ALL RIGHT. WE WILL BEGIN THE
BANKING AND FINANCIAL
INSTITUTIONS COMMITTEE TODAY WE
ARE BEGINNING AS A SUB COMMITTEE
AND, UM, WE WILL TRANSITION ONCE
WE HAVE A QUORUM. UM TODAY WE
ARE GOING TO BEGIN WITH. WE HAVE
THREE BILLS ON THE AGENDA. UM
ONE IS ON CONSENT, BUT WE WILL
BEGIN WITH SENATE BILL 198 WITH
SENATOR ROTH. SENATOR ROTH FEEL
FREE TO START WHEN YOU'RE READY.
THANK YOU, MADAM. CHAIR MEMBERS.
FIRST. I'D LIKE TO THANK YOU AND
YOUR STAFF FOR WORKING WITH OUR
OFFICE AND THE SPONSOR. ON THIS
MEASURE, I'LL BE ACCEPTING THE
SUGGESTED AMENDMENT OUTLINED ON
PAGE FIVE OF THE ANALYSIS TO
REMOVE THE PROPOSED CHANGE THAT
WOULD REDUCE THE MINIMUM LOAN
TERM FROM FOUR MONTHS TO THREE
MONTHS. AS YOU KNOW, EVERY FIVE
YEARS. THE CALIFORNIA
PAWNBROKERS COME BEFORE THE
LEGISLATURE TO REQUEST APPROVAL
TO ADJUST MAXIMUM FEES THAT CAN
BE CHARGED ON A PAWN LOAN TO
KEEP PACE WITH RISING
OPERATIONAL COSTS. AND WE ARE
NOW AT THAT FIVE YEAR MARK. THE
BILL ENSURES FINANCIAL VIABILITY
OF THE PAWN INDUSTRY BY
INCREASING HANDLING AND STORAGE
FEES TO ACCOUNT FOR INCREASED
SECURITY COSTS, ALLOWING FOR A
NEW REMOTE TRANSACTION FEE AND
INCREASING THE FEE TO PREPARE A
LOAN EXPIRATION NOTICE. PAWN
SHOPS THROUGHOUT THE STATE SERVE
AS A RELIABLE SOURCE OF SHORT
TERM LOANS, ALLOWING SOMEONE TO
ACCESS MUCH NEEDED CASH WITHOUT
THE HASSLE OF AN ASSOCIATED WITH
TRADITIONAL LENDING INSTITUTIONS
, WHETHER IT'S COVERING MEDICAL
BILLS, CAR REPAIRS OR OTHER
URGENT EXPENSES ARE PAWN SHOPS
IN THE STATE OFFER AN INSTANT
AND ACCESSIBLE SOLUTION FOR
THOSE IN NEED. CURRENT LAW
LIMITS THE AMOUNT OF
COMPENSATION PAWNBROKERS MAY
CHARGE OR RECEIVE FOR PROVIDING
THESE CRITICAL SERVICES AND THE
FEE INCREASES PROVIDED HERE.
LENDING BUSINESSES WILL CONTINUE
TO CLOSE THROUGHOUT THE STATE,
LEAVING AN IMMEDIATE AND
DRAMATIC IMPACT ON THE LOW
INCOME COMMUNITIES THEY SERVE
AND THAT WE FIGHT FOR AT THE
APPROPRIATE TIME. I WILL
RESPECTFULLY ASK FOR YOUR I VOTE
HERE WITH ME TO TESTIFY IN
SUPPORT OF THE BILL OR FORMER
ASSEMBLY MEMBER ALBERTO TORICO
ON BEHALF OF THE CALIFORNIA
PAWNBROKERS ASSOCIATION, AND JAN
SNYDER, THE LEGISLATIVE CHAIR OF
THE CALIFORNIA PAWNBROKERS
ASSOCIATION AND OWNER OF R AND
J, JEWELRY AND LOAN. WE WILL GO
AHEAD AND BEGIN THE TESTIMONY
AND SUPPORT THANK YOU. GOOD
AFTERNOON, MADAM CHAIR. MEMBERS
OF THE COMMITTEE. UM LET ME
BEGIN BY THANKING SENATOR ROCK
HIS STAFF HIS LIPPER ON ON THEIR
VERY HARD WORK AND DILIGENCE ON
THIS BILL, I WANT TO DO THE SAME
FOR YOU, MADAM CHAIR AND YOUR
STAFF VERY MUCH APPRECIATE. UM
THE CONVERSATION AND HAPPY TO
TAKE THE AMENDMENT AS WELL. UM I
I'M STANDING BEFORE YOU ON
BEHALF OF THE CALIFORNIA OF PAWN
BROKERS WHO ARE SPONSOR OF THE
BILL. I'M JUST GONNA TURN IT
OVER FOR A VERY BRIEF COMMENTS
FROM MS SNYDER. THANK YOU VERY
MUCH. APPRECIATE IT. GOOD
AFTERNOON, MADAM CHAIR COMMITTEE
. UM I WANT TO THANK YOU FOR
ALLOWING ME TO TESTIFY TODAY IN
SUPPORT OF S¼ B 1198, AS WAS
MENTIONED WE EVERY FIVE YEARS
COME AND TRY TO GET A FEE
INCREASE TO CATCH UP WITH OUR
COST OF DOING BUSINESS. UM MY
SHOP IS IN SAN JOSE. MY
INSURANCE ALONE HAS GONE UP 37%
SINCE OUR LAST FEE INCREASE
BECAUSE OF THE SCOURGE OF RETAIL
THEFT. WE HAD FOUR INCIDENTS
MAJOR INCIDENTS IN MY SHOP ALONE
IN THE LAST THREE YEARS AND, UH,
EVERYBODY OH, YOU HAVE INSURANCE
. WELL YEAH, WE HAVE INSURANCE,
BUT IT DOESN'T COVER EVERYTHING
NUMBER ONE, AND IT CERTAINLY
DOESN'T COVER IMPROVEMENTS THAT
WE NEED TO MAKE ONGOING TO MAKE
OUR STORES MORE AND MORE AND
MORE SECURE, MORE FORTRESS LIKE
IF YOU WILL, SO, SO THAT'S BEEN
REALLY TOUGH AND IT'S ONE OF THE
MAIN REASONS THAT WE ARE
SEEKING. THESE FEE INCREASES IS
TO COVER THOSE COSTS AND, UM
I'VE BEEN IN BUSINESS 46 YEARS.
IT'S A FAMILY BUSINESS. UH, WE
HAVE SIX EMPLOYEES, TWO OF WHICH
ARE MY SON AND DAUGHTER IN LAW.
AND UM, OTHER THAN THAT, IF YOU
HAVE ANY QUESTIONS FOR ME ABOUT
OUR INDUSTRY, I'M MORE THAN
HAPPY TO ANSWER THEM. THANK YOU
SO MUCH NEXT, UH, WE WILL HEAR
FROM ANY WITNESSES IN OPPOSITION
. YES WE DO. WE HAVE A QUORUM,
SO WE'RE GONNA GO AHEAD AND
ESTABLISH A QUORUM. UM, IF WE
CAN PLEASE CALL ROLL. SENATOR
LIMONE. HERE LIONE HERE. NILO
NILO HERE. BRADFORD BRADFORD
HERE, CABALLERO. MENJIVAR. WHEN
FORINO. FINO HERE. THANK YOU. WE
HAVE QUORUM. WE HAVE A MOTION TO
MOVE THE BILL. WE DON'T HAVE ANY
WITNESSES IN OPPOSITION
REGISTERED. IF THERE ARE ANY IN
THE ROOM, PLEASE COME FORWARD.
ALL RIGHT, SEEING NONE. WE HAVE
A MOTION MEMBERS ANY QUESTIONS
OR COMMENTS SEE NÓ QUESTIONS OR
COMMENTS. UM, UM NICE THAT YOU
HAVE YOUR VOICE BACK. THANK YOU.
