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House Interim Committee on Financial Institutions
Charge

Review the laws governing trust companies for necessary revisions and possible incorporation in the Texas Banking Act.
Background

The 74th Legislature adopted the Texas Banking Act of 1995. In adopting the Act, Chapters 1 through 10 of the Banking Code of 1943 were repealed. The new Texas Banking Act retained Chapter 11 of the old code, which contains generally unmodified state trust company regulations.

A revised Chapter 11 was prepared, but there was insufficient time to review the changes with the industry. The Financial Institutions Committee decided to set aside the revised chapter and conduct a full interim study on the issue.
Recommendation

  • Regulate Texas trust companies under a single free-standing Texas Trust Company Act, and repeal Chapter 11 of the Texas Banking Code of 1943.
    Charge

    Review the Texas Credit Code to identify areas that may need revision and recommend such revisions.
    Background

    Currently, the Texas Credit Code is divided into three subtitles: Subtitle I contains general interest and usury provisions; Subtitle II contains provisions for consumer installment loans, secondary mortgage loans, retail installment sales, manufactured home financing, and motor vehicle installment sales; and Subtitle III contains revolving loan provisions.
    Recommendation

  • Rearrange the Texas Credit Code into subtitles containing the following provisions: Subtitle A-General Interest and Usury Provisions; Subtitle B-Commercial Transactions; and Subtitle C-Consumer Transactions.
    Charge

    Review federal legislation affecting the banking, thrift, or securities industries to assess impacts on Texas and the need for revising Texas laws.
    Background

    In 1996, federal legislation was passed clarifying the regulatory authority of state and federal agencies over the securities industry. The state will have exclusive regulatory jurisdictions over invest ment advisors that have $25 million or less under management and will no longer regulate investment advisors with more than $25 million under management. The state will retain its authority to collect filing or registration fees with respect to securities or securities transactions and its authority to bring enforcement action with respect to fraud. There is no fiscal impact to state government.

    Recommendation

    Due to the preemptory nature of the federal securities legislation, the committee made no recommendations.