ASSEMBLY, No. 378

STATE OF NEW JERSEY

Introduced Pending Technical Review by Legislative Counsel

PRE-FILED FOR INTRODUCTION IN THE 1996 SESSION

By Assemblyman T. SMITH

An Act concerning sureties and financial institutions and supplementing Title 17 of the Revised Statutes.

    Be It Enacted by the Senate and General Assembly of the State of New Jersey:

    1. a. A surety shall elicit and record, on a standard form prescribed by the Commissioner of Insurance, the race, gender and ethnicity of each person applying to it for coverage in connection with the performance of a contract to provide goods or services, including construction services, to any public or private entity and shall list thereon its decision to approve or deny coverage. A surety shall transmit a completed form to the commissioner. Based upon this information, the commissioner shall compile and publish, at least annually, a statistical report which lists for each surety the rates of approval and denial by race, gender and ethnicity and which compares this information for each surety against an industry-wide average. Whenever a person applying for coverage is other than an individual, the surety shall elicit, record and report the information required by this section for each individual holding an interest therein.

    b. Whenever a surety denies coverage, it shall provide the applicant with a complete written explanation which lists all reasons for the denial.

    c. As used in this section:

    "interest" means the ownership or control of more than 10% of the profits or assets of a firm, association or partnership or more than 10% of the stock in a corporation for profit or holding shares in a professional service corporation;

    "person" means a firm, association, partnership, corporation or professional service corporation, as well as an individual; and

    "surety" means a company authorized under the laws of this State to carry on the business specified in subsection g. of R.S.17:17-1.

    2. a. A financial institution shall elicit and record, on a standard form prescribed by the Commissioner of Banking, the race, gender and ethnicity of each person applying to it for a business or commercial loan and shall list thereon its decision to approve or deny the loan. A financial institution shall transmit a completed form to the commissioner. Based upon this information, the commissioner shall compile and publish, at least annually, a statistical report which lists for each financial institution the rates of approval and denial by race, gender and ethnicity and which compares this information for each financial institution against an industry-wide average. Whenever a person applying for a loan is other than an individual, the financial institution shall elicit, record and report the information required by this section for each individual holding on interest therein.

    b. Whenever a financial institution denies a loan, it shall provide the applicant with a complete written explanation which lists all reasons for the denial.

    c. As used in this section:

    "financial institution" means an entity subject to the supervision and regulation of the Commissioner of Banking;

    "interest" means the ownership or control of more than 10% of the profits or assets of a firm, association or partnership or more than 10% of the stock in a corporation for profit or holding shares in a professional service corporation; and

    "person" means a firm, association, partnership, corporation or professional service corporation, as well as an individual.

    3. This act shall take effect immediately.

STATEMENT

    This bill would implement one of the recommendations made by the Governor's Study Commission on Discrimination in Public Works Procurement and Construction Contracts in its report of February 22, 1993. The commission determined that minority businesses and women's business were having difficulty in obtaining bond coverage and business loans and that this was limiting the ability of these firms to compete in the marketplace. It recommended that reporting requirements be imposed on sureties and financial institutions in order to identify and prevent discrimination against minority businesses and women's businesses.

    The bill would require a surety to elicit, record and report to Commissioner of Insurance the race, gender and ethnicity of persons applying for bond coverage in connection with the performance of certain contracts. It would also require financial institutions to file similar reports with the Commissioner of Banking in regard to business and commercial loans. In addition, the bill requires sureties

and financial institutions to provide a complete written explanation to any applicant denied coverage or a loan.

Imposes certain reporting requirements on sureties and financial institutions.