I HAVE MORE OF MY VOICE BACK
YESTERDAY WAS PAINFUL. UM, BUT
IT'S BACK. THANK YOU. THANK YOU,
VICE CHAIR. UH I DO WANNA, UH,
THANK YOU, UH, THE AUTHOR AND
ALSO THE SPONSORS FOR WORKING ON
THE COMMITTEE AMENDMENTS. UM WE
APPRECIATE THOSE AMENDMENTS AND
THINK THAT, UM, THAT THAT'S IN
THE RIGHT DIRECTION. SO WITH
THAT, UH, WE HAVE A MOTION AND
THE MOTION IS DO PASS, BUT FIRST
AMEND, UH, TO REREFER TO THE
COMMITTEE ON JUDICIARY. SO WE
WILL GO AHEAD AND CALL THE ROLL
FOR THAT. MOTION IS DUE PASS AS
AMENDED TO JUDICIARY, SENATOR
LAMONE I NILO I NE I BRADFORD
BRADFORD, I CABALLERO BEAR. WHEN
TOO. FORTINO I ALL RIGHT, THAT
HAS FOUR WILL LEAVE THE ROLE
OPEN FOR ADDITIONAL MEMBERS TO
ADD ON THANK YOU, AND I DIDN'T
GIVE YOU THE OPPORTUNITY TO
CLOSE. YES YOU DID, MA'AM. I
RESPECTFULLY ASKED FOR AND I
VOTE AND I DO WANT TO THANK YOU
AND THANK YOU MEMBERS. SORRY I
WAS JUST VERY AWARE OF YOUR TÚI
OF THE TIME CRUNCH, TOO, WHERE
YOU NEEDED TO BE NEXT. SO
APOLOGIES. ALL RIGHT. UM AND,
UH, WE WILL GO AHEAD AND TAKE
THE CONSENT CALENDAR FIRST ON
CONSENT. WE HAVE SENATE BILL 985
OCHOA BOGUE. WE HAVE A MOTION
FOR CONSENT. SO MOVE. WE MOVE BY
SENATOR BRADFORD. WE'LL GO AHEAD
AND CALL THE ROLL. SENATOR
LIONE. I LÀ I NILOY NELO I
BRADFORD BRADFORD. I CABALLERO
MENJIVAR WHEN PORTANTINO. TINO,
I ALL RIGHT. WE HAVE FOUR VOTES
THAT, UH AND WE WILL LEAVE THAT
OPEN FOR ADDITIONAL MEMBERS TO
ADD ON AND WE WILL GO TO OUR
FINAL BILL. WE HAVE SENATOR
BRADFORD WITH SENATE BILL 1075.
THANK YOU, MADAM CHAIR MEMBERS.
I'M PRESENTING S¼ B 1075, WHICH
WILL ESTABLISH BASIC CONSUMER
PROTECTIONS FOR CALIFORNIANS WHO
ARE MEMBERS OF CREDIT UNIONS. UH
THIS MEASURE WILL CREATE A NEW
BUT NEEDED SAFEGUARD FOR FROM
OVERDRAFT AND NON SUFFICIENT
FUNDS, OR N S¼ F S¼ FEES BY
REQUIRING CREDIT UNIONS TO HAVE
FIVE BUSINESS DAY GRACE PERIOD
FOR A CONSUMER TO PAY BACK ANY
OVERDRAFT AMOUNT BEFORE A FEE
IS, UH, WILL ALSO PLACE A CAP ON
THE AMOUNT OF FEES THAT CAN BE
CHARGED PER MONTH TO THREE. UH,
OVERDRAFT AND N S¼ F FEES TEND
TO DISPROPORTIONATELY AFFECT
THOSE WHO CAN LEAST AFFORD THEM.
UH, CONSUMER FINANCIAL
PROTECTION BUREAU ESTIMATES 80%
OF OVERDRAFT FEES COME FROM JUST
9% OF ACCOUNT HOLDERS. UH,
INDUSTRY WIDE AND THE DATA ALSO,
UH, UM, FIRST ANNUAL REPORT OF
INCOME FROM THE NON SUFFICIENT
FUNDS AND OVERDRAFT FEES WAS
RELEASED ON MARCH OF 2020 THREE.
UH, THANKS TO OUR SENATOR, OUR
CHAIRS BILL THAT SHE DID A
NUMBER OF YEARS AGO. S¼ B 1415.
THIS REPORT SHOW THAT 28 STATES,
UH, STATE CHARTERED A CREDIT
UNIONS GENERATE 40% OR MORE OF
THEIR NET INCOME. FROM THESE
FEES ALONE, SIX CREDIT UNIONS
GENERATE MORE THAN 100. OF THEIR
NET INCOME FROM THESE FEES. THIS
MEANS THAT THESE CREDIT UNIONS
CAN COVER ALL THEIR EXPENSES
WITH JUST THESE FEES ALONE, IN
ADDITION TO MAKING A PROFIT
OVERDRAFT OR COURTESY PAY IS AN
OPT IN PROGRAM OFFERED BY CREDIT
UNIONS WHERE MEMBERS CAN
OVERDRAFT THEIR ACCOUNT. AND
HAVE THE BALANCES GOING NEGATIVE
TO COMPLETE A TRANSACTION. N S¼
FE S¼ ARE CHARGED WHENEVER A
CONSUMER TRIES TO WITHDRAW MONEY
GREATER THAN THE ACCOUNT BALANCE
BUT ARE NOT S¼, UH, SIGNED UP
FOR OVERDRAFT PROTECTION FEES ON
AVERAGE RANGE FROM 20 TO $35,
WHICH IS A SIGNIFICANT AMOUNT OF
MONEY TO PAY. WHEN YOU'RE IN THE
NEGATIVE CREDIT UNIONS ARE
NONPROFIT ORGANIZATIONS THAT ARE
SUPPOSED TO BE FUNDED BY
CONSUMERS FOR CONSUMERS,
ESPECIALLY CONSUMERS, WHO ARE
OVERLOOKED BY TRADITIONAL
FINANCIAL INSTITUTIONS. AND
ALTHOUGH OVERDRAFT IS VIEWED AS
A FINANCIAL TOOL BY CREDIT
UNIONS, ITS FEES ARE INHERENTLY
PREDATORY, PREDATORY AND TARGET
THE MOST FINANCIALLY VULNERABLE
CALIFORNIANS. WHILE THE INDUSTRY
SAYS THAT THE OVERDRAFTS IS A
BENEFIT TO THEIR MEMBERS, IT'S
REALLY A BENEFIT TO THEIR BOTTOM
LINE. THE INDUSTRY SAYS THAT
CONSUMERS PREFER TO OVERDRAFT IN
ORDER TO GET THEIR GROCERIES AND
PAY THEIR BILLS MAINTAIN A ROOF
OVER THEIR HEADS. BUT THEY DO
NOT WANT TO OVERDRAFT THEY NEED
TO OVERDRAFT IN ORDER TO
SURVIVE. THEY DESERVE THE
OPPORTUNITY TO MAKE THEMSELVES
AND THEIR ACCOUNT HOLD BEFORE
THEY'RE PUNISHED FOR TRYING TO
DO SO. AND I ASKED FOR I VOTE.
SENATOR BRADFORD. UM WE WILL GO
AHEAD AND WELCOME ANY WITNESSES
IN SUPPORT. GOOD AFTERNOON CHAIR
. LEÓN. I'M JOE THROUGH KBA WITH
RICE ECONOMY. UM IT IS MY HONOR
TO TESTIFY IN SUPPORT OF HARD
WORKING LOW INCOME BY PA
CALIFORNIANS WHO WOULD SURELY
BENEFIT FROM A S¼ B 1075,
FEDERAL AND STATE REGULATORY
AGENCIES, THE èC F PB AND THE
Dð FP HAVE PUBLISHED OVERDRAFT
FEE DATA. WE SEE THAT PEOPLE OF
COLOR ARE OVERREPRESENTED IN
THOSE BEARING THE BURDEN OF COST
OF THESE OVERDRAFT AND NON
SUFFICIENT FUND FEES, ALSO KNOWN
AS JUNK FEES IN SINCE OUR BABY
NOTED THAT HALF OF THOSE WHO
OVERDRAFTED REPORTED THAT THE
MOST RECENT OVERDRAFT WAS
UNINTENTIONAL AND THE MAJORITY
REPLENISHED THESE FUNDS WITHIN
DAYS. THE GRACE PERIOD PROPOSED
IN THIS BILL SUPPORTS WORKING
PEOPLE IN MAKING ENDS MEET
BETWEEN PAYCHECKS RISE ECONOMY
ANALYZE THE DF P DATA FROM LAST
YEAR. WHAT WE FOUND MOST
PROBLEMATIC IS THAT COMPARED TO
BANKS, CREDIT UNIONS REPORTED
HIGHER PERCENTAGES OF INCOME
EARNED FROM REVENUE COLLECTED
VIA JUNK FEES, COLLECTING ALIENS
AND JUNK FEES, AND DEPENDING SO
HEAVILY ON THIS REVENUE IS
INCONSISTENT WITH THE CREDIT
UNION INDUSTRIES INSISTENCE THAT
THEY ARE COMMUNITY MINDED AND
SERVE THE MEMBERS NEEDS
ADEQUATELY. TAKE FOR EXAMPLE,
THE EDUCATIONAL EMPLOYEES CREDIT
UNION THAT SERVES RURAL
COMMUNITIES FRESNO MADEIRA AND
CURRENT COUNTIES TO NAME A FEW
AND REDWOOD CITY UNION SERVING
BAY AREA COMMUNITIES IN NAPA
VALLEY, AMONG OTHERS. BOTH
CREDIT UNIONS TOUT MILLIONS, UM
IN ASSETS IN BILLIONS IN ASSETS
YET, UH, THE CREDIT YET THEY ARE
. THEY ARE HERE, PUSHING BACK TO
REDUCE THE FEES. UM, UH,
COLLECTIVE YET. YET THEY ARE
HERE TO PUSH BACK ON THESE JUNK
FEES. UM, WE URGE YOU TO
RECOGNIZE THEIR REVENUE STREAM.
