PROPOSED RULEMAKING
[10 PA. CODE CHS. 11, 13, 17, 35 AND 41]
Repeal of Various Provisions
[27 Pa.B. 1813] The Department of Banking (Department), under the authority contained in sections 201 and 202 of the Department of Banking Code (71 P. S. §§ 733-201 and 733-202), section 103 of the Banking Code of 1965 (7 P. S. § 103) and section 12 of the Consumer Discount Company Act (7 P. S. § 6212), proposes to eliminate the following regulations: §§ 11.1--11.5, 13.2(b) and (c), 13.3(a)(3), 17.1, 35.1--35.3 and 41.3.
Purpose
The proposed amendments targeted for elimination have been deemed by the Department to be obsolete, preempted or unnecessary for the conduct of the business of banking or the making of consumer loans.
Explanation of Regulatory Requirements
The Department is unable to articulate the purposes of or necessity for the provisions listed as follows. These provisions are not enforced by Department examiners and are deemed to be unnecessary for the safety and soundness of regulated institutions. Furthermore, the Department is unable to ascertain any consumer protection which is derived from these subsections.
§ 13.2(b) and (c) (relating to participation in evidences of indebtedness and agreements for the payment of money).
Department personnel are unable to articulate the purposes of or necessity for these provisions. These provisions are not enforced by Department examiners and are deemed by the Department to be unnecessary for the safe and sound conduct of the business of banking.
§ 13.3(a)(3) (relating to participants in pools of evidences of indebtedness or agreements for the payment of money).
Department personnel are unable to articulate the purposes of or necessity for these provisions. These provisions are not enforced by Department examiners and are deemed by the Department to be unnecessary for the safe and sound conduct of the business of banking. This section is substantially similar to another section proposed to be repealed, § 13.2(c).
§ 13.3(b) (relating to participants in pools of evidences of indebtedness or agreements for the payment of money).
This provision contributes little or nothing to the safety and soundness of State-chartered institutions. Additionally, this provision is not enforced by examiners and is deemed by the Department to be unnecessary for the safe and sound conduct of the business of banking.
Chapter 11 (relating to reserves against deposits).
Chapter 11 sets forth reserve requirements for State-chartered banking institutions. However, in light of more restrictive Federal regulations applicable to State-chartered banking institutions as found in regulation D, 12 CFR Part 204, this chapter is deemed to be obsolete.
Chapter 17 (relating to audits and examinations).
Chapter 17 sets forth the minimum standards for director's audits of State-chartered banking institutions. This chapter is redundant and essentially meaningless. It sets forth no requirements other than notifying State-chartered institutions that the Department maintains instructions with regard to minimum requirements for internal audits.
Chapter 35 (relating to mortgage loans).
Chapter 35 sets forth restrictions on service charges and premiums charged by savings associations with regard to mortgage loans. In light of broad Federal preemption with regard to mortgage lending found in the Depository Institution Deregulation and Monetary Control Act of 1980 (12 U.S.C.A. § 173f-7a) and in the Alternative Mortgage Transaction Parity Act of 1982 (12 U.S.C.A. § 3801 et seq.), Chapter 35 is obsolete.
§ 41.3(i) (relating to contracts with consumers).
The second sentence in § 41.3(i) requires consumer discount companies which are licensed by the Department to obtain a license for places of business at which payments are received from borrowers. This section has been overridden by recent amendments to the Consumer Discount Company Act (7 P. S. §§ 6201--6219). The amendment which nullifies the second sentence of § 41.3(i) is found at section 8 of the Consumer Discount Company Act (7 P. S. § 6208).
Entities Affected
As the regulations targeted for elimination are largely obsolete, preempted and/or not enforced by the Department of Banking, the eliminations of these regulations will have no effect on the regulated community. Section 41.3(i) governs the extension of credit by the 620 licensed consumer discount companies in this Commonwealth. The rest of the regulations targeted for elimination are applicable to the 176 Pennsylvania-chartered banks, bank and trust companies and savings banks.
