HOUSE BILL NO. 523

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Bill Status



H0523...........................................................by BUSINESS
BANKS - Amends and repeals existing law relating to banking to delete
sections relating to the capital structure of  banks and the authority of
the director of the Department of Finance regarding reserves; to revise the
definition of "victim"; to provide for control of the Bank Act over other
designated laws; to remove a recording requirement; to revise the banks
subject to certain reserve requirements; and to remove restrictions on
redeemed or otherwise purchased portion of a bank's own capital stock for
specified purposes.

02/12    House intro - 1st rdg - to printing
02/13    Rpt prt - to Bus
02/20    Rpt out - rec d/p - to 2nd rdg
02/21    2nd rdg - to 3rd rdg
02/22    3rd rdg - PASSED - 61-1-8
      AYES -- Anderson, Barrett, Bayer, Bell, Bilbao, Black, Block, Bock,
      Boe, Bolz, Bowers, Brackett, Bradford, Chadderdon, Chavez, Chew,
      Clark, Collins, Crane, Durst, Eskridge, Hagedorn, Hart, Harwood,
      Henbest, Henderson, Jaquet, Killen, King, Labrador, Lake, LeFavour,
      Loertscher, Luker, Marriott, Mathews, McGeachin, Mortimer, Moyle,
      Nielsen, Nonini, Pasley-Stuart, Patrick, Pence, Ringo, Roberts,
      Ruchti, Sayler, Schaefer, Shepherd(02), Shepherd(08), Shirley,
      Shively, Smith(30)(Stanek), Thayn, Thomas, Trail, Vander Woude,
      Wills, Wood(35), Mr. Speaker
      NAYS -- Rusche
      Absent and excused -- Andrus, Bedke, Kren, Raybould, Smith(24),
      Snodgrass, Stevenson, Wood(27)
    Floor Sponsor - Luker
    Title apvd - to Senate
02/25    Senate intro - 1st rdg - to Com/HuRes
02/29    Rpt out - rec d/p - to 2nd rdg
03/03    2nd rdg - to 3rd rdg
03/06    3rd rdg - PASSED - 33-0-2
      AYES -- Andreason, Bair, Bastian, Bilyeu, Burkett, Cameron, Coiner,
      Corder, Darrington, Davis, Fulcher, Geddes, Goedde, Hammond,
      Heinrich, Hill, Jorgenson, Kelly, Keough, Langhorst, Little, Lodge,
      Malepeai(Sagness), McGee, McKague, McKenzie, Pearce, Richardson,
      Schroeder, Siddoway, Stegner, Stennett, Werk
      NAYS -- None
      Absent and excused -- Broadsword, Gannon
    Floor Sponsor - Andreason
    Title apvd - to House
03/07    To enrol
03/10    Rpt enrol - Sp signed
03/11    Pres signed - To Governor
03/17    Governor signed
         Session Law Chapter 140
         Effective: 07/01/08

Bill Text




                                                                       
  ]]]]              LEGISLATURE OF THE STATE OF IDAHO             ]]]]
 Fifty-ninth Legislature                   Second Regular Session - 2008

                                                                       

                              IN THE HOUSE OF REPRESENTATIVES

                                     HOUSE BILL NO. 523

                                   BY BUSINESS COMMITTEE

  1                                        AN ACT
  2    RELATING TO BANKING; REPEALING SECTION 26-307, IDAHO CODE, RELATING  TO  ADDI-
  3        TION  TO CAPITAL STRUCTURE OF BANK, AND SECTION 26-603, IDAHO CODE, RELAT-
  4        ING TO AUTHORITY OF THE DIRECTOR OF THE DEPARTMENT  OF  FINANCE  REGARDING
  5        RESERVES;  AMENDING  SECTION 19-5304, IDAHO CODE, TO REVISE THE DEFINITION
  6        OF "VICTIM"; AMENDING SECTION 26-201, IDAHO CODE, TO PROVIDE  FOR  CONTROL
  7        OF THE BANK ACT OVER OTHER DESIGNATED LAWS; AMENDING SECTION 26-203, IDAHO
  8        CODE,  TO  REMOVE  A RECORDING REQUIREMENT; AMENDING SECTION 26-601, IDAHO
  9        CODE, TO REMOVE CERTAIN RESERVE REQUIREMENTS AND TO REVISE THE BANKS  THAT
 10        ARE  SUBJECT  TO  CERTAIN  RESERVE  REQUIREMENTS; AMENDING SECTION 26-602,
 11        IDAHO CODE, TO REVISE TERMINOLOGY AND  TO  MAKE  A  TECHNICAL  CORRECTION;
 12        AMENDING SECTION 26-702, IDAHO CODE, TO REMOVE RESTRICTIONS ON REDEEMED OR
 13        OTHERWISE  PURCHASED  PORTION OF A BANK'S OWN CAPITAL STOCK AND TO PROVIDE
 14        FOR REDEMPTION OR PURCHASE OF A BANK'S OWN  CAPITAL  STOCK  FOR  SPECIFIED
 15        PURPOSES; AND AMENDING SECTION 26-708, IDAHO CODE, TO REVISE A CODE REFER-
 16        ENCE.

