ASSEMBLY, No. 2351

 

STATE OF NEW JERSEY

 

INTRODUCED SEPTEMBER 19, 1996

 

 

By Assemblymen ZECKER and BROWN

 

 

An Act permitting certain banks, savings banks and their subsidiaries to engage in the securities business under certain circumstances and amending P.L.1979, c.226.

 

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

 

    1. Section 8 of P.L.1979, c.226 (C.17:9A-24.9) is amended to read as follows:

    8. Additional powers of banks and savings banks. In addition to the powers which banks and savings banks may otherwise exercise, every bank and savings bank, as defined in section 1 of "The Banking Act of 1948," P.L.1948, c.67 (C.17:9A-1), shall have power

    (1) To subscribe for, purchase and hold stock of one or more insurance companies organized under the laws of this State which have been or may hereafter be limited to insure banks, savings banks and other depository institutions

    (a) Against loss from the defaults of persons in positions of trust, public or private, or against loss or damage on account of neglect or breaches of duty or obligations guaranteed by the insurer; and against loss of any bills of exchange, notes, checks, drafts, acceptances of drafts, bonds, securities, evidences of debt, deeds, mortgages, documents, gold or silver, bullion, currency, money, platinum and other precious metals, refined or unrefined, and articles made therefrom, jewelry, watches, necklaces, bracelets, gems, precious and semiprecious stones, and also against loss resulting from damage, except by fire, to the insured's premises, furnishings, fixtures, equipment, safes and vaults therein, caused by burglary, robbery, holdup, theft or larceny, or attempt thereat. No such indemnity indemnifying against loss of any property as specified herein shall indemnify against the loss of any such property occurring while in the mail or in the custody or possession of a carrier for hire for the purpose of transportation, except for the purpose of transportation by an armored motor vehicle accompanied by one or more armed guards; and

    (b) Against loss or damage by burglary, theft, larceny, robbery, forgery, fraud, vandalism or malicious mischief, or any one or more of such hazards; and against any and all kinds of loss or destruction of or damage to moneys, securities, currencies, scrip, coins, bullion, bonds, notes, drafts, acceptances of drafts, bills of exchange and other valuable papers or documents, except while in the custody or possession of and being transported by a carrier for hire or in the mail.

    (2) To make loans and investments as authorized for associations by section 155 of the "Savings and Loan Act (1963)," P.L.1963, c.144 (C.17:12B-155).

    (3) To make loans and investments as authorized for associations by, and subject to the limitations of, sections 157 through 160 and 162 through 164 of the "Savings and Loan Act (1963)," P.L.1963, c.144 (C.17:12B-157 through C.17:12B-160 and C.17:12B-162 through C.17:12B-164).

    (4) To extend credit through the use of credit cards issued by it through an arrangement with participating vendors, and without limitation of the generality of the foregoing, to exercise all the powers permitted to associations pursuant to subsection (18) of section 48 of the "Savings and Loan Act (1963)," P.L.1963, c.144 (C.17:12B-48).

    (5) To make any investment authorized for associations by section 165 of the "Savings and Loan Act (1963)," P.L.1963, c.144 (C.17:12B-165), provided, however, that where reference is made to State associations or federal associations therein such reference for purposes of this act shall be deemed to refer to banking institutions as defined in section 1 of "The Banking Act of 1948," P.L.1948, c.67 (C.17:9A-1).

    (6) To exercise any powers and activities that have been or are hereafter approved by regulation of the Board of Governors of the Federal Reserve System as being so closely related to banking or managing or controlling banks as to be a proper activity for a bank holding company pursuant to the "Bank Holding Company Act of 1956," 70 Stat. 133 (12 U.S.C.§1841 et seq.) and regulations thereunder.

    (7) To apply to the commissioner for authority, and if granted, to exercise any power or activity that has been or is hereafter deemed to be closely related to banking under the "Bank Holding Company Act of 1956," 70 Stat. 133 (12 U.S.C.§1841 et seq.) and which has been permitted on an individual basis by order of the Board of Governors of the Federal Reserve System.

