STAND. COM. REP. NO.2753
RE: S.B. No. 2294
Honorable Robert Bunda
President of the Senate
Twenty-First State Legislature
Regular Session of 2002
State of Hawaii
Your Committee on Judiciary, to which was referred S.B. No. 2294, S.D. 1, entitled:
"A BILL FOR AN ACT RELATING TO FINANCIAL SERVICES LOAN COMPANIES,"
begs leave to report as follows:
The purpose of this measure is to recodify the laws relating to financial services loan companies.
Testimony in support of this measure was received from the Commissioner of Financial Institutions (Commissioner), and the Hawaii Financial Services Loan Association (Association).
This measure repeals article 9 of the code of financial institutions relating to financial services loan companies (FSLCs) and replaces it with two new articles relating to depository FSLCs and nondepository FSLCs, respectively. The proposed new laws, among other things:
(1) Provide depository FSLCs with greater flexibility in their operations, similar to that enjoyed by banks, savings banks, and savings and loan associations;
(2) Establish a 24% usury ceiling on loans made by depository FSLCs, the same as that applicable to banks, savings banks, and savings and loan associations, and a 31.66% annual percentage rate ceiling on certain simple interest loans made by nondepository FSLCs;
(3) Repeal the authority of FSLCs to make precomputed loans, but grandfather in existing precomputed loans;
(4) Limit or prohibit certain fees and charges that may be assessed against consumers; and
(5) Establish recordkeeping and reporting requirements for nondepository FSLCs.
Your Committee has amended this measure as follows:
(1) On the recommendation of the Association, to renumber the articles from 9 to 9A for depository FSLCS and from 9A to 9B for nondepository FSLCS, for clarity; and
(2) On the recommendation of the Commissioner, to place quotation marks on the words "finance charge" and "annual percentage rate" in the interest rate section of article 9A and 9B.
As affirmed by the record of votes of the members of your Committee on Judiciary that is attached to this report, your Committee is in accord with the intent and purpose of S.B. No. 2294, S.D. 1, as amended herein, and recommends that it pass Third Reading in the form attached hereto as S.B. No. 2294, S.D. 2.
Respectfully submitted on behalf of the members of the Committee on Judiciary,
BRIAN KANNO, Chair