 17    Be It Enacted by the Legislature of the State of Idaho:

 18        SECTION  1.  That Sections 26-307 and 26-603, Idaho Code, be, and the same
 19    are hereby repealed.

 20        SECTION 2.  That Section 19-5304, Idaho Code, be, and the same  is  hereby
 21    amended to read as follows:

 22        19-5304.  RESTITUTION  FOR  CRIME VICTIMS -- ORDERS TO BE SEPARATE -- WHEN
 23    RESTITUTION IS NOT APPROPRIATE -- OTHER REMEDIES --  EVIDENTIARY  HEARINGS  --
 24    DEFINITIONS. (1) As used in this chapter:
 25        (a)  "Economic  loss"  includes, but is not limited to, the value of prop-
 26        erty taken, destroyed, broken, or otherwise harmed, lost wages, and direct
 27        out-of-pocket losses or expenses, such as medical expenses resulting  from
 28        the  criminal  conduct,  but does not include less tangible damage such as
 29        pain and suffering, wrongful death or emotional distress.
 30        (b)  "Found guilty of any crime" shall mean a finding by a  court  that  a
 31        defendant  has  committed  a  criminal act and shall include an entry of a
 32        plea of guilty, an order withholding  judgment,  suspending  sentence,  or
 33        entry of judgment of conviction for a misdemeanor or felony.
 34        (c)  "Value" shall be as defined in section 18-2402(11), Idaho Code.
 35        (d)  "Property" shall be as defined in section 18-2402(8), Idaho Code.
 36        (e)  "Victim" shall mean:
 37             (i)   The directly injured victim which means a person or entity, who
 38             suffers  economic  loss  or  injury  as the result of the defendant's
 39             criminal conduct and shall also include the  immediate  family  of  a
 40             minor  and  the  immediate  family  of  the actual victim in homicide
 41             cases;
 42             (ii)  Any health care provider who has provided medical treatment  to