Cost and Paperwork Requirement
The regulations targeted for elimination are obsolete or preempted by other laws. Therefore, these regulations impose no cost or burdens to the regulated community and, thus, their elimination will have no effect on costs or paperwork requirements.
Contact Person
Interested persons are encouraged to submit their written comments, if any, within 30 days from the day of this publication to Valentino F. DiGiorgio III, Staff Attorney, Department of Banking, 333 Market Street, 16th Floor, Harrisburg, Pennsylvania 17101-2290, telephone number (717) 787-1471.
Regulatory Review
Under section 5(a) of the Regulatory Review Act (71 P. S. § 745.5(a)), the Department submitted a copy of this proposed regulation on April 1, 1997, to the Independent Regulatory Review Commission (IRRC) and the Chairpersons of the House Committee for Business and Economic Development and the Senate Committee on Banking and Insurance. In addition to submitting the regulation, the Department has provided IRRC and the Committees with a copy of a detailed Regulatory Analysis Form prepared by the agency in compliance with Executive Order 1982-2 ''Improving Government Relations.'' A copy of this material is available to the public upon request.
If IRRC has objections to any portion of the proposed regulation, it will notify the Department within 30 days of the close of the public comment period. The notification shall specify the regulatory review criteria which have not been met by that portion. The Regulatory Review Act specifies detailed procedures for review and comments including objections to the proposed regulations by IRRC and the General Assembly prior to final publication and approval of the proposed regulation.
Fiscal Note: 3-32. No fiscal impact; (8) recommends adoption.
Annex A
TITLE 10. BANKS AND BANKING
PART II. BUREAU OF BANKS
CHAPTER 11. [RESERVES AGAINST DEPOSITS] (Reserved)
[LEGAL RESERVE FUNDS] § 11.1. [Definition] (Reserved).
[The term ''transaction account,'' as used in this chapter, means a deposit or account on which the depositor or account holder is permitted to make withdrawals by negotiable or transferable instruments for the purpose of making payments or transfers to a third person; the term includes demand deposits, negotiable order of withdrawal accounts and savings deposits subject to automatic transfers.]
§ 11.2. [General provisions] (Reserved).
[(a) The opening deposit figures for each business day shall be used as the base in computing the required legal reserve fund for such business day.
(b) The required reserve and the reserve held shall be computed daily and averaged for each 14-day period beginning January 6, 1966. The required reserve for nonbusiness days such as Saturdays, Sundays and holidays shall be that of the succeeding business day.
(c) If there is a deficiency in the reserve fund of a banking institution according to the average daily computation at the end of any 14-day period, that institution shall notify the Department in writing within three business days after the end of that 14-day period. The notice shall state the amount of the deficiency and the corrective action taken to prevent the recurrence of future deficiencies.]
§ 11.3. [Reserves to be maintained by institutions] (Reserved).
[The amount of the reserve fund which shall be established and maintained against deposits is fixed at the following percentages:
(1) 7.0% of the total of transaction accounts.
(2) 3.0% of the total of all other deposit accounts.]
§ 11.4. [Savings banks] (Reserved).
[The minimum amount of the reserve fund which a savings bank shall establish and maintain is 6.0% of the total of its deposits.]
§ 11.5. [Component parts--legal reserve fund] (Reserved).
[(a) No less than 50% shall, and the total of the reserve fund may, consist of United States coin and currency kept on hand at the place of business of the institution or on deposit in a reserve agent subject to call without notice.
(b) To determine United States coin and currency kept on deposit in a reserve agent subject to call without notice, the balance due to the reserve agent shall be deducted from the balance due from the reserve agent, unless the balance due to the reserve agent is by contract or agreement separate and apart and not deductible.
(c) The remainder of the legal reserve fund, which shall be no more than 50% of the total, may consist of obligations of the following:
(1) The United States or its instrumentality.
(2) The Commonwealth.
(3) A political subdivision of the Commonwealth.
(4) A public body of the Commonwealth.
(5) A public body of a political subdivision of the Commonwealth.
(6) The following governmental agencies:
(i) Government National Mortgage Association.
(ii) Farmers Home Administration.