WE URGE YOU TO RECOGNIZE THESE
FEES AT INDUSTRY, GREED,
PREDATORY OF LOW INCOME MEMBERS
AND NOT A SERVICE OR BENEFIT
PROVIDED BY THE CREDIT UNIONS.
AND IF CERTAIN CREDIT UNIONS
MUST RELY ON THE REVENUE FROM
CHARGING UNSUSPECTING CONSUMER
FEES THEY CANNOT AFFORD. MAYBE
THOSE CREDIT UNIONS SHOULD
CONSIDER ANOTHER LINE OF
BUSINESS. WHY SHOULD THE STATE
ALLOW A PREDATORY BUSINESS MODEL
TO FLOURISH? THIS BILL IS AN
APPROPRIATE STEP TO PROTECT
WORKERS AT A TIME WHEN THE STATE
IS STRUGGLING TO CLOSE THE
RACIAL INCOME AND WEALTH GAP. WE
RESPECTFULLY ASK FOR AN EYE
VOTE. THANK YOU. THANK YOU THE
NEXT LEAD WITNESS IN SUPPORT.
GOOD AFTERNOON, MADAM CHAIR AND
MEMBERS ROBERT HORRELL. I'M THE
EXECUTIVE DIRECTOR OF THE
CONSUMER FEDERATION OF
CALIFORNIA, AND, UH, WE SUPPORT
SENATOR BRADFORD'S EFFORT ON S¼
B 1075. I WOULD JUST NOTE. UH,
THE ANALYSIS DOES AN EXCELLENT
JOB OF GOING INTO GREAT DETAIL
ABOUT THE HISTORY OF THESE FEES.
WHAT'S BREWING? I'LL TRY NOT TO
BE REPETITIVE TO THAT. UM I
WOULD ALSO COMPLIMENT YOU, MADAM
CHAIR BECAUSE YOUR BILL OF A FEW
YEARS AGO WHICH THE CONSUMER FED
SUPPORTED, UH, LED TO THIS
REPORT THIS REPORT SHOWS US
WHERE THE PROBLEM IS. AND WHAT
WE SEE IN THAT DATA. IS THAT 35
STATE CHARTER CREDIT UNIONS GET
MORE THAN 5% OF THEIR OVERALL
INCOME FROM N S¼ F AN OVERDRAFT
FEES. IN COMPARISON, THE STATE
CHARTERED BANKS YOU'RE LOOKING
AT MAYBE ONE OR TWO THAT MEET
THAT SAME THRESHOLD. SO CLEARLY,
THIS REPORT DONE BY THE
DEPARTMENT OF FINANCIAL
PROTECTION, AND INNOVATION SHOWS
US THAT THERE IS A MASSIVE
PROBLEM GOING ON WITH STATE
CHARTERED CREDIT UNIONS. AND SO
THAT'S WHY SENATOR BRADFORD HAS
FOCUSED HIS BILL IN THAT
APPROPRIATE AREA. WE WOULD NOTE
THAT THERE IS AAA RULE THAT THE
CONSUMER FINANCIAL PROTECTION
BUREAU THE FEDERAL LEVEL IS
LOOKING AT THIS CONSUMER. TO
CALIFORNIA, AS MANY OF YOU KNOW,
HAS BEEN WORKING ON JUNK AND
HIDDEN FEES FOR A NUMBER OF
YEARS. THIS IS PART OF THAT
AGENDA. THERE IS A THRESHOLD,
UH, AT THE FEDERAL PROPOSED RULE
OF $10 BILLION THAT'S IMPORTANT
TO RECOGNIZE AND OF COURSE
THEY'RE DEALING WITH FEDERALLY
CHARTERED INSTITUTIONS. HERE IN
CALIFORNIA, YOU CAN TAKE STEPS
TO PROTECT CONSUMERS,
PARTICULARLY THE CONSUMERS THAT,
UH, MISS BABA FROM UH RISE.
ECONOMY INDICATED LOWER INCOME
COMMUNITIES OF COLOR CONSUMERS
WHO ARE UM TAKING ADVANTAGE OF
BY THESE VERY, VERY HIGH FEES.
I'D LIKE TO CLOSE WITH JUST TWO
BRIEF COMMENTS ONE. THESE FEES
ARE WILDLY DISPROPORTIONATE TO
THE AMOUNT OF MONEY THAT IT
ACTUALLY TAKES TO PROCESS AND
PROMULGATE SUCH A FEE. THAT
NOTION OF PROPORTIONALITY OF
FEES IS BECOMING VERY IMPORTANT
AGAIN AT THE FEDERAL LEVEL.
WHETHER YOU LOOK AT WHAT THE F
Tð èC IS LOOKING AT WITH JUNK
FEES, OR THE èC FBP OR OTHER
FEDERAL ENTITIES,
PROPORTIONALITY IS IMPORTANT,
AND THESE FEES ARE NOT
PROPORTIONATE TO WHAT THEY COST
THOSE INSTITUTIONS. FINALLY I'D
LIKE TO JUST NOTE ONE PATTERN
THAT WE'VE SEEN IN INDUSTRY.
THAT'S TROUBLESOME. THIS IS WHAT
I REFER TO AS ORDERING SAY A
CONSUMER HAS THREE ITEMS OF
CHARGES TO BE TAKEN OUT OF THEIR
ACCOUNT. WHAT MANY FINANCIAL
INSTITUTIONS WILL DO IS THEY
WILL TAKE THE LARGEST ONE FIRST,
THEREBY PUTTING THE CONSUMER IN
THE RED AND THEN THE TWO SMALLER
ONES IF THEY HAD BEEN TAKEN
FIRST WOULD NOT HAVE PUT THE
CONSUMER IN THE RED. WHAT DOES
THIS DO? THIS ALLOWS THE
FINANCIAL INSTITUTION THE CREDIT
UNION TO CHARGE OVERDRAFT THREE
TIMES. WHEN HAD THEY ORDERED IT
DIFFERENTLY. IT ONLY WOULD HAVE
BEEN ONE. THIS IS A PERNICIOUS
AND PROBLEMATIC PRACTICE. FOR
THESE AND OTHER REASONS. WE
SUPPORT SENATOR BRADFORD'S
EFFORTS IN THIS AREA AND WE'RE
HAPPY TO BE AVAILABLE FOR
TECHNICAL QUESTIONS. SHOULD THEY
COME UP? THANK YOU ANY OTHER
WITNESSES IN SUPPORT IN THE ROOM
, PLEASE? JUST STATE, YOUR
ENTITY AND YOUR POSITION. CHRIS
MYERS WITH THE CALIFORNIA SCHOOL
EMPLOYEES ASSOCIATION IN SUPPORT
OF THE BILL. THANK YOU. ALL
RIGHT. SEE NÓ OTHER, UH, FOLKS
IN THE ROOM, UH, IN SUPPORT, WE
WILL, UH, INVITE PEOPLE IN
OPPOSITION TO LEAD. GOOD
AFTERNOON, SENATOR CHAIR MEMBERS
OF THE COMMITTEE. ROBERT WILSON,
CALIFORNIA CREDIT UNION LEAGUE
HERE IN OPPOSITION TO SB 1075.
SB 1075 IMPOSES STRINGENT
REQUIREMENTS ON HOW STATE
CHARTERED CREDIT UNIONS AND ONLY
STATE CHARTER CREDIT UNIONS
SERVE THEIR MEMBERS AT UTILIZE
OVERDRAFT SERVICES. AS THE
SENATOR SAID IT LIMITS THE
NUMBER OF NON SUFFICIENT FUND
AND OVERDRAFT TRANSACTIONS TO
THREE PER MONTH. IN MY DATES, A
FIVE DAY WAITING PERIOD BEFORE A
FEE CAN BE ASSESSED. CREDIT
UNIONS ARE NOT FOR PROFIT MEMBER
OWNED CO OPERATIVES STARTED OVER
100 YEARS AGO TO PROVIDE
FINANCIAL SERVICES TO THOSE THAT
WERE LEFT OUT OF THE FRAY.
