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AB-2633 Banks: noncustodial accounts.(2019-2020)

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Date Published: 02/20/2020 02:00 PM
AB2633:v99#DOCUMENT


CALIFORNIA LEGISLATURE— 2019–2020 REGULAR SESSION

Assembly Bill
No. 2633


Introduced by Assembly Member Ting

February 20, 2020


An act to amend Sections 1083 and 1400 of, and to add Section 80003 to, the Financial Code, relating to financial institutions.


LEGISLATIVE COUNSEL'S DIGEST


AB 2633, as introduced, Ting. Banks: noncustodial accounts.
Existing law, the Banking Law, authorizes a bank to participate in a financial education program that involves receiving deposits or paying withdrawals on the premises of, or at a facility used by, a school, subject to specified conditions, including that the bank employees work at the site only to participate in the program. The law requires a bank account by or in the name of a minor to be held for the exclusive right and benefit of the minor.
This bill would authorize a bank to participate in a financial education program described above on the premises of a youth agency, as defined. The bill would also prohibit a bank from denying a checking or savings account to a person because the person is a minor or from requiring that minor to provide a cosignor or guarantor as a condition of opening a checking or savings account, except as provided. The bill would define “noncustodial account” to mean a checking or savings account that is held by a minor who is 14 years old and on which a person other than the minor is not a cosignor or guarantor. The bill would prohibit a bank from engaging in specified practices with respect to a noncustodial account, including by prohibiting a bank from charging a regular monthly fee or inactivity fee on the account or requiring the minor to provide a social security number as a condition of opening the account. The bill would also require a bank to collect specified demographic and income information related to noncustodial accounts and to annually report that information to the Commissioner of Business Oversight.
Existing law establishes the Bank on California Program, which is a voluntary collaborative initiative that assists Californians in opening a bank or credit union account and saving for the future.
This bill would require the program to develop and implement a plan to improve youth financial literacy, access to financial institutions, and awareness of noncustodial accounts.
Vote: MAJORITY   Appropriation: NO   Fiscal Committee: YES   Local Program: NO  

The people of the State of California do enact as follows:


SECTION 1.

 The Legislature finds and declares all of the following:
(a) Access to safe quality banking is essential to financial stability and can seed economic mobility when introduced at a young age.
(b) Noncustodial accounts (NCAs) give youth a strong start when delivered alongside financial education, goal-setting, and income, as demonstrated in a working paper published by the Federal Reserve Bank of San Francisco in 2016.
(c) The youth that need NCAs and the financial boost those accounts provide the most are youth without parents or guardians, including foster youth and unaccompanied minors, and youth who are working while growing up in financial deserts. Both groups of youth are shut out of the financial system and access to saving and borrowing tools and forced to pay predatory fees for basic transactions and predatory services like payday loans.

SEC. 2.

 Section 1083 of the Financial Code is amended to read:

1083.
 (a) A bank may participate in a financial education program that involves receiving deposits or paying withdrawals on the premises of, or at a facility used by, a school. school or youth agency. The school or youth agency premises or facility will not be considered a branch office of the bank, as that term is defined in Section 1070 of the Financial Code, if all of the following conditions are met:
(1) The bank does not establish and operate the school or youth agency premises or facility in which the program is conducted.
(2) Bank employees work at the site only to participate in the program.
(3) The program is provided at the discretion of the school. school or youth agency.
(4) The principal purpose of the program is financial education. For example, a program is educational if it is designed to teach students the principles of personal financial management, banking operations, or the benefits of saving for the future, and is not designed for the purpose of profitmaking.
(5) No services are Services are not provided to the general public.
(6) The program is conducted in a manner that is consistent with safe and sound banking practices and complies with applicable law.
(b) A bank that participates in a financial education program pursuant to this section shall be liable for all deposits made on the premises of, or at a facility used by, a school or youth agency as if the deposit was made directly at a branch office of the bank. bank and shall comply with Section 1400.
(c) As used in this section, “youth agency” means a youth employment, youth workforce, foster youth, unaccompanied minor, or other youth program.

SEC. 3.

 Section 1400 of the Financial Code is amended to read:

1400.
 (a) As used in this section, “noncustodial account” means a checking or savings account that meets both of the following requirements:
(1) The account is held by a minor who is at least 14 years of age.
(2) A person other than the minor is not a cosignor or guarantor on the account.

A

(b) A bank account by or in the name of a minor shall be held for the exclusive right and benefit of such that minor and shall be paid to such that minor or to his the minor’s order and payment so made is a valid release and discharge to the bank for such that deposit or any part thereof.
(c) A bank shall not deny a checking or savings account to a person because the person is a minor, unless that person is not at least 14 years of age.
(d) (1) Except as provided in paragraph (2), a bank shall not require a minor to provide a cosigner or guarantor as a condition of opening a checking or savings account.
(2) A bank may require a minor to provide a cosigner or guarantor for a reason unrelated to the minor’s status as a minor.
(e) With respect to a noncustodial account, a bank shall not do any of the following:
(1) Charge a regular monthly fee or inactivity fee on the account.
(2) Require a deposit amount of $10 or more to open the account.
(3) Impose a minimum balance requirement of $10 or more.
(4) Charge a fee to use an ATM or mobile application to access the account.
(5) Require the minor to provide a social security number as a condition of opening the account.
(6) Allow the account to be overdrawn.
(f) A bank shall electronically send statements regarding a checking or savings account held by a minor.
(g) (1) A bank shall collect data regarding all of the following:
(A) The race, gender, and ethnicity of a person who holds a noncustodial account.
(B) The ZIP Code of a person who holds a noncustodial account.
(C) The household income of a person who holds a noncustodial account.
(2) A bank shall annually report to the commissioner, in a manner prescribed by the commissioner, all of the following information:
(A) Aggregate data regarding the race, ethnicity, and gender of holders of noncustodial accounts.
(B) The total number of holders of noncustodial accounts organized by ZIP Code.
(C) The average household income of holders of noncustodial accounts.

SEC. 4.

 Section 80003 is added to the Financial Code, to read:

80003.
 The program shall develop and implement a plan to improve youth financial literacy, access to financial institutions, and awareness of noncustodial accounts, as described in Section 1400.