    (8) To make loans, as defined in this subsection, pursuant to which the parties may contract for and the bank or savings bank may receive interest or other compensation at a rate or rates or in an amount that the bank or savings bank and the borrower may agree upon, notwithstanding the provisions of any other law of this State, except N.J.S.2C:21-19, which limits the interest rate or finance charge which would otherwise be applicable to the loan. A loan, for the purposes of this subsection, includes loans in the amount of $5,000.00 or more, payable on demand or in installments, and (a) which is for the purpose of acquiring or is secured by equipment used for business or commercial purposes or (b) is secured by (i) an interest in warehouse receipts, bills of lading, or other documents of title which are subject to chapter 7 of Title 12A of the New Jersey Statutes, or (ii) by an interest in negotiable instruments or commercial paper which are subject to chapter 3 of Title 12A of the New Jersey Statutes, or (iii) by an interest in stocks, bonds, certificates of deposit or other securities which are subject to chapter 8 of Title 12A of the New Jersey Statutes, or (iv) by an interest in any combination of the foregoing.

    (9) To engage in the business of providing data processing and computer services.

    (10) To acquire, by purchase or otherwise, and to sell warrants, options or other similar rights to any class or classes of equity securities issued or to be issued by a corporation, if, at the time the warrants, options or other similar rights are acquired, the issuer, or its parent company, affiliate or subsidiary, is a borrower of funds loaned by the bank or savings bank, and if the acquisition by purchase or otherwise, and the sale of the warrants, options or other similar rights neither adds to the bank's or saving bank's credit risk nor increases the bank's or savings bank's financial liabilities.

    (11) (a) To engage in securities activities or establish or invest in a subsidiary which may engage in securities activities, or any combination of the actions permitted pursuant to this paragraph (a).

    (b) Securities activities engaged in pursuant to this subsection (11) are subject to the provisions of the "Uniform Securities Law (1967)," P.L.1967, c.93 (C.49:3-47 et seq.), notwithstanding the exemption provisions of subsection c. of section 2 of P.L.1967, c.93 (C.49:3-49), but only to the extent that securities activities conducted by national banks or state banks pursuant to federal law or pursuant to rule or regulation of the Board of Governors of the Federal Reserve System or by rule or regulation of the Federal Deposit Insurance Corporation are subject to the provisons of the "Uniform Securities Law (1967)."

    (c) For purposes of this subsection (11):

    "securities activities" means the purchase, sale, underwriting and otherwise dealing in debt and equity securities, including, without limitation, stocks, bonds, municipal bonds, mortgage backed securities and commercial paper:

    (i) to the extent that national banks are permitted to engage in those activities by federal law or regulation, subject to any statutory or regulatory limitations and conditions placed on such banks engaging in securities activities;

    (ii) to the extent that state banks or national banks are permitted to engage in those activities by regulation or rule of the Board of Governors of the Federal Reserve or by regulation or rule of the Federal Deposit Insurance Corporation, subject to all limitations and conditions contained in the regulations and rules; or

    (iii) as the Commissioner of Banking and Insurance may allow by regulation or order, or which activities have been fully described in an application to the commissioner, which application the commissioner has approved, except, that such securities activities shall be on parity with regulations or orders allowing such securities activities for national banks or other state chartered banks.

    "state bank" means a bank or savings bank as defined in section 1 of P.L.1948, c.67 (C.17:9A-1) or a corporation organized as a bank under the laws of a state other than New Jersey.

    The commissioner may, by regulation, prescribe the manner in which and the extent to which the powers enumerated in this section may be exercised, including whether they are to be exercised through a subsidiary corporation and may, by regulation, prescribe other powers, not otherwise expressly authorized or prohibited by law, which banks and savings banks may exercise.

(cf: P.L.1985, c.528, s.2)

 

    2. This act shall take effect immediately

 

STATEMENT

 

 

    This bill permits a State chartered bank or savings bank to engage in securities activities or to establish or invest in a subsidiary which may engage in securities activities, or any combination of these actions, under limited circumstances. The bill defines securities activities broadly to mean engaging in the purchase, sale, underwriting and otherwise dealing in debt and equity securities, including, without limitation, stocks, bonds, muncipal bonds, mortgage backed securities and commercial paper, and then limits those activities in the following manner: a State chartered bank or savings bank is permitted to engage in securities activities to the extent that national banks are permitted to engage in securities activities by federal law or regulation, subject to any statutory or regulatory limitations and conditions placed on such banks, or to the extent that state banks or national banks are permitted to engage in securities activities by regulation or rule of the Board of Governors of the Federal Reserve System or by rule or regulation of the Federal Deposit Insurance Corporation, subject to all limitations and conditions contained in the regulations and rules; or as the Commissioner of Banking allows by regulation or rule, or which activities have been fully described in an application to the commissioner, which application the commissioner has approved provided, however, that such securities activities are on parity with regulations or orders allowing such securities activities for national banks or other state chartered banks.

 

                             

 

Permits State banks, savings banks and subsidiaries to engage in securities business if certain other banks are allowed to do so.