OVERDRAFT SERVICES WERE PROPOSED
AND CREDIT UNIONS WITH THIS GOAL
IN MIND TO SERVE PEOPLE THAT
NEEDED ACCESS TO FUNDS. IT'S
IMPORTANT TO SET THE RECORD
STRAIGHT IN COURTESY OVERDRAFT
PAY. IT IS AN OPT IN SERVICE
UNDER FED REG E, MEANING THE
CONSUMER KNOWS WHAT THEY'RE
OPTING INTO. WHEN THEY CHOOSE TO
DO THIS. AND THEY USE THIS AS A
FINANCIAL TOOL. AS WE STATED
CONSUMERS LIKE THE OPPORTUNITY
TO GET THEIR LEAVE WITH THEIR
BAG OF GROCERIES OR THEIR GAS,
SO THEY'RE NOT BOUNCING A CHECK
ON RENT OR MASON A LATE PAYMENT
ON A CAR, SO IT'S VERY MUCH A
FINANCIAL TOOL WHEN WE ASK OUR
MEMBERS. AS FOR THE Dð FP
REPORT, AND THE DISCREPANCIES
THAT HAVE BEEN NOTED, I'D LIKE
TO NOTICE THAT NOTE THAT STATE
CHARTER CREDIT UNIONS SERVE
INDIVIDUALS, WHILE A LOT OF
STATE CHARTERED BANKS ARE
SERVING COMMERCIAL CLIENTS. I
WILL ALSO NOTE THAT, UH, NET
INCOME IS NOT THE BEST STATISTIC
FOR THAT. IF YOU TAKE ANY
REVENUE STREAM AND POINT IT OUT
A NET INCOME. IT'S GOING TO BE A
VERY IT'S NOT HOW FINANCES ARE
REALLY VIEWED IN THE INDUSTRY.
SO ON THE S¼ B 1075. ITS TIMING
IS PREMATURE IN OUR EYES, AS WAS
STATED EARLIER, THE CONSUMER
FINANCIAL PROTECTION BUREAU
PROPOSED A RULE IN 2024
REGARDING COURTESY OVERDRAFTS
THAT PROVIDE TWO OPTIONS FOR
VERY LARGE FINANCIAL
INSTITUTIONS, A BREAK EVEN
ANALYSIS OR A BENCHMARK FEE
RANGING FROM 3 TO $14. WE'RE
STILL AWAITING THAT FINAL RULE.
I WILL NOTE IT IS FOR FINANCIAL
INSTITUTIONS, BOTH STATE AND
FEDERALLY CHARTERED OVER $10
BILLION. SO THERE ARE SOME STATE
CHARTER CREDITS THAT WILL HIT
THAT. HOWEVER, OUR INDUSTRY SEES
THAT VERY MUCH. AS AN INDUSTRY
STANDARD THAT'S GOING TO COME
FORWARD. THERE'S GONNA BE
DOWNWARD COST PRESSURE. IF THERE
IS SOMEONE WANTS TO USE
OVERDRAFT, THEY'RE JUST GONNA GO
TO A LARGE FINANCIAL INSTITUTION
UNLESS A SMALL FINANCIAL
INSTITUTION OF OFFERS THE SAME
PRICE AS WELL AS POTENTIAL
LITIGATION, SO IT'S VERY MUCH
SEEN AS AN INDUSTRY STANDARD.
WHEN THE èC F VÆ ARRIVES AT
THAT NUMBER. UH, THE FIVE DAY
WAITING PERIOD IN THE BILL IS
ENTIRELY TOO LONG. THERE ARE
LOSSES OF SO ASSOCIATED WITH
OVERDRAFT TRANSACTIONS WITH BAY
AREA CREDIT UNION THAT HAS A 22%
CHARGE OFF RATE WITH OVERDRAFT
TRANSACTIONS CURRENTLY UH, IN
FIVE DAYS IS A FULL PAY PERIOD.
IF YOU GET PAID WEEKLY. IF
YOU'RE GETTING PAID BIWEEKLY,
THAT'S HALF A PAY PERIOD. UH,
LIMITING TRANSACTION FREE PER
MONTH WILL LIMIT CONSUMER
CHOICE. AND WE'VE ISSUES WITH
THAT AS WELL. UH, WHEN WE ASK
OUR CREDIT UNION MEMBERS ABOUT
COURTESY OVERDRAFT, THEY VIEW IT
AS A MEANS TO MANAGE THEIR
FINANCES EFFECTIVELY. FINALLY
AND PERHAPS MOST IMPORTANTLY,
WITH THIS BILL, IT ONLY IMPACTS
THE CHARTER CREDIT UNIONS. IT'S
A VERY SMALL SLICE OF THE PIE.
UM IF A MEMBER WANTS TO UTILIZE
OVERDRAFT SERVICES, THEY'RE
SIMPLY GONNA CLOSE THEIR CREDIT
UNION ACCOUNT, AND THEY HAVE THE
ABILITY TO WALK ACROSS THE
STREET TO WHATEVER FINANCIAL
INSTITUTION IS THERE AND ACCESS
FIND ACCESS OVERDRAFT SERVICES
WITHOUT ANY OF THESE LIMITATIONS
ON THERE. UM I WILL SAY THERE'S
A CREDIT UNION IN THE IN THE
CENTRAL VALLEY THAT THAT PULLED
THEIR MEMBERS THAT USE OVERDRAFT
WITHIN THE LAST MONTH. 89% OF
THEM SAID THEY LIKED THE
SERVICE. THEY VIEWED IT
POSITIVELY, AND 70% OF THOSE IN
THAT SAME SURVEY SAID THEY WOULD
RETHINK THEIR MEMBERSHIP IF THE
OVERDRAFTS WAS WAS TO GO AWAY.
UH, OUR MEMBERS SPENT A LOT OF
TIME GOING TO THEIR MEMBERSHIP
AND ASKING THEM WHAT THEY SAID.
THE RESULTS HAVE COME BACK VERY
POSITIVE. SO I SAY S¼ B 1075
CANNOT BE VIEWED IN A VACUUM. WE
MUST STOP TO CONSIDER THE
DOWNWARD PRICE PRESSURE FROM THE
èC F PB. AND WITH THAT, UH,
CALIFORNIA CREDIT UNION LEAGUE
IS ASKING FOR A NOVA ON SB 1075.
THANK YOU. THANK YOU ANY OTHER
LEAD WITNESSES IN OPPOSITION?
ALL RIGHT, SEEING NÓ OTHER, UH,
LEAD WITNESSES IN OPPOSITION.
ANY OTHER ENTITIES OR GROUPS IN
OPPOSITION? ALL RIGHT. SEE THEN
WE WILL MOVE IT, UH, TO MEMBERS.
