Existing law establishes the Department of Financial Protection and Innovation, which is under the direction of the Commissioner of Financial Protection and Innovation. Existing law makes the department responsible for administering various laws relating to financial institutions, including banks and credit unions. Existing law, until January 1, 2030, establishes the Financial Empowerment Fund, and provides that moneys in the fund are continuously appropriated to the commissioner for allocation to fund financial education and financial empowerment programs and services for at-risk populations in California, as specified.

This bill would establish the California Community Reinvestment Act, and would require a covered financial institution, as defined, to have a continuing and affirmative obligation to meet the financial services needs of the communities, including low- and moderate-income communities and communities of color, in which the covered financial institution conducts substantial business, as specified. The bill would require the commissioner to assess the record of each covered financial institution in satisfying this obligation no less than once every 3 years, as specified. After each assessment, the bill would require the commissioner to assign one of 5 possible ratings to describe how the covered financial institution is meeting its community financial services needs, and to prepare a specified written evaluation of the covered financial institution’s record of performance. The bill would authorize the commissioner to consider this record of performance when considering an application for, among other things, the establishment of a branch or the relocation of a main office. The bill would also prohibit a covered financial institution with certain ratings from receiving state funds for deposit or being awarded a state contract to provide financial services.

This bill would also authorize the commissioner to conduct specified investigations into covered financial institutions for compliance with the act. The bill would also authorize the commissioner to examine, in consultation with state and federal regulators, covered financial institutions for their compliance with specified state and federal laws.

This bill would establish the Community Reinvestment Fund within the State Treasury, and would make moneys in the fund available, upon appropriation by the Legislature, to the commissioner for purposes of administering these provisions. The bill would authorize the commissioner to issue an administrative penalty of up to $100,000 to a covered financial institution that regularly fails to meet its obligations under the act, and would require those penalties to be deposited in the fund.