                                       2

  1             a  directly injured victim if such treatment is for an injury result-
  2             ing from the defendant's criminal  conduct,  and  who  has  not  been
  3             otherwise  compensated  for  such  treatment by the directly  injured
  4             victim or the immediate family of the directly injured victim;
  5             (iii) The account established pursuant to the crime victims compensa-
  6             tion act, chapter 10, title 72, Idaho Code, from  which  payment  was
  7             made  to  or  on  behalf of a directly injured victim pursuant to the
  8             requirements of Idaho law as a result  of  the  defendant's  criminal
  9             conduct;
 10             (iv)  A  person or entity who suffers economic loss because such per-
 11             son or entity has made payments to or on behalf of a directly injured
 12             victim pursuant to a contract  including,  but  not  limited  to,  an
 13             insurance contract, or payments to or on behalf of a directly injured
 14             victim  to  pay  or  settle  a claim or claims against such person or
 15             entity in tort or pursuant to statute and arising from the crime.
 16        (2)  Unless the court determines that an order  of  restitution  would  be
 17    inappropriate  or  undesirable, it shall order a defendant found guilty of any
 18    crime which results in an economic loss to the victim to make  restitution  to
 19    the  victim.   An  order  of  restitution shall be a separate written order in
 20    addition to any other sentence the court may impose, including  incarceration,
 21    and  may be complete, partial, or nominal. The court may also include restitu-
 22    tion as a term and condition of judgment of conviction; however,  if  a  court
 23    orders  restitution  in  the  judgment of conviction and in a separate written
 24    order, a defendant shall not be required to  make  restitution  in  an  amount
 25    beyond  that  authorized by this chapter. Restitution shall be ordered for any
 26    economic loss which the victim actually suffers. The existence of a policy  of
 27    insurance  covering  the  victim's loss shall not absolve the defendant of the
 28    obligation to pay restitution.
 29        (3)  If the court determines that restitution is inappropriate or undesir-
 30    able or if only partial or nominal restitution is ordered, it shall  enter  an
 31    order articulating the reasons therefor on the record.
 32        (4)  If  a  separate  written  order of restitution is issued, an order of
 33    restitution shall be for an amount certain and shall be due and owing  at  the
 34    time  of  sentencing  or  at the date the amount of restitution is determined,
 35    whichever is later. An order of restitution may provide for interest from  the
 36    date of the economic loss or injury.
 37        (5)  The court may order the defendant to pay restitution to the victim in
 38    any  case,  regardless  of  whether the defendant is incarcerated or placed on
 39    probation. The court may order the defendant to pay all or a part of the  res-
 40    titution ordered to the court to be distributed by the court to the victims in
 41    a manner the court deems just.
 42        (6)  Restitution  orders shall be entered by the court at the time of sen-
 43    tencing or such later date as deemed necessary by  the  court.  Economic  loss
 44    shall  be  based  upon the preponderance of evidence submitted to the court by
 45    the prosecutor, defendant, victim  or  presentence  investigator.  Each  party
 46    shall  have the right to present such evidence as may be relevant to the issue
 47    of restitution, and the court may consider such hearsay as may be contained in
 48    the presentence report, victim impact statement or otherwise provided  to  the
 49    court.
 50        (7)  The court, in determining whether to order restitution and the amount
 51    of  such  restitution, shall consider the amount of economic loss sustained by
 52    the victim as a result of the offense,  the  financial  resources,  needs  and
 53    earning  ability  of  the defendant, and such other factors as the court deems
 54    appropriate. The immediate inability to pay restitution by a  defendant  shall
 55    not be, in and of itself, a reason to not order restitution.

                                       3

  1        (8)  In  determining  restitution, where it appears that more than one (1)
  2    person is responsible for a crime that results in economic loss to  a  victim,
  3    and  one (1) or more of the suspects or defendants are not found, apprehended,
  4    charged, convicted or ordered  to pay restitution, the court may  require  the
  5    remaining defendant or defendants, who are convicted of or plead guilty to the
  6    crime, to be jointly and severally responsible for the entire economic loss to
  7    the victim.
  8        (9)  The  court may, with the consent of the parties, order restitution to
  9    victims, and/or any other person or entity, for economic loss  or  injury  for
 10    crimes which are not adjudicated or are not before the court.
 11        (10) A  defendant, against whom a restitution order has been entered, may,
 12    within forty-two (42) days of the entry of the order of  restitution,  request
 13    relief  from the restitution order in accordance with the Idaho rules of civil
 14    procedure relating to relief from final orders.
 15        (11) An order of restitution shall not preclude the  victim  from  seeking
 16    any other legal remedy.
 17        (12) Every  presentence  report shall include a full statement of economic
 18    loss suffered by the victim or victims of the defendant's crime or  crimes.
 19        (13) If there is more than one (1) victim,  the  restitution  order  shall
 20    provide  that  the directly injured victim(s) be fully compensated for so much
 21    of the loss caused by the defendant's criminal conduct which has not been paid
 22    by a third party, including persons  referred  to  in  subsection  (1)(e)(ii),
 23    (iii) and (iv) of this section.

 24        SECTION  3.  That  Section  26-201, Idaho Code, be, and the same is hereby
 25    amended to read as follows:

 26        26-201.  GENERAL CORPORATION LAWS APPLICABLE. Except as otherwise provided
 27    herein, the general business corporation laws of this state shall apply to all
 28    corporations organized and operating under the bank act. In the event  of  any
 29    conflict between the provisions of the bank act and the provisions of the gen-
 30    eral  business  corporation  laws, the laws governing limited liability compa-
 31    nies, partnerships and other business associations and entities, or  the  laws
 32    governing  entity mergers, acquisitions, conversions, domestications, interest
 33    exchanges and divisions, the bank act shall control.

 34        SECTION 4.  That Section 26-203, Idaho Code, be, and the  same  is  hereby
 35    amended to read as follows:

 36        26-203.  ARTICLES  OF INCORPORATION -- FORM. Proposed articles of incorpo-
 37    ration of a banking corporation shall be in a form acceptable to the director,
 38    and must be submitted to the director for approval  as  to  form  and  content
 39    before the same are filed for record in the offices of the secretary of state;
 40    and  county recorder; provided that no bank shall be required to have the word
 41    "corporation" in its corporate name. The  articles  may  include  a  provision
 42    which eliminates or limits the personal liability of the directors of the bank
 43    in  accordance with section 30-1-202, Idaho Code, provided that such provision
 44    shall not eliminate or  limit  the  liability  of  a  director  under  section
 45    26-213(5), Idaho Code.

