Download Zipped Introduced WordPerfect SB0108.ZIP
[Status][Bill Documents][Fiscal Note][Bills Directory]

S.B. 108

             1     

FINANCIAL INSTITUTION AMENDMENTS

             2     
2012 GENERAL SESSION

             3     
STATE OF UTAH

             4     
Chief Sponsor: Curtis S. Bramble

             5     
House Sponsor: Patrick Painter

             6     
             7      LONG TITLE
             8      General Description:
             9          This bill modifies the Financial Institutions Act to address credit exposure from
             10      derivative transactions.
             11      Highlighted Provisions:
             12          This bill:
             13          .    includes in total loans and extensions of credit, credit exposure to derivative
             14      transaction for purposes of limitations on loans and extensions of credit for banks
             15      and industrial banks;
             16          .    grants rulemaking authority to define terms; and
             17          .    makes technical changes.
             18      Money Appropriated in this Bill:
             19          None
             20      Other Special Clauses:
             21          None
             22      Utah Code Sections Affected:
             23      AMENDS:
             24          7-3-19, as last amended by Laws of Utah 2000, Chapter 260
             25          7-8-20, as last amended by Laws of Utah 2004, Chapter 92
             26     
             27      Be it enacted by the Legislature of the state of Utah:


             28          Section 1. Section 7-3-19 is amended to read:
             29           7-3-19. Limitations on loans and extensions of credit.
             30          (1) The total loans and extensions of credit [by any], including credit exposure to a
             31      derivative transaction, by a bank to [any] a person outstanding at one time and not fully
             32      secured, as determined in a manner consistent with Subsection (2), by collateral having a
             33      market value at least equal to the amount of the loan or extension of credit may not exceed
             34      15% of the amount of the bank's total capital.
             35          (2) (a) The total loans and extensions of credit, including credit exposure to a
             36      derivative transaction, by a bank to a person outstanding at one time and fully secured by
             37      readily marketable collateral having a market value, as determined by reliable and continuously
             38      available price quotations, at least equal to the amount of the funds outstanding may not exceed
             39      10% of the total capital of the bank.
             40          (b) The limitation of Subsection (2)(a) is separate from and in addition to the limitation
             41      described in Subsection (1).
             42          (3) (a) The limitations contained in Subsections (1) and (2) are subject to exceptions
             43      the commissioner may prescribe by rule made in accordance with Title 63G, Chapter 3, Utah
             44      Administrative Rulemaking Act.
             45          (b) A rule made under this section may not be inconsistent with law and regulations
             46      applicable to loan restrictions on national banks.
             47          (4) (a) The commissioner may, by rule made in accordance with Title 63G, Chapter 3,
             48      Utah Administrative Rulemaking Act, define the following terms as used in this section:
             49          (i) "credit exposure to a derivative transaction";
             50          (ii) "derivative";
             51          (iii) "loans and extensions of credit"; and
             52          (iv) "person" [as used in this section].
             53          (b) The definitions described under Subsection (4)(a) may not be inconsistent with
             54      those applicable to national banks.
             55          Section 2. Section 7-8-20 is amended to read:
             56           7-8-20. Limitations on loans to one borrower -- Exceptions -- Rules.
             57          (1) Except as provided in this section, the total loans and extensions of credit [by any],
             58      including credit exposure to a derivative transaction, by an industrial bank to [any] a person


             59      outstanding at any one time may not exceed 15% of the industrial bank's total capital.
             60          (2) Subsection (1) does not apply to an extension of credit that is subject to, or
             61      expressly exempted from, a federal statute or federal regulation limiting the amount of total
             62      loans and credit that may be extended to any person or group of persons.
             63          (3) The commissioner may by rule made in accordance with Title 63G, Chapter 3, Utah
             64      Administrative Rulemaking Act:
             65          (a) exempt from Subsection (1) [any] a class of loans or class of extensions of credit,
             66      including credit exposure to a derivative transaction, that are adequately secured or are not
             67      otherwise a risk to the safe and sound operation of an industrial bank;
             68          (b) define terms and phrases necessary to interpret and implement this section;
             69          (c) adopt standards for aggregating or segregating loans to the same or different
             70      persons;
             71          (d) describe records required to be maintained;
             72          (e) require specific actions to be taken by an institution's board of directors or
             73      executive officers; and
             74          (f) prescribe other actions necessary to interpret and implement this section.




Legislative Review Note
    as of 12-27-11 10:29 AM


Office of Legislative Research and General Counsel


[Bill Documents][Bills Directory]