QUESTIONS. COMMENTS, SENATOR
CABALLERO. THANK YOU VERY MUCH,
UM THIS ONE. THIS ONE. THIS BILL
IS A HARD ONE FOR ME AND I. I
WANT TO THANK THE AUTHOR FOR
BRINGING THIS FORWARD BECAUSE
THIS, UH AND FOR THE CHAIR FOR
AUTHORING THE LEGISLATION THAT
GOT US SOME OF THE DATA IN
REGARDS TO THIS, UM, THE WHOLE
ISSUE OF WHOLE BANKING ISSUE IS
ONE. I THINK WE'VE ALL BEEN
STRUGGLING WITH WHICH IS HOW DO
WE GET CREDIT INTO THE HANDS OF
PEOPLE WHO HAVE A HARD TIME
GETTING CREDIT FOR A WHOLE
VARIETY OF REASONS, RIGHT? UM
AND UM AND ONE OF THE ONE OF
THE, UH, THE PLUSES FOR THE
CREDIT. UM THE, UM THE CREDIT
UNIONS. AND I HAVE TO SAY THAT
FOR YEARS I WANTED TO BE A
CREDIT UNION MEMBER BUT COULDN'T
BE BECAUSE YOU HAD TO BE PART OF
AN ORGANIZATION THAT STARTED A
CREDIT UNION, SO I WAS GLAD WHEN
THE WHEN THE RULES CHANGED. AND
I'M PROUD TO BE A èC. UH UH,
UNION. A CREDIT UNION MEMBER NOW
IS THAT THEY PROVIDE THEY
PROVIDE AN OPPORTUNITY FOR UM
FOR INDIVIDUALS TO BE ABLE TO
HAVE, UH, SERVICES AND TO NOT
CHARGE FOR MOST OF THOSE
SERVICES. UM WHICH IS NOT NOT
THE BANKING MODEL, AND SO, UM
THE CONCERN I HAVE IS TO WELL
AND SO HERE'S HERE'S WHERE I'M
GOING WITH. THIS IS REST. I WAS
STRUGGLING WITH WHAT? WHAT? UM
WHAT COULD YOU GIVE THE CREDIT
UNIONS? THAT WOULD BE A UM,
INCENTIVE FOR THEM TO RETHINK
THE THIS OVERDRAFT AND I. I
CAN'T II. I DIDN'T COME UP WITH
THE ANSWER OTHER OTHERWISE I'D
HAVE A SUGGESTION, BUT, UM, BUT
I'M I'M WHAT I WILL ASK IS THAT
I'LL I'LL SUPPORT THE BILL TODAY
. I'LL MAKE THE MOTION WHEN IT'S
APPROPRIATE. UM BUT IT I THINK
IT'S IMPORTANT TO HAVE A
CONVERSATION WITH THE CREDIT
UNIONS TO FIGURE OUT, IS IT IS
THE SYSTEM THAT YOU'RE
SUGGESTING. IS THAT THE BEST WAY
TO GO ABOUT IT OR, UM, IS A
BETTER WAY TO GO ABOUT IT,
REDUCING WHAT THEY CHARGE IN
TERMS OF THE PROPORTIONALITY
ISSUE THAT WAS RAISED. UM OR IS
IT SOMETHING? IS THERE SOMETHING
IN THE IN THE, UH A CHANGE TO
THEIR CHARTER THAT WOULD GIVE
THEM MORE FLEXIBILITY IN TERMS
OF WHAT THEY THEY COULD DO FOR,
YOU KNOW, IN TERMS OF CHARGES
BECAUSE ONE WAY OR ANOTHER, UM
UH, WHILE WE WANT TO HAVE A
LOWER FEE THAT'S CHARGED FOR AN
OVERDRAFT. UM WHAT YOU THEN DO
IS SAY, OK. WE'RE GONNA, UH,
SPREAD THE COST OUT TO EVERYBODY
SOMEHOW, EITHER BY CHARGING FOR
A SERVICE THAT THEY HERE TO FOR
DID NOT CHARGE FOR. AND UM, UH
OR JUST FOR MAINTAINING THE
ACCOUNTS THERE AND I. I WOULD
HATE TO SEE THAT HAPPEN BECAUSE
ONE OF THE BEAUTIES OF A OF A
CREDIT UNION IS REALLY HAVING
AVAILABLE CASH. UM, BEING ABLE
TO USE THE A Tð M WITHOUT ANY
SERVICE CHARGE. I MEAN, THAT'S
LIKE A MIRACLE. I REMEMBER USING
MY BANK CARD, AND THEY USED TO
CHARGE ALL THE TIME AND IT
BECAME RIDICULOUS. A Tð SOME
POINT. IT'S YOUR MONEY. YOU'RE
GETTING 1% INTEREST ON IT. UM
BUT YOU GOTTA YOU GOTTA PAY TO
TAKE MONEY OUT. UH WHEN YOU NEED
IT, SO, UM, AS I SAID, I, I
APPRECIATE WHAT YOU'RE YOU'RE
TRYING TO ACCOMPLISH HERE. UM A
AND THERE'S NÓ QUESTION IN MY
MIND THAT IT'S THE POOREST THAT
ARE PAYING THESE FEES. UM BUT
IT'S A QUESTION OF YOU KNOW WHAT
WHAT'S FAIR IN TERMS OF ALLOWING
A NONPROFIT ORGANIZATION THAT
REALLY HAS THEIR MEMBERSHIP AT
AT HEART, UM, TO CONTINUE TO DO
BUSINESS, SO THAT SAID, I I'M
DONE. THANK YOU AND, UH, SENATOR
CABALLERO. DID I HEAR THAT?
YOU'RE MAKING THE MOTION? ALL
RIGHT, SO WE DO HAVE A MOTION.
NEXT. WE WILL MOVE TO, UH,
SENATOR PORTANTINO. THANK YOU.
AND I APPRECIATE THE AUTHOR AND
THE CHAIR FOR HIGHLIGHTING THIS
ISSUE. AND LIKE SENATOR
CABALLERO. I'M STRUGGLING
BECAUSE CREDIT UNIONS ARE
NONPROFITS. UM THEY'RE MEMBER
BASE. THEY THEY, THEY THEY REACH
OUT TO THE UNBANKED TO TRY TO
BRING MORE PEOPLE INTO THE
FINANCIAL WORLD TO EXTEND THIS
THIS THING THAT MANY OF US JUST
GREW UP AS A COMMONPLACE, YOU
KNOW, I REMEMBER MY MOM WHO WAS
A WIDOW ENCOURAGING ME TO OPEN
UP AN ACCOUNT. UM AND YOU KNOW,
CREDIT UNIONS AND IT WAS OUT OF
CREDIT UNION AND, YOU KNOW,
CREDIT UNIONS DO HAVE A HAVE A
HAVE A MISSION OF SERVING THEIR
MEMBERS. UM CAN I ASK A COUPLE
QUESTIONS TO SOME OF THE FOLKS
WHO PRESENTED IF THE GENTLEMAN
FROM THE CONSUMER FEDERATION CAN
COME UP FIRST? I HAVE JUST ONE
QUESTION FOR YOU. WHEN YOU
TALKED ABOUT THE STACKING OF THE
PENALTIES, THE ORDERING THAT'S
JUST NOT LIMITED TO CREDIT
UNIONS. OTHER FINANCIAL
INSTITUTIONS DO THE DO THE BANKS
DO THE SAME THING OR DO CREDIT
ARE THE CREDIT UNIONS? THE ONLY
ONES GUILTY OF THAT? I'M NOT
SAYING THAT THEY'RE THE ONLY
ONES GUILTY OF IT. BUT WHAT
YOU'VE SEEN AGAIN. A LOT OF THIS
IS AT THE NATIONAL LEVEL. YOU'VE
SEEN A LOT OF THE LARGER
FINANCIAL INSTITUTIONS.
FEDERALLY CHARTERED BANKS, FOR
EXAMPLE, SIGNIFICANTLY LOWER
THEY, UH OVERDRAFT AND NSF FEES.
UM, ORDERING UM, IS TOUGH. OR
EVEN THE REGULATORS. TO FIND
BECAUSE THEN YOU GET INTO A VERY
TECHNICAL CONVERSATION ABOUT THE
TIMING OF TRANSACTIONS AND
THINGS LIKE THAT. BUT WE KNOW
AND WE èC F èC WAS ONE OF 142
GROUPS THAT JUST SIGNED A LETTER
EARLIER THIS WEEK INTO NATIONAL
AND STATE GROUPS INTO THE èC FP
VÆ REGARDING THE PENDING RULE
THERE, THE PROPOSED RULE THERE
ABOUT IT, I WOULD LOVE TO SEE
UH, IF IT'S POSSIBLE SOMETHING
BE DONE ON ORDERING, BUT I DON'T
WANNA GET AHEAD OF SENATOR
BRADFORD. BECAUSE THIS IS NOT IN
HIS BILL. I JUST WANTED TO POINT
OUT THAT IT'S A WAY THAT'S BEING
USED RIGHT NOW TO MAXIMIZE
REVENUE. FROM DISPROPORTIONATELY
POOR COMMUNITIES OF COLOR
CONSUMERS. UM BY MISORDERING. I
WOULD SAY THE TRANSACTIONS, BUT
MY POINT IS, THEY'RE NOT THE
ONLY ONES THAT ARE ORDERING
OTHER FINANCIAL INSTITUTIONS.
ORDER BANKS. OTHER FEDERALLY
CHARTERED CREDIT UNIONS, NOT
JUST STATE CHARTERED CREDIT
UNIONS. NÓ, BUT I'LL BE HONEST
WITH YOU, SENATOR I WAS WHEN
THIS REPORT CAME OUT PURSUANT TO
SENATOR LIMON'S BILL, I WAS
SURPRISED TO THE POINT OF BEING
SHOCKED AT THE DISPARITY. AND
EVEN IF YOU ACCOUNT FOR THE
POINT THAT THE CREDIT UNIONS
MAKE, WHICH IS WELL, THERE'S
MORE STATE ARE COMMERCIAL BANKS.
AND EVEN IF YOU ACCOUNT FOR THAT
THERE IS A WILD DISPROPORTIONATE
RESULT IN THAT DATA BETWEEN
CREDIT UNIONS THAT ARE VERY
AGGRESSIVE AND GETTING A LOT OF
REVENUE FROM OVERDRAFT. N S¼ F
VERSUS STATE CHARTERED BANKS.
