California Department of Business Oversight
November 2019 Volume 7, Number 4
Governor Newsom Declares Statewide Emergency; Commissioner Alvarez Urges Patience, Flexibility for Fire Victims
Governor Gavin Newsom declared a statewide emergency on October 27 due to historic winds that fanned fires and forced evacuations across the state.
In light of the widespread impacts of the fires, Commissioner of Business Oversight Manuel P. Alvarez is urging financial institutions and other licensees to grant whatever latitude they can to help affected customers and the larger, fire-ravaged communities recover from these disasters.
Financial institutions that take prudent steps to adjust or alter terms of existing loans in affected areas will not be subject to examiner criticism. Commissioner Alvarez recognizes that efforts to work constructively with borrowers in communities impacted by natural disasters can be consistent with safe-and-sound banking practices as well as the public interest.
Commissioner Alvarez, pursuant to his authority under the Bank Extraordinary Situation Closing Act, issued proclamations authorizing state-chartered banks to close any or all of their offices in affected areas until the Commissioner determines the extraordinary conditions have ended.
Christopher Shultz Appointed New Chief Deputy Commissioner of Business Oversight
The DBO welcomed Christopher Shultz as its new chief deputy commissioner on November 4. Governor Gavin Newsom appointed him to the position on October 15.
Shultz had been chief deputy director at the Department of Consumer Affairs since 2017. Before that, he was deputy commissioner for community programs and policy initiatives at the California Department of Insurance from 2011 to 2017, and legislative director for Assemblymember Dave Jones from 2009 to 2010. He also served as Jones’ chief of staff from 2004 to 2006.
Shultz was public affairs director at the Ulum Group Public Relations and Public Affairs from 2006 to 2009, capitol office director for State Senator Dede Alpert from 2002 to 2004 and technology policy coordinator at the Office of the Secretary for Education from 2000 to 2001.
DBO Forms Cannabis Banking Task Force
The DBO on October 22 announced the formation of the Cannabis Banking Task Force (CBTF) to bring together regulators, banks and credit unions to answer the question: How can an existing DBO licensee bank a cannabis-related business in an environment of conflicting state and federal laws and be safe and sound? The task force’s goal is to identify solutions for existing DBO licensees to engage in banking cannabis-related businesses.
The first meeting of the task force, scheduled to run from 10 a.m. to 3 p.m. November 20 at the DBO’s Sacramento office, will include representatives of California cannabis licensing authorities who will discuss their licensing operations and related information available to DBO licensees.
Governor Newsom Signs Bill to Curb Consumer Loan Interest Rates
Governor Newsom has signed Assembly Bill 539, which limits interest rates finance lenders may charge on loans of $2,500 to $10,000 to 36 percent plus the Federal Funds Rate. The new law takes effect on January 1, 2020.
The law requires finance lenders making loans subject to these provisions to report each borrower’s payment performance to at least one consumer reporting agency that compiles and maintains files on consumers on a nationwide basis and to offer, at no cost to borrowers, a credit education program or seminar that has been reviewed and approved by the DBO Commissioner, in accordance with specific requirements. The law further specifies that licensees may contract for and receive an administrative fee.
Under the California Financing Law (CFL), certain principles apply in determining whether a loan is of a bona fide principal amount under specified provisions and whether the regulatory ceiling provision is used for purposes of evading the CFL.
The new law applies these principles to loans of bona fide principal amounts of $2,500 or more but less than $10,000 and to any fees paid to a licensee for the privilege of participating in an open-end credit program. The new law has several other provisions that CFL-licensed lenders should review.
Comments Sought on Regulations to Transition CFL Licensees to NMLS
The DBO is seeking comments by December 9 on proposed regulations that would affect all applicants and licensees under the California Financing Law (CFL), with certain specific applications to Property Assessed Clean Energy (PACE) program administrators.
Currently, only CFL licensees that make or broker loans secured with residential real property or finance PACE transactions are licensed through the Nationwide Multistate Licensing System (NMLS). The proposed regulations would transition all CFL applicants and licensees to NMLS to obtain and maintain a CFL license. The regulations would require all applicants to file through NMLS on or after January 1, 2021 and all existing licensees to transition to NMLS by July 1, 2021.
The PACE section of the regulations would implement the regulatory requirements of licensure, including provisions related to the enrollment and oversight of PACE solicitors and solicitor agents.
Premium Finance Company Assessments
The DBO assesses all California insurance premium finance companies in order to fund the department’s administration of laws governing such firms.
An invoice and cover letter detailing the assessment will be sent to each licensee on November 30. Assessments must be paid in full by Dec 20. The base assessment rate is set at 0.022300 percent of each company’s total assets as of December 31, 2018.
The minimum assessment is $250. To pay by check, licensees should mail payments to:
Department of Business Oversight
Attn: Accounting Office
1515 K Street, Suite 200
Sacramento, CA 95814-4052
Premium finance companies wishing to pay electronically via ACH should include the invoice number and credit:
Department of Business Oversight
Routing Number: 021052053
UPIC Account Number: 10440639
For questions about assessments, please contact Rowena Lumen at (415) 542-6273 or Rowena.Lumen@dbo.ca.gov.
Federal Judge Rules OCC Lacks Authority to Create National Fintech Charte
In a lawsuit brought by the New York Department of Financial Services, the U.S. District Court for the Southern District of New York has ruled that the Office of the Comptroller of the Currency (OCC) lacks the authority to create a federal nonbank charter.
On October 21, Judge Victor Marrero said in his decision that the National Bank Act’s “business of banking” clause “unambiguously requires that, absent a statutory provision to the contrary, only depository institutions are eligible to receive national bank charters from the OCC.”
Commercial Bank Activity
First State Bank of Colorado, Greenwood Village, Colorado, to merge with and into United Business Bank, Walnut Creek, California
Lighthouse Bank, Santa Cruz, to merge with and into Santa Cruz County Bank, Santa Cruz
Pacific Global Bank, Chicago, Illinois, to merge with and into Royal Business Bank, Los Angeles
Presidio Bank, San Francisco, to merge with and into Heritage Bank of Commerce, San Jose
Premium Finance Company Activity
New Premium Finance Company
Alpine Premium Finance Corporation 600 W. Broadway, San Diego
KSJT Premium Finance, Inc.
Pacific Premium Finance, Inc.
Ripple Premium Finance Co.
Credit Union Activity
LA Financial Credit Union, Pasadena, to merge with and into Ventura County Credit Union, Ventura
Kern Schools Federal Credit Union to convert to state charter under the name Kern Schools Credit Union
Money Transmitter Activity
New Money Transmitter
Currency Cloud Inc.
Voluntary Surrender of License
World First USA, Inc.
MANUEL P. ALVAREZ • Commissioner of Business Oversight
The November 2019 Monthly Bulletin covers the month ended October 31, 2019.
It is issued pursuant to Financial Code section 376.
The Monthly Bulletin is available at no charge via e-mail.
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