Spring 2006-06 Bill to make banking powers more flexible
Bill to make banking powers more flexible
Senate Bill 814, if enacted into law, would tie the powers of Puerto Rican banks to those of national banks.
Although the Puerto Rico Bank Act and the National Bank Act follow the same pattern, the latter has tended to evolve faster, due in part to sheer numbers and the Office of the Comptroller of the Currency’s active public ruling program. The recent Comptroller ruling that allows a national bank to own a hotel under certain circumstances (ruling that, by the way, is under attack at press time) comes to mind. Time and again local banks must look to the federal system for guidance on what they are and are not authorized to do under the law.
Senate Bill 814 proposes to adopt a wild card provision (sort of) in Puerto Rico. It moves to amend the local Bank Act in order to authorize local banks to engage in any activity authorized to national banks, either expressly by the National Bank Act, or by ruling of the Office of the Comptroller.
It cuts both ways, though, as such powers would be subject to the same limitations and conditions imposed to national banks. And there is more:
licensing requirements would not be affected;
in order to use the expanded powers a bank would have to notify so to the Commissioner of Financial Institutions not later than 30 days from the effective date; and
the Commissioner could condition the activity in order to “assure the economic health of the bank.”
The bank’s notice to the commissioner must be accompanied by a copy of the National Bank Act or Comptroller ruling allowing the activity in question.
The bill’s statement of motives mentions that a large number of states have incorporated such wild card riders in their banking laws.
© 2006 Goldman Antonetti & Cordóva, LLC