 46        SECTION  5.  That  Section  26-601, Idaho Code, be, and the same is hereby
 47    amended to read as follows:

 48        26-601.  RESERVE. Every bank, not a member of the Federal Reserve  System,
 49    shall have on hand  each day as a reserve, an amount equal to at least ten per

                                       4

  1    cent  (10%)  of  its net demand deposits and four per cent (4%) of its savings
  2    and time deposits.  Said reserve shall be in cash in its  vaults  or  held  on
  3    deposit  subject  to  check with any other bank or banks which shall have been
  4    approved by the  director  as  reserve  depositories  and  shall  be  computed
  5    biweekly  in  the following manner:  on the basis of average daily net deposit
  6    balances and average daily cash in its vaults or held on  deposit  in  reserve
  7    depositories  subject  to  check  during  the  prior biweekly period. Biweekly
  8    periods shall end at the close of business on days to be fixed by  the  direc-
  9    tor. Notwithstanding the above, upon an annual showing by a bank, not a member
 10    of  the Federal Reserve System, that it is subject to the reserve requirements
 11    of the Federal Reserve Act, the director may waive the reserve requirements of
 12    this act.
 13        Any bank which is or becomes a member of the Federal Reserve System, orga-
 14    nized under the laws of this state and authorized to  receive  deposits  shall
 15    comply with the reserve requirements of the Federal Reserve act.

 16        SECTION  6.  That  Section  26-602, Idaho Code, be, and the same is hereby
 17    amended to read as follows:

 18        26-602.  DIMINUTION OF RESERVE. (1) When the reserve  of  any  bank  falls
 19    below  the  amount  required by section 26-601, Idaho Code, for a biweekly any
 20    reporting period, the bank shall immediately restore its reserve to the amount
 21    required by section 26-601, Idaho Code, and in addition:
 22        (a)  If a bank is deficient in reserve for two (2) nonconsecutive biweekly
 23        reporting periods in a calendar year, the bank shall pay to the department
 24        of finance at the end of the second biweekly reporting period  a  fine  of
 25        three hundred dollars ($300).
 26        (b)  If  a  bank  is  deficient  in  reserves for three (3) nonconsecutive
 27        biweekly reporting periods in a calendar year, the bank shall pay  to  the
 28        department  of finance at the end of the third biweekly reporting period a
 29        fine equal to five percent (5%) of the dollar amount by which it was defi-
 30        cient in reserves for the third biweekly reporting period or five  hundred
 31        dollars ($500), whichever is greater.
 32        (c)  If  a  bank  is  deficient  in  reserves  for  more  than  three  (3)
 33        nonconsecutive  biweekly reporting periods or for two (2) or more consecu-
 34        tive reporting periods in a calendar year, the director shall  proceed  as
 35        provided  in  section 26-1115, Idaho Code. The bank shall not increase its
 36        loans or discounts until its reserve is fully restored  and  the  director
 37        may  by  order  set  a  minimum level of cash reserves which the bank must
 38        maintain until such time as the director has reason to  believe  that  the
 39        bank  will  comply  with the reserve requirements of section 26-601, Idaho
 40        Code.
 41        (2)  The penalties set out in subsection  (1)  of  this  section  are  not
 42    exclusive.  The director may in proper cases proceed in his discretion as pro-
 43    vided in section 26-1115, Idaho Code, or chapter 10, title 26, Idaho Code.