THANK YOU AND I HAVE QUESTIONS
IF I MAY, MADAM CHAIR IF YOU èC
COME ON UP. UM SO I'LL ASK YOU
SIMILAR QUESTION. DO THE DO THE
FEDERALLY CHARTERED CREDIT
UNIONS DO THE SAME PRACTICE AS
THE STATE CHARTERED CREDIT
UNIONS? THAT'S WHY IN TERMS OF
ORDERING, I MEAN, I BELIEVE
ORDERING IS ACTUALLY A UDP
VIOLATION CURRENTLY, SO I I'M
NOT SURE HOW MUCH OF THAT IS
STILL OCCURRING. AND PERHAPS IT
DID. UM, I KNOW THAT THERE'S A
PRACTICE THAT WAS CALLED
AUTHORIZED POSITIVE. SETTLE
NEGATIVE. UH, THAT èC F PB
ISSUED A CIRCULAR IN 2022 ON AS
WELL AS THE ATTORNEY GENERAL
JUST ISSUED A LETTER THAT'S
BASICALLY SAYING YOU THOUGHT YOU
HAD $100 IN YOUR ACCOUNT HOW THE
ACCOUNTS CAME IN THEN, UM
TRIGGERED AN OVERDRAFT YOU SPENT
, YOU KNOW $90 AT TARGET AND
WHEN THE CHECK CAME IN, SO IT'S
KIND OF LIKE THE ORDERING THING.
UM SO THEY SHOULD NOT BE
PARTAKING IN THAT RIGHT NOW. UM,
IF THEY ARE THEY HAVE, YOU KNOW
THE ANSWER TO FOR THAT, UH, BUT
TO YOUR POINT, SENATOR, I THINK
IS THAT YOU KNOW IT'S STATE
FEDERAL CHARTER. THEY'RE ALL
THEY'RE ALL TREATED VERY EQUALLY
UNDER THE èC FPP RULE, SO
THAT'S MY NEXT QUESTION. SO HOW
MANY WHAT PERCENTAGE OF THE
FINANCIAL INSTITUTIONS WOULD BE
AFFECTED BY THIS BILL? UH, SO WE
HAVE TO USE SOME SOME KIND OF
NATIONAL NUMBERS ON WHO WOULD
THE PRIMARY CHECKING ACCOUNTS OF
BASED ON A FEDERAL RESERVE STUDY
? UM, ABOUT 24.5% USE A CREDIT
UNION AS THEIR PRIMARY CHECKING
ACCOUNT. IN THE STATE. IT'S
ABOUT A 40 3% BREAK TO STATE
VERSUS FEDERAL CHARGE OF 40. 3%
OF THE CREDIT UNIONS IN THE
STATE ARE STATE CHARTERED, SO
THAT WOULD LEAVE US IN THE YOU
KNOW LOW TEENS OF PEOPLE WHO
PRIMARILY USE THE STATE CHARTER
CHECKING ACCOUNT AS THEIR NUMBER
ONE OPTION. SO, UM WE KIND OF
LAYERED THAT OVER SOME, UH UH,
CFPB STUDIES ON WHO OVERDRAFTED
IN THE LAST YEAR AND WE'RE
TALKING ABOUT, YOU KNOW, 2.5 OR
SO PERCENT OF THE HOUSEHOLDS, UM
, IN THE STATE, UH, WOULD
IMPACTED BY THIS BILL IF THEY
OVERDRAFT. IF NOT, THEN IT'S
KIND OF 10 TO 15% OR SO THAT
THAT YOU STATE CHARTERED CREDIT
UNIONS. THE OTHER QUESTION WOULD
BE. SO IF I'M A STATE CHARTERED
CREDIT UNION AND THIS BECOMES
LAW. DOES ANYTHING PRECLUDE ME
FROM THEN SWITCHING TO BECOME A
FEDERAL CHARTERED CREDIT UNION
TO AVOID THIS. NÓ. THERE'S
NOTHING PRECLUDING THAT IT. IT
IS. IT IS A PROCESS IT IS. IT IS
VERY MUCH A PROCESS TO FLIP
ONE'S CHARTER. UM BUT, UH, IT IS
SOMETHING THAT HAS BEEN
CONTEMPLATED AND WILL BE
CONTEMPLATED. ALRIGHT. THANK YOU
APPRECIATE THAT. WHERE WHERE I'M
STRUGGLING IS THERE'S A BIG I
MEAN, I THINK THE HEART AND SOUL
OF WHAT YOU'RE TRYING TO DO IS
EXTREMELY POSITIVE. WHAT I'M
STRUGGLING WITH IS THAT WE'RE
ONLY GOING AFTER A SMALL
PERCENTAGE OF THE MARKET, AND
THEY'RE THE NONPROFIT THEY
CHARTERED. MARKET AND I'M I'M
CONCERNED THAT SOME STATE
CHARTERED CREDIT UNIONS WOULD
JUST BECOME FEDERALLY CHARTERED
TO AVOID HAVING TO DEAL WITH
THIS REGULATION. SO I AS AS
SENATOR CABAL IS. I'M STRUGGLING
WITH THIS BECAUSE TRADITIONALLY,
CREDIT UNIONS ARE NONPROFITS.
THEY'RE TRADITIONALLY THE ONES
REACHING OUT TO THIS COHORT OF
FOLKS AND I DON'T WANT TO HURT.
I DON'T WANT TO HAVE AN
UNINTENTIONAL CONSEQUENCE OF
HURTING THE VERY COHORT OF
PEOPLE THAT WE'RE TRYING TO
BRING INTO FINANCE INSTITUTION.
SO THAT'S THAT'S WHAT I'M
STRUGGLING WITH. SO THANK YOU
FOR BRINGING IT FORWARD, AND I
WOULD ENCOURAGE YOU, UH, I. I
THINK THE BILL IS GONNA GET OUT
OF COMMITTEE TODAY TO WORK WITH
WHICH GOES TO APPROACH NEXT.
WITH THE APPROPRIATIONS CHAIR
WHO CLEARLY UNDERSTANDS THIS.
UH, VERY WELL AND THE CREDIT
UNIONS TO TRY TO FIGURE OUT
SOMETHING THAT IS A LITTLE BIT
MORE BROADER TO AFFECT MORE OF
THE MARKET. AND MAYBE IN A FAIR
WAY. SO ANYWAY, THOSE ARE MY
THOUGHTS, SO THANK YOU, MR
BRADFORD. THANK YOU. AND THEN WE
HAVE VICE CHAIRMAN MILO THANK
YOU VERY MUCH AGAIN. NICE TO
HEAR YOUR VOICE ALMOST BACK.
YESTERDAY. SHE LITERALLY
COULDN'T TALK. UM QUICK RECOVERY
. UH, MY CONCERN IS EXACTLY THE,
UM Dð THE DISPARITY THAT'S
CREATED BETWEEN STATE CHARTERED
AND, UH, A FEDERALLY CHARTERED
AND, UM IT. IT IS A SERVICE THAT
PEOPLE FREELY SIGN UP FOR, AND
IT COULD BE YOUR YOUR PROPOSAL
COULD BE LOOKED AT AS A
RESTRICTION TO THE CUSTOMER. UH
THAT, UH UH COMPROMISES THEIR
ABILITY TO USE THE TOOL AS THEY
MIGHT WANT. WITH REGARD TO THE
ORDERING THING. I'M DOESN'T SEEM
TO BE A CLEAR AGREEMENT AS TO IF
AND HOW THAT WORKS. UM IF UM,
TRANSACTIONS WERE TAKEN
CHRONOLOGICALLY AND IF THE
EARLIER TRANSACTION WHERE THE
LARGER TRANSACTION ONE COULD SAY
IT WAS PICKED BECAUSE IT WAS
LARGER, ANOTHER COULD SAY IT WAS
PICKED BECAUSE IT CAME IN FIRST.
