Honorable Robert Bunda

President of the Senate

Twenty-Third State Legislature

Regular Session of 2005

State of Hawaii

Sir:

Your Committee on Commerce, Consumer Protection, and Housing, to which was referred S.B. No. 746 entitled:

begs leave to report as follows:

The purpose of this measure is to make the annual fee charged against financial institutions discretionary, rather than mandatory, to permit financial services loan companies to charge borrowers a returned check fee, and to repeal an obsolete filing requirement.

The Department of Commerce and Consumer Affairs and Hawaii Financial Services Association testified in support of this measure.

Currently, the Commissioner of Financial Institutions (Commissioner) is required to collect an annual fee from state-chartered financial institutions, notwithstanding the Commissioner's ability to waive other fees and assessments. This measure grants the Commissioner the authority to also waive the annual fee, if warranted, thereby providing the Commissioner with greater flexibility to administer the fee requirement and to align revenues with expenses from year to year.

Additionally, by allowing a financial services loan company to charge a borrower a returned check fee, this measure recognizes that the lender should not be obligated to absorb the costs it incurs when the borrower tenders a check in payment on the borrower's loan that is returned for nonpayment.

Finally, this measure repeals the requirement that a financial institution file an annual statement of assets and liabilities with the Commissioner. With access to this information readily available directly from the institutions and on federal regulatory web sites, the requirement is no longer necessary to provide information to the public and creates an unwarranted regulatory burden on financial institutions.

Your Committee has amended this measure by making technical changes 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. 746, as amended herein, and recommends that it pass Second Reading in the form attached hereto as S.B. No. 746, S.D. 1, and be referred to the Committee on Ways and Means.