Nondiscrimination., the official text

An act to add Chapter 22 (commencing with Section 1915) to Division 1.1 of, to add Chapter 13 (commencing with Section 16910) to Division 5 of, and to add Chapter 10 (commencing with Section 50710) to Division 20 of, the Financial Code, relating to financial institutions.

LEGISLATIVE COUNSEL'S DIGEST

Existing law establishes the Department of Financial Protection and Innovation, which is under the direction of the Commissioner of Financial Protection and Innovation. Existing law makes the department responsible for administering various laws relating to financial institutions, including the Banking Law, the California Credit Union Law (CCUL), and the California Residential Mortgage Lending Act (CRMLA), a willful violation of which is punishable as a misdemeanor.
This bill, the California Fair Lending Examination Act, would require, under the Banking Law, the CCUL, and the CRMLA, the commissioner to, at least once every 4 years, examine, as prescribed, the books and records of any entity subject to the commissioner’s examination authority under those laws for compliance with any applicable nondiscrimination law, as specified, and would require the commissioner to provide a written statement of the findings of that examination, issue a copy of that statement to the subject’s principals, officers, or directors, and take appropriate steps to ensure correction of any violations of applicable nondiscrimination laws. The bill would prohibit disclosure of that statement to anyone other than the subject entity, law enforcement officials, or other state or federal regulatory agencies for further investigation and enforcement.
This bill would make a violation of an applicable nondiscrimination law a violation of the Banking Law, the CCUL, or the CRMLA, as applicable, and would authorize the commissioner to examine the applicable entity’s officers, directors, employees, or agents under oath regarding the bank’s operations.
By expanding the scope of the crimes of perjury and of violating the CRMLA, this bill would impose a state-mandated local program.
Existing constitutional provisions require that a statute that limits the right of access to the meetings of public bodies or the writings of public officials and agencies be adopted with findings demonstrating the interest protected by the limitation and the need for protecting that interest.
This bill would make legislative findings to that effect.
The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.
This bill would provide that no reimbursement is required by this act for a specified reason.

The people of the State of California do enact as follows:

SECTION 1.
This act shall be known as the California Fair Lending Examination Act.

SEC. 2.
Chapter 22 (commencing with Section 1915) is added to Division 1.1 of the Financial Code, to read:
22.
Nondiscrimination1915.
(a) (1) At least once every four years, the commissioner shall examine, pursuant to paragraph (2), the books and records of any bank subject to the commissioner’s examination authority for compliance with any applicable nondiscrimination law, including the federal Equal Credit Opportunity Act (15 U.S.C. Sec. 1691 et seq.), the federal Fair Housing Act (42 U.S.C. Sec. 3601 et seq.), the California Fair Employment and Housing Act (Part 2.8 (commencing with Section 12900) of Division 3 of Title 2 of the Government Code), the Holden Act (Part 6 (commencing with Section 35800) of Division 24 of the Health and Safety Code), and the Unruh Civil Rights Act (Section 51 of the Civil Code).
(2) (A) The commissioner may examine the books, records, and documents of the bank and may examine the bank’s officers, directors, employees, or agents under oath regarding the bank’s operations.
(B) The commissioner may cooperate with any agency of the state or federal government, other states, agencies, the Federal National Mortgage Association, or the Federal Home Loan Mortgage Corporation, and the commissioner may accept an examination conducted by any of those entities in place of an examination by the commissioner under this chapter, unless the commissioner determines that the examination does not provide information necessary to enable the commissioner to fulfill the commissioner’s responsibilities under this chapter.
(b) (1) The commissioner shall provide a written statement of the findings of any examination conducted under this chapter, issue a copy of that statement to the subject bank’s principals, officers, or directors, and take appropriate steps to ensure correction of any violation of applicable nondiscrimination law, including a discriminatory effect under the California Fair Employment and Housing Act (Part 2.8 (commencing with Section 12900) of Division 3 of Title 2 of the Government Code), that is not attributable to a legitimate business interest of the bank.
(2) Notwithstanding any other law, a statement required by this subdivision of the findings of an examination shall not be disclosed to anyone other than the bank, law enforcement officials, or other state or federal regulatory agencies for further investigation and enforcement.
(c) An affiliate of a bank is subject to examination by the commissioner on the same terms as the bank, if a report from, or examination of, a bank provides documented evidence of unlawful activity between a bank and an affiliate benefiting, affecting, or arising from the activities regulated by this chapter.
(d) The commissioner shall assess to the bank a fee for the purpose of covering the costs of the examination that does not exceed the reasonable expenses of the examination under this chapter.
(e) A violation of an applicable nondiscrimination law is a violation of this division, and the commissioner may use the authority provided by this division or Division 24 (commencing with Section 90000) to bring an appropriate enforcement action based on the nature of the violation.

