STAND. COM. REP. NO.2178

Honolulu, Hawaii

, 2002

RE: S.B. No. 2294

S.D. 1

 

 

Honorable Robert Bunda

President of the Senate

Twenty-First State Legislature

Regular Session of 2002

State of Hawaii

Sir:

Your Committee on Commerce, Consumer Protection and Housing, to which was referred S.B. No. 2294 entitled:

"A BILL FOR AN ACT RELATING TO FINANCIAL SERVICES LOAN COMPANIES,"

begs leave to report as follows:

The purpose of this measure is to recodify the laws relating to financial services loan companies.

The Hawaii Financial Services Loan Association testified in support of this measure. The Commissioner of Financial Institutions (Commissioner) offered amendments to the measure.

This measure repeals article 9 of the code of financial institutions relating to financial services loan companies (FSLCs) and replaces it with two new articles relating to depository FSLCs and nondepository FSLCs, respectively. The proposed new laws, among other things:

(1) Provide depository FSLCs with greater flexibility in their operations, similar to that enjoyed by banks, savings banks, and savings and loan associations;

(2) Establish a 24% usury ceiling on loans made by depository FSLCs, the same as that applicable to banks, savings banks, and savings and loan associations, and a 31.66% annual percentage rate ceiling on certain simple interest loans made by nondepository FSLCs;

(3) Repeal the authority of FSLCs to make precomputed loans, but grandfather in existing precomputed loans;

(4) Limit or prohibit certain fees and charges that may be assessed against consumers; and

(5) Establish recordkeeping and reporting requirements for nondepository FSLCs.

Upon careful consideration, your Committee has amended this measure by:

(1) Incorporating amendments proposed by the Commissioner that reflect the version of this measure drafted by a task force composed of industry representatives, the division of financial institutions, and others;

(2) Inserting a delayed effective date of July 1, 2050; and

(3) Making technical, nonsubstantive changes for purposes of clarity and consistency, and to reflect preferred drafting style.

As affirmed by the record of votes of the members of your Committee on Commerce, Consumer Protection and Housing that is attached to this report, your Committee is in accord with the intent and purpose of S.B. No. 2294, as amended herein, and recommends that it pass Second Reading in the form attached hereto as S.B. No. 2294, S.D. 1, and be referred to the Committee on Judiciary.

Respectfully submitted on behalf of the members of the Committee on Commerce, Consumer Protection and Housing,

____________________________

RON MENOR, Chair