(iii) Export-Import Bank of the United States.
(iv) Student Loan Marketing Association.
(v) The Federal Home Loan Mortgage Corporation.
(vi) The Tennessee Valley Authority.]
CHAPTER 13. LOANS
PARTICIPATIONS § 13.2. Participations in evidences of indebtedness and agreements for the payment of money.
[(a)] ***
[(b) Participations may not be acquired from or sold to individuals, partnerships or associations who do not have an interest other than an investment interest in such evidences of indebtedness or agreements.
(c) Institutions may not sell participations upon terms under which the institutions would be required, at the option of the purchaser, to repurchase the participations.]
§ 13.3. Participants in pools of evidences of indebtedness or agreements for the payment of money.
[(a)] Institutions may purchase from and sell to other institutions, [national] National banks or similar banking companies existing under the laws of any other [State] state, and may sell to other corporations, participations or undivided interests in pools of evidences of indebtedness or agreements for the payment of money, if:
* * * * * [(3) An institution which sells a participation in a pool, may be under no obligation to repurchase the participation.]
* * * * * [(b) No participations in a pool may be purchased from a person except an institution, national bank and similar banking company existing under the laws of another state.]
CHAPTER 17. [AUDITS AND EXAMINATIONS] (Reserved)
[DIRECTORS AUDITS] § 17.1. [Minimum standards for directors audits] (Reserved).
[(a) Instructions setting forth the minimum acceptable requirements for directors audits have been compiled by the Department and will be distributed to all State-chartered institutions. These instructions are available upon request from the Department.
(b) Institutions with internal audit programs which have been approved pursuant to section 1407(c) of the Banking Code (7 P. S. § 1407(c)) will not be subject to the minimum requirements set forth in the instructions referred to in subsection (a).]
PART III. SAVINGS ASSOCIATION BUREAU
CHAPTER 35. [MORTGAGE LOANS] (Reserved) § 35.1. [Premiums] (Reserved).
[An association may charge a premium on a mortgage loan of 1.0% per annum if paid in installments. If the premium is deducted in advance it shall not exceed 10% of the amount of the loan. An association shall be permitted to collect only one of these two alternative premiums on any one mortgage loan.]
§ 35.2. [Service charges] (Reserved).
[An association shall be permitted to collect a reasonable service charge on a mortgage loan, in addition to the customary closing costs. Such service charges shall be restricted to the following rates:
(1) Not more than 1.0% of the amount of the loan or mortgages secured by improved property.
(2) Not more than 2.0% of the amount of the loan on construction loans.]
§ 35.3. [Excessive premiums and service charges] (Reserved).
[Any premiums or service charges in excess of the rates authorized by §§ 35.1 and 35.2 (relating to premiums; service charges) shall be considered excessive, and the amount exceeding such rates shall be refunded to the borrower by the association.]
PART IV. BUREAU OF CONSUMER CREDIT AGENCIES
CHAPTER 41. CONSUMER DISCOUNT COMPANIES § 41.3. Contracts with consumers.
* * * * * (i) A licensee may not permit a person other than an employe of the licensee to accept payments on loan accounts at a place of business of the licensee other than a licensed office. [An office, room, or building at which a practice is made of accepting payments shall be construed as a place of business of the licensee and shall be licensed.] This subsection does not apply to the collection of a contract in default by an attorney at law, public official or a collection agent authorized by a licensee. This subsection does not apply to a payment system whereby payments are accepted at a bank, a savings and loan association or other depository institution, organized and existing under the statutes of the Commonwealth, or of other states or of Federal law, on behalf of the licensee, in an arrangement commonly known as a lock box arrangement. When a consumer elects to mail payments, a licensee may, except on final payments, require the consumer to furnish self-addressed stamped envelopes for the purpose of forwarding receipts. When the mailing of receipts is conditioned upon the furnishing of self-addressed stamped envelopes by a consumer, a statement to that effect shall be furnished to the consumer.
* * * * *
[Pa.B. Doc. No. 97-553. Filed for public inspection April 11, 1997, 9:00 a.m.]
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