SEC. 3.
Chapter 13 (commencing with Section 16910) is added to Division 5 of the Financial Code, to read:
13.
Nondiscrimination16910.
(a) (1) At least once every four years, the commissioner shall examine, pursuant to paragraph (2), the books and records of any credit union subject to the commissioner’s examination authority for compliance with any applicable nondiscrimination law, including the federal Equal Credit Opportunity Act (15 U.S.C. Sec. 1691 et seq.), the federal Fair Housing Act (42 U.S.C. Sec. 3601 et seq.), the California Fair Employment and Housing Act (Part 2.8 (commencing with Section 12900) of Division 3 of Title 2 of the Government Code), the Holden Act (Part 6 (commencing with Section 35800) of Division 24 of the Health and Safety Code), and the Unruh Civil Rights Act (Section 51 of the Civil Code).
(2) (A) The commissioner may examine the books, records, and documents of the credit union and may examine the credit union’s officers, directors, employees, or agents under oath regarding the credit union’s operations.
(B) The commissioner may cooperate with any agency of the state or federal government, other states, agencies, the Federal National Mortgage Association, or the Federal Home Loan Mortgage Corporation, and the commissioner may accept an examination conducted by any of those entities in place of an examination by the commissioner under this chapter, unless the commissioner determines that the examination does not provide information necessary to enable the commissioner to fulfill the commissioner’s responsibilities under this chapter.
(b) (1) The commissioner shall provide a written statement of the findings of any examination conducted under this chapter, issue a copy of that statement to the subject credit union’s principals, officers, or directors, and take appropriate steps to ensure correction of any violation of applicable nondiscrimination law, including a discriminatory effect under the California Fair Employment and Housing Act (Part 2.8 (commencing with Section 12900) of Division 3 of Title 2 of the Government Code), that is not attributable to a legitimate business interest of the credit union.
(2) Notwithstanding any other law, a statement required by this subdivision of the findings of an examination shall not be disclosed to anyone other than the credit union, law enforcement officials, or other state or federal regulatory agencies for further investigation and enforcement.
(c) An affiliate of a credit union is subject to examination by the commissioner on the same terms as the credit union, if a report from, or examination of, a credit union provides documented evidence of unlawful activity between a credit union and an affiliate benefiting, affecting, or arising from the activities regulated by this chapter.
(d) The commissioner shall assess to the credit union a fee for the purpose of covering the costs of the examination that does not exceed the reasonable expenses of the examination under this chapter.
(e) A violation of an applicable nondiscrimination law is a violation of this division, and the commissioner may use the authority provided by this division or Division 24 (commencing with Section 90000) to bring an appropriate enforcement action based on the nature of the violation.

SEC. 4.
Chapter 10 (commencing with Section 50710) is added to Division 20 of the Financial Code, to read:
10.
Nondiscrimination50710.
(a) (1) At least once every four years, the commissioner shall examine, pursuant to paragraph (2), the books and records of any licensee subject to the commissioner’s examination authority for compliance with any applicable nondiscrimination law, including the federal Equal Credit Opportunity Act (15 U.S.C. Sec. 1691 et seq.), the federal Fair Housing Act (42 U.S.C. Sec. 3601 et seq.), the California Fair Employment and Housing Act (Part 2.8 (commencing with Section 12900) of Division 3 of Title 2 of the Government Code), the Holden Act (Part 6 (commencing with Section 35800) of Division 24 of the Health and Safety Code), and the Unruh Civil Rights Act (Section 51 of the Civil Code).
(2) (A) The commissioner may examine the books, records, and documents of the licensee and may examine the licensee’s officers, directors, employees, or agents under oath regarding the licensee’s operations.
(B) The commissioner may cooperate with any agency of the state or federal government, other states, agencies, the Federal National Mortgage Association, or the Federal Home Loan Mortgage Corporation, and the commissioner may accept an examination conducted by any of those entities in place of an examination by the commissioner under this chapter, unless the commissioner determines that the examination does not provide information necessary to enable the commissioner to fulfill the commissioner’s responsibilities under this chapter.
(b) (1) The commissioner shall provide a written statement of the findings of any examination conducted under this chapter, issue a copy of that statement to the subject licensee’s principals, officers, or directors, and take appropriate steps to ensure correction of any violation of applicable nondiscrimination law, including a discriminatory effect under the California Fair Employment and Housing Act (Part 2.8 (commencing with Section 12900) of Division 3 of Title 2 of the Government Code), that is not attributable to a legitimate business interest of the licensee.
(2) Notwithstanding any other law, a statement required by this subdivision of the findings of an examination shall not be disclosed to anyone other than the licensee, law enforcement officials, or other state or federal regulatory agencies for further investigation and enforcement.
(c) An affiliate of a licensee is subject to examination by the commissioner on the same terms as the licensee, if a report from, or examination of, a licensee provides documented evidence of unlawful activity between a licensee and an affiliate benefiting, affecting, or arising from the activities regulated by this chapter.
(d) The commissioner shall assess to the licensee a fee for the purpose of covering the costs of the examination that does not exceed the reasonable expenses of the examination under this chapter.
(e) A violation of an applicable nondiscrimination law is a violation of this division, and the commissioner may use the authority provided by this division or Division 24 (commencing with Section 90000) to bring an appropriate enforcement action based on the nature of the violation.

SEC. 5.
The Legislature finds and declares that Sections 2, 3, and 4 of this act, which add Chapter 22 (commencing with Section 1915) to Division 1.1 of, Chapter 13 (commencing with Section 16910) to Division 5 of, and Chapter 10 (commencing with Section 50710) to Division 20 of, the Financial Code, impose a limitation on the public’s right of access to the meetings of public bodies or the writings of public officials and agencies within the meaning of Section 3 of Article I of the California Constitution. Pursuant to that constitutional provision, the Legislature makes the following findings to demonstrate the interest protected by this limitation and the need for protecting that interest:
In order to protect the privacy of a licensee who has complied with the Commissioner of Financial Protection and Innovation’s demands, or otherwise reached a mutually agreeable resolution of any issues, during an investigation, it is necessary to hold any examinations and correspondence related to that investigation confidential. Furthermore, in order to protect the safety and soundness of a depository institution, records related to an examination should remain confidential, as that information is similarly protected by federal regulators of depository institutions.

SEC. 6.
No reimbursement is required by this act pursuant to Section 6 of Article XIII B of the California Constitution because the only costs that may be incurred by a local agency or school district will be incurred because this act creates a new crime or infraction, eliminates a crime or infraction, or changes the penalty for a crime or infraction, within the meaning of Section 17556 of the Government Code, or changes the definition of a crime within the meaning of Section 6 of Article XIII B of the California Constitution.