 44        SECTION 7.  That Section 26-702, Idaho Code, be, and the  same  is  hereby
 45    amended to read as follows:

 46        26-702.  BANK STOCK. (1) Except as provided in subsection (2) of this sec-
 47    tion,  no  bank shall accept as collateral, nor make any loans or discounts on
 48    the security  of nor purchase any shares of its own  capital  stock.  No  bank
 49    shall  purchase  the shares of any other bank wherever organized, or situated,
 50    except stock of federal reserve banks. A bank may acquire a security  interest
 51    in  or  purchase its own stock if the acquisition is necessary to prevent loss

                                       5

  1    upon a debt previously contracted in good faith and the stock so purchased  or
  2    acquired  shall  within six (6) months from the date of acquirement be sold or
  3    disposed of at public or private sale. After the expiration of six (6)  months
  4    any such stock shall not be considered as a part of the assets of such bank.
  5        (2)  With  the  written  approval  of  the  director, a bank may redeem or
  6    otherwise purchase a portion shares of its own capital stock if  the  director
  7    finds  that  such redemption or purchase does not impair the capital structure
  8    of the bank as required by section 26-205, Idaho Code, is for legitimate  cor-
  9    porate  purposes  and  not  for speculation, is not for an unreasonable price,
 10    does not conflict with the articles of incorporation  or  the  bylaws  of  the
 11    bank,  and is not otherwise detrimental to the bank or to the public interest,
 12    provided, however, (i) that a bank may not hold its capital stock so  redeemed
 13    or purchased for a period longer than twelve (12) months from the date of such
 14    redemption  or  purchase,  and  (ii) a bank shall not retain at any one time a
 15    total number of shares of its capital stock so redeemed or purchased in excess
 16    of seven per cent (7%) of the total number of shares of its capital stock then
 17    issued and outstanding. Legitimate corporate purposes for acquiring and  hold-
 18    ing of treasury stock may include:
 19        (a)  To  have  shares  available for use in connection with employee stock
 20        option, bonus, purchase or similar plans;
 21        (b)  To sell to a director for the purpose of acquiring qualifying shares;
 22        (c)  To purchase a director's qualifying  shares  upon  cessation  of  the
 23        director's  service  in  that capacity if there is no ready market for the
 24        shares;
 25        (d)  To reduce the number of shareholders to qualify  as  a  subchapter  S
 26        corporation;
 27        (e)  To  reduce costs associated with shareholder communications and meet-
 28        ings;
 29        (f)  To facilitate a bank's shareholder dividend reinvestment plan; or
 30        (g)  Any other legitimate corporate purpose as  may  be  approved  by  the
 31        director.

 32        SECTION  8.  That  Section  26-708, Idaho Code, be, and the same is hereby
 33    amended to read as follows:

 34        26-708.  VALUATION OF ASSETS. No bank shall enter or at any time carry  on
 35    its  books any of its assets at a valuation exceeding their actual cost to the
 36    bank; nor shall the value of any of its assets be increased on  the  books  of
 37    the  bank  without  the  written  consent of the director. Additional charges,
 38    delinquency charges and other similar charges on consumer credit  transactions
 39    permitted  by  and  made  in compliance with the Uniform Consumer Idaho Credit
 40    Code and added to the principal balance of the loan, shall not come within the
 41    prohibition of this section.

Statement of Purpose / Fiscal Impact


                    STATEMENT OF PURPOSE

                          RS 17907

  The purpose of this bill is to amend the Idaho Bank Act to
  address several items best described as "housekeeping", and
  to clarify when a bank may be considered a "victim" of a
  crime, eligible to receive restitution if the judge imposes
  restitution as a part of the criminal's sentence. Changes
  include:  
  Making it clear that a person who suffers economic loss
  because that person paid money to a crime victim to settle a
  claim arising from the crime is also a victim, in whose
  favor a restitution order may be entered; making it clear
  that in the event of any conflict between the Idaho Bank Act
  and the general business corporation laws, the Bank Act
  controls; eliminating an obsolete requirement that banks
  file their Articles of Incorporation in the county
  recorder's office; eliminating obsolete capital requirements
  for establishing branch banks; making bank reserve
  requirements under state law consistent with those under
  federal law; correcting obsolete references to the reporting
  periods of banks; clarifying the standards applicable to a
  bank's request for permission from the Director of Finance
  to repurchase some of its own capital stock, and removing
  the arbitrary limit on the amount of capital stock which may
  be repurchased and on the period of time it may be retained
  (subject to the Director's approval); and correcting an
  obsolete reference to the Uniform Consumer Credit Code.  


                        FISCAL NOTE

  This bill will have no impact on the general fund.  






  Contacts:
  Name:     Representative Max Black
  Phone:    (208) 332-1139
  Name:     Representative Lynn Luker
            (208) 332-1000
  Name:     Patrick V. Collins
            Hawley Troxell Ennis & Hawley LLP
            Counsel for the Idaho Bankers Association
  Phone:    (208) 388-4828
  

  STATEMENT OF PURPOSE/FISCAL NOTE                      H 523