden (email: mpadden@calbankers.com or facsimile: 916/441-5756).

Assembly Banking and Finance Committee:
Chair: Patricia Wiggins
Vice Chair: Russ Bogh
Members: Ronald Calderon, Wilma Chan, Ed Chavez, Ellen Corbett, Lou Correa, Guy Houston, Tim Leslie, Cindy Montanez, Tony Strickland and Juan Vargas.

Producer lien bill dies a quick death

For those of you who engage in agricultural lending, CBA is pleased to announce that Senator Dean Florez has decided not to pursue his producer lien bill, Senate Bill 658, in this legislative session. The Senator's decision is a result, in part, of the hard work of CBA Agricultural Lending Chairman Corny Gallagher of Bank of America and CBA lobbyists who have spent countless hours educating legislators on this issue.

Financial Management Curriculum Proposed - AB 707

Assembly Member Lou Correa and Assembly Member Firebaugh have authored AB 707, a bill which would require the establishment of the Personal Financial Management Curriculum Task Force. This task force, which includes banks, would be responsible for developing curriculum and educational programs centered on personal financial management for all grades, from kindergarten through the twelfth grade. Although current law requires "consumer economics" curriculum for grades 7 to 12, it has not been implemented. We are very supportive of this effort and believe it may afford the banking industry an opportunity to become even more involved in the financial education of California's children.

Convenience check legislation update

Assembly Bill 73 (Lowenthal) was pulled from the Assembly Banking Committee hearing schedule on April 1, due to heavy opposition to the bill. CBA opposes AB 73 because it creates a new extensive consumer "opt-out" disclosure scheme for any bank intending to offer customers and non-customers unsolicited negotiable instruments, including convenience checks. The notice scheme in the bill would:

• Have a retroactive impact because it would apply to all existing accounts and would require notice to be provided "before or with the very first solicitation" of the covered products;

• Be required on every application for a loan or credit if a financial institution sends unsolicited negotiable instruments to consumers;

• Be required on each of the products covered by the bill; and

• Create unchecked liability for banks if checks are inadvertently sent to a customer who has opted out because the bill would allow the customer to use the checks and to not have to pay back the debt.

CBA will continue to oppose AB 73 in its current form if the legislative author of the bill puts it back on the Assembly Banking hearing schedule.

Credit inquiries legislation update

Assembly Bill 3 (Calderon) would have restricted the ability of banks and other financial institutions to track when consumers incur multiple credit inquiries and to use those inquires as factors in internal underwriting formulas, credit scoring models and in credit reports. CBA and the credit bureaus opposed AB 3 in this form, and the legislative author agreed to remove the onerous credit inquiry section from the bill. With these changes, AB 3 is no longer of concern so CBA has taken a neutral position on the bill.

U.S. House passes bank deposit insurance increase

Reuters reported on April 2 that the U.S. House passed legislation that would raise the maximum government insurance for bank accounts to $130,000 from $100,000 for most accounts and charge banks fees to maintain the fund. The legislation, which would also streamline government administration of the insurance fund and give regulators greater discretion on when to raise fees to boost reserves, was approved by an overwhelming bipartisan majority. The legislation would raise insurance on retirement accounts to $260,000 and accounts held by towns to $2 million. It would also increase deposit insurance in future years at the rate of inflation. The bill faces an uncertain future in the Senate, where Senate Banking Committee Chairman Richard Shelby, an Alabama Republican, does not support raising the cap on government insurance for bank deposits.

Customer Bill of Rights update

Progress was made by CBA on AB 1664, the Bank Customer Bill of Rights, a measure sponsored by Lt. Governor Cruz Bustamante. Bill Lasher, president and CEO of Community Commerce Bank, joined CBA staff in a meeting with Lt. Governor Bustamante last Wednesday. In addition, Russell Noack and Jim Gonzalez, bank government affairs consultants, attended the meeting in which our opposition to the measure was presented. As a result of the meeting, Bustamante agreed to drop two of the four provisions in the bill and also agreed to remove the offensive title from the measure. Although he has not yet agreed to drop the measure, Bustamante has agreed to meet with CBA again to discuss the technical challenges the bill presents. Many thanks to Bill Lasher, Russell Noack and Jim Gonzalez for their hard work. In addition, thanks are due to Frank Riolo, president and CEO of Borrego Springs Bank, who shared his views opposing the measure with advisors to the Lt. Governor. We will keep you informed of this measure in the weeks to come.

2003 Compensation and Benefits Benchmark Survey

CBA will be mailing the survey documents for the 2003 Compensation and Benefits Benchmark Survey this week to all financial institutions with assets up to $10 billion. All data must be submitted to Perry-Smith by May 2, and those submitting their information by April 18 will receive the published survey results at a discount.

One major change to this year's survey will be the reporting of compensation data by survey area. This year, we are requesting that participants report the CBA survey area in which each employee is located, not the location of the bank's headquarters. This should significantly improve the meaningfulness of the data presented. The Survey Committee also added questions regarding Executive Compensation and a variety of strategic questions to establish HR trends and identify hot topics in the industry. We believe you and your management team will find these changes and additions very beneficial.

Please be sure that your organization is ready to receive and respond to the survey. Your cooperation in this regard is critical to meeting our goal of timely publication of the survey results. We are excited about the improvements being made to the survey and look forward to your bank's participation again this year.

Grassroots Update

The following meetings have been scheduled between CBA members and their elected officials. If you would like more information on these meetings, or would like to participate in any of the meetings, please contact Mary Boruff at 916/441-7377, ext. 207. If you are not available, please consider sending an officer from your bank.

You are welcome to phone in to a grassroots conference call (1-888-903-2663) every Thursday afternoon (4:00 pm - State Legislature / 4:30 pm - House of Representatives) prior to any scheduled district office meeting(s) to discuss CBA's priority issues and to answer any questions you may have regarding meeting with your legislator.

* Freshman legislator
** Meeting rescheduled - new time
*** Meeting rescheduled - new date/time