I DON'T KNOW WHICH IT IS CAUSE I
DON'T KNOW THE DATA. I DON'T
KNOW, UH, WHERE IT'S COMING
FROM. SO UM, BUT ON THE POINT OF
NONPROFIT, BY THE WAY, UM,
CREDIT UNIONS ARE NONPROFIT. AND
UH, THAT'S UH, A NICE THING, BUT
I THINK IT'S IMPORTANT TO
REALIZE UH AND I'M ONLY SAYING
THIS BECAUSE FOR PROFIT IS
LOOKED AT IN THE PEJORATIVE FAR
TOO OFTEN. THE AMOUNT OF GROSS
REVENUE. THAT ENDS UP ON THE
BOTTOM BOTTOM LINE OF AN
ENTERPRISE IN THE UNITED STATES
IS LOW SINGLE DIGIT PERCENTAGE
POINTS. SO, TO THE EXTENT THAT A
FOR PROFIT COMPANY, UH, IS
CHARGING SIGNIFICANTLY MORE FOR
THEIR PRODUCT OR THEIR SERVICE
BECAUSE THEIR PROFIT I WOULD
SUBMIT THAT THAT DELTA IS
AWFULLY SMALL, GIVEN WHAT THE
ACTUAL NET PROFIT IS, UM, THAT
DOESN'T DIRECTLY RE RELATE TO
THIS ISSUE, BUT I THINK IT'S
IMPORTANT TO POINT OUT BUT MY
PRIMARY. UH, PROBLEM WITH THIS
IS THE, UH IS IT AFFECTS? UH
HALF OR LESS OF THE CREDIT
UNIONS AND, UH, WOULD SEEM
NUMBER ONE NOT TO BE FAIR AND
NUMBER TWO WOULD PROBABLY
DEPENDING UPON HOW SIGNIFICANT
IT WAS, UH, MIGHT DRIVE THEM TO
CON, UH, FEDERALLY CHARTERED
INSTEAD. AND MY UNDERSTANDING IS
THE FEDERAL GOVERNMENT IS
WORKING ON REGULATIONS THAT
INCLUDE THIS AREA, SO WHY NOT
WAIT FOR THEM AND WE CAN HAVE A
LEVEL PLAYING FIELD AND FOR
THOSE REASONS, I CAN'T SUPPORT
IT. OK? THANK YOU. UM AND I WILL
CHIME IN SEE NÓ NÓ OTHER MEMBER
COMMENTS. UM YOU KNOW, I JUST
WANT TO START OFF BY SAYING THAT
WHEN I AUTHORED THIS REPORT, UM
NEVER DID. I THINK THAT THE
REPORT WOULD FIND WHAT IT FOUND.
SO I WAS VERY SHOCKED. SEE AND
JUST TO BE CLEAR, THE REPORT
ASKED, UM FOR A STEADY ON FEES
FOR ALL UH, CHARTERED, UH,
FINANCIAL INSTITUTIONS,
INCLUDING OTHER INSTITUTIONS
THAT ARE NOT CREDIT UNIONS. SO I
THINK THERE WAS A REAL SURPRISE.
AND PART OF THAT SURPRISE DIDN'T
COME TO ME JUST BECAUSE I SERVE,
UM AS THE CHAIR OF BANKING AND
FINANCE, BUT BECAUSE FOR ME I'VE
HAD A LONG, DECADES LONG
RELATIONSHIP WITH CREDIT UNIONS.
MY PARENTS ARE MEMBERS THERE.
THEY OPENED A BANK ACCOUNT FOR
ME AS A CHILD AT A CREDIT UNION.
I AM STILL A CREDIT UNION, UM,
CUSTOMER AND MY EXPERIENCE HAD
BEEN DIFFERENT. FOR DECADES UP
UNTIL WHAT I SAW THE REPORT
FOUND. AND I SAY THAT BECAUSE IF
YOU THINK I UNDERSTAND THE
CHALLENGES THAT FOLKS ARE
FEELING. UM WHEN YOU KNOW WE
HAVE A HISTORY OF A RELATIONSHIP
WITH AN ENTITY THAT IS VERY
DIFFERENT WITH THE WHAT THE DATA
SAYS. BUT I ALSO THINK JUST
BECAUSE OF THAT RELATIONSHIP AND
MY OWN EXPERIENCE. UM, WHICH,
WHICH HAS BEEN A POSITIVE
EXPERIENCE DOESN'T MEAN THAT WE
IGNORE WHAT THE REPORT SAID. AND
THE REPORT LOOKED AT ALL THE
BANKS. AND IT SPECIFICALLY
CALLED OUT CREDIT UNIONS, AND
THAT WAS THE SHOCK. UM AND I
THINK THAT YOU KNOW, SENATOR
BRADFORD. THIS ISN'T EASY, BUT
YOU'RE THE ONLY SENATOR. THAT IS
BRINGING SOMETHING FORWARD TO A
PROBLEM THAT WAS DISCLOSED, SO I
WANT TO RECOGNIZE YOU FOR DOING
THAT, AND ALSO SAY THAT IF WE
DON'T BELIEVE THAT THIS IS THE
SOLUTION OR THE RIGHT ANSWER NÓ
ONE ELSE. EXCEPT SENATOR
BRADFORD HAS COME FORWARD WITH
AN IDEA. AND AN IDEA THAT WAS
GENERATED, UM FROM READING THIS
REPORT AND TRYING TO FIGURE OUT
WHAT DO YOU DO? HOW DO YOU KEEP
THEM OPEN BY GIVING THEM FIVE
DAYS BEFORE THE FEE IS CHARGED.
IF THAT'S NOT THE RIGHT
SOLUTION. THEN WHAT IS IT THREE
DAYS? IS IT MORE? I DON'T. I
MEAN, I DON'T KNOW. AND I THINK
THAT, UM YOU KNOW, I ALSO HAVE
NOT SEEN ANY PROPOSED AMENDMENTS
TO THIS BILL FROM THE OPPOSITION
. UH SO I AM LEFT REALLY WITH
THE ONE SENATOR WHO IS
ADDRESSING A PROBLEM. UM AND I
THINK IT'S A PROBLEM THAT NEEDS
TO BE ADDRESSED. THERE ARE 100
AND 14 CREDIT UNIONS. 35 HAVE 5%
OR MORE THAT ARE THAT ARE MAKING
5% OR MORE ON THESE FEES. THE
ONE THAT MADE THE MOST 1 MAY $24
MILLION. THAT HURT TO READ. FOR
ONE ENTITY TO MAKE $24 MILLION
OFF OF THIS FEES. THAT'S ROUGH.
THAT'S IN. YOU KNOW THAT THAT
THAT WAS JUST ROUGH TO READ AND
YOU'RE KIND OF LOOKING AT
YOURSELF LIKE WHAT DO YOU DO?
BUT IT DOESN'T MEAN THAT ALL 114
ARE THERE. SO I THINK THAT THIS
IS WHAT WE'RE TRYING TO GRAPPLE
WITH. UM MEMBERS HAVE BROUGHT UP
THE FACT THAT YOU KNOW, THE
FEDERAL GOVERNMENT IS LOOKING AT
THIS. THE FEDERAL GOVERNMENT IS
LOOKING AT THIS. UM SO WE'RE NOT
ALONE IN CALIFORNIA TRYING TO
ADDRESS THIS. THE FEDS ALSO HAVE
, YOU KNOW, HAVE MADE IT VERY
CLEAR THAT THEY'RE TRYING TO
LOOK AT IT. AND IT IS WHY WE'VE
ACTUALLY SEEN CHANGE OVER THE
LAST DECADE WITH A LOT OF
FINANCIAL INSTITUTIONS CHARTERED
HERE OR FEDERALLY. THEY'VE
CHANGED. YOU KNOW THEY'VE MADE
CHANGES ON THEIR OWN. UM BUT I
WANNA ALSO RECOGNIZE THAT WHAT'S
BEING PROPOSED? CURRENTLY ONLY
TWO OUT OF THE 114 CREDIT UNIONS
WOULD HAVE TO COMPLY TO WHAT'S
HAPPENING AT THE FEDERAL LEVEL
WITH THE $10 BILLION THRESHOLD.
MAYBE WE'LL GET ANOTHER TWO MORE
SO THAT WOULD BE FOUR OUT OF 100
AND 14. IT STILL LEAVES US TO
THINK ABOUT WHAT DO WE CHANGE OR
IS THERE SOMETHING THAT NEEDS TO
BE CHANGED FOR THE REST? THE
OTHER 110? UM AND I DO THINK ALL
CREDIT UNIONS ARE DIFFERENT. UM,
YOU KNOW, THEY'RE NOT ALL THE
SAME SIZE SO I THIS IS YOU, YOU
KNOW A CHALLENGING ISSUE. UM, I
AM SUPPORTIVE OF THE BILL. UM I
THINK THE ANALYSIS LAYS OUT A
LOT OF, UM, PERSPECTIVES AND A
LOT OF, UM, INFORMATION THAT I
THINK IS REALLY HELPFUL. UM, BUT
I JUST WANNA EXPLAIN ALSO WHY I
AM SUPPORTIVE. AND RECOGNIZE WHY
THIS IS HARD FOR FOLKS, BUT, UM,
IN THE END, I UNDERSTAND THAT
WHILE I'M SHOCKED AT WHAT THE
REPORT FOUND BECAUSE THE REPORT
NEVER SAID GO, JUST LOOK AT
CREDIT UNIONS AND SAID, LOOK AT
EVERYTHING. UM I YOU KNOW, I. I
VERY MUCH HAVE HAD A GREAT
RELATIONSHIP. UM WITH THE CREDIT
UNION THAT I'M A PART OF, AND,
UH IT STILL NEEDS TO BE
ADDRESSED. SO I ENCOURAGE
MEMBERS. YOU KNOW THE OPPOSITION
IF THERE ARE BETTER SOLUTIONS,
UM, I THINK BRING THEM FORWARD.
BUT THIS MOMENT, SENATOR
BRADFORD IS THE ONLY SENATOR
BRINGING FORWARD A SOLUTION TO
THIS. SO WITH THAT, I WILL ALLOW
YOU TO CLOSE. THANK YOU, MADAM
CHAIR AND I WANNA THANK MY
COLLEAGUES FOR THEIR
CONVERSATION AS REGARDS AND
THEIR CONCERNS. AND I STAND
HERE. I DIDN'T COME TO THIS
ISSUE. READILY OR EASILY. I
CHEERED BANKING IN THE SENATE
FOR TWO YEARS, AND THIS WAS
SOMETHING WE LOOKED AT, AND NOT
ONLY HERE FOR CREDIT UNIONS, BUT
AS WE DEALT WITH ONLINE LENDING,
PAYDAY LENDING, WE DEALT WITH
ALL THESE EXORBITANT FEES THAT
HAVE BEEN CHARGED TO CONSUMERS
AND MAINLY PORK CONSUMERS, AND
WE MOVE FORWARD. IN THAT MATTER.
I'M A MEMBER OF A CREDIT UNION.
AND I HAVE AMAZING CREDIT UNIONS
IN MY DISTRICT, SO THIS IS NOT
ABOUT HURTING OR CLOSING CREDIT
UNIONS. THIS BILL SIMPLY STATES
AND IT DOESN'T TAKE AWAY
OVERDRAFT PROTECTIONS. ALL WE'RE
TRYING TO DO IS LIMIT THE NUMBER
OF FEES YOU CAN CHARGE IN A
MONTH. THAT'S WHAT WE'RE TRYING
TO SAY. AND UM, STILL, LIKE YOU
SAY OVERDRAFT CAN STILL HAPPEN,
AND WE'RE NOT EVEN DEALING WITH
THE DOLLAR AMOUNT. YOU KNOW,
WE'RE JUST TRYING TO SAY THE
FREQUENCY AND GIVING THAT
CONSUMER A GRACE PERIOD BEFORE
THAT FEE IS CHARGED SO WHETHER
IT'S FIVE DAYS AS A CHAIR STATED
OR WHETHER IT'S THREE DAYS WE
JUST THINK CONSUMERS SOME NEED A
OPPORTUNITY TO MAKE CORRECTIONS
IF YOU'RE LIVING FROM PAYCHECK
TO PAYCHECK, AND THAT'S ALL
WE'RE TRYING TO DO. WE'RE NOT
TRYING TO HURT THESE
INSTITUTIONS BECAUSE THEY
WOULDN'T EXIST IF THEY WEREN'T
NEEDED. JUST LIKE WE HAVE THE
ONLINE LENDERS. WE HAVE THE
PAYDAY LENDERS. WE THEY HAVE
EMERGED BECAUSE OUR TRADITIONAL
BANKING INSTITUTIONS HAS WALKED
AWAY FROM THESE CUSTOMERS. MY
FIRST BILL IN THE LEGISLATURE IN
2010 WAS DEALING WITH UNBANKED
CALIFORNIANS AND I WAS BLOWN
AWAY AT THE NUMBER OF UNBANKED
CALIFORNIANS THAT EXISTED. IN
2009. AND THE NUMBER HASN'T
DECREASED AND HAS INCREASED
SINCE THEN. AND SO AGAIN, WE
WANT INSTITUTIONS LIKE THE
CREDIT UNION TO BE AROUND TO
PROVIDE THOSE SERVICES. BUT WE
KNOW OUR LARGER FINANCIAL
INSTITUTIONS ARE CHARGING THESE
FEES, TOO. BUT THEY'RE WALKING
AWAY FROM MANY OF THESE
CUSTOMERS WHO NEED THESE
SERVICES. SO WE'RE TRYING TO
CREATE A BALANCE HERE. THIS IS
WHAT WE'RE HOPING TO DO AGAIN,
NOT TO ELIMINATE THE OVERDRAFT
PROTECTIONS THAT CONSUMERS NEED
BUT TO LIMIT THE NUMBER OF FEES
AND WE'RE NOT EVEN DEALING WITH
THE AMOUNT I WOULD LOVE TO
REDUCE THE AMOUNT I WOULD LOVE
TO SAY A SET DOLLAR FEE, SO AS
THIS MOVES FORWARD, IF THAT'S
THE YOU KNOW, THE COMPROMISE
THAT WE COME TO WILL BE WILLING
TO CROSS THAT BRIDGE AT THAT
TIME, BUT WHAT WE HAVE RIGHT NOW
IS A BILL THAT CLEARLY JUST
STATES NÓ MORE THAN THREE DRAFTS
IN A MONTH. IN GIVING THAT
CONSUMER FIVE DAYS UH TO WRITE
THAT, UH UH, MAKE COAL ON THIS
ACCOUNT, OR OR THE OVER OVERDUE
CHARGES THAT, UH, THEY WERE
LACKING. SO ON THAT NOTE, I
WOULD RESPECTFULLY ASK FOR OUR
VOTE. THANK YOU. WE WILL GO
AHEAD AND CALL THE ROLL. OH, AND
SORRY. THE MOTION IS DUE PASS,
BUT FIRST RE REFER TO THE
COMMITTEE ON APPROPRIATIONS.
SORRY. LET ME READ THAT AGAIN DO
PASS, BUT FIRST AMEND AND
REREFER TO THE COMMITTEE ON
APPROPRIATIONS. MOTION IS DUE
PASS AS AMENDED TO
APPROPRIATIONS COMMITTEE.
SENATOR LIMONE LIONE I NILO NELO
NÓ BRADFORD BRADFORD, I
CABALLERO CABALLERO, I MENJIVAR
WHEN? WHEN NÓ PORTANTINO. ALL
RIGHT. THAT BILL WILL BE PUT ON
CALL. THANK YOU. THANK YOU. AND
WITH THAT WE WILL CALL ABSENT
MEMBERS AND WE WILL, UH GO
THROUGH THE ROLE AGAIN TO DO ADD
ONS. SO WE WILL START. WITH THE
CONSENT CALENDAR ON CONSENT WITH
SENATE BILL 985. CHAIR VOTING. I
SENATOR CABALLERO. CABALLERO. I
BEAR WHEN I YEAH. ALL RIGHT,
LEAVE THE CALL. OPEN FOR THAT
NEXT. WE HAVE, UM SENATE BILL
1198, SENATOR ROSS. THE CHAIR IS
VOTING I, SENATOR CABALLERO
CABALLERO. I MENJIVAR WHEN I
HAVE SEX. ALL RIGHT. WE'LL LEAVE
THE BILL ON CALL, AND I THINK
EVERYBODY VOTED ON SENATE BILL
1075. SO WE WILL JUST WAIT FOR
ABSENT MEMBERS. THANK YOU.
ALRIGHT. WE WILL GO AHEAD AND
CALL THE ROLL. FIRST. WE WILL
START WITH CONSENT. SENATE BILL
985. CHAIR VOTING I, SENATOR
MINAR. MEN DO OUR I RIGHT SO
THAT BILL HAS SEVEN VOTES IT IS
OUT. NEXT IS SENATE BILL 1198,
SENATOR ROTH. MOTION IS DUE PASS
AS AMENDED TO JUDICIARY WITH THE
CHAIR VOTING I, SENATOR MIND
MANJAR EYE HAS SEVEN. ALL RIGHT.
THAT BILL IS OUT WITH SEVEN
VOTES, AND THE NEXT ONE IS
SENATE BILL. UH 1075 BRADFORD
MOTION IS DUE PASS AS AMENDED TO
APPROPRIATIONS COMMITTEE CHAIR
VOTING I, SENATOR MANAR MANJAR
IY. IT HAS FIVE ALRIGHT, THAT
BILL IS OUT WITH A FIVE FOUR
VOTES, AND, UH TO AN OPPOSITION.
AND ONE NOT VOTING. ALL RIGHT
WITH THAT WE WILL GO AHEAD AND
ADJOURN.