HB154: establishing a department of financial services.

HB 154-FN - AS INTRODUCED

2003 SESSION

03-0320

06/01

HOUSE BILL 154-FN

AN ACT establishing a department of financial services.

SPONSORS: Rep. Elliott, Hills 42; Rep. Dionne, Hills 42

COMMITTEE: Executive Departments and Administration

ANALYSIS

This bill merges the banking and insurance departments to create a new department of financial services and sets up a commission to review the statutory changes necessary to accomplish the merger.

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Explanation: Matter added to current law appears in bold italics.

Matter removed from current law appears [in brackets and struckthrough.]

Matter which is either (a) all new or (b) repealed and reenacted appears in regular type.

03-0320

06/01

STATE OF NEW HAMPSHIRE

In the Year of Our Lord Two Thousand Three

AN ACT establishing a department of financial services.

Be it Enacted by the Senate and House of Representatives in General Court convened:

1 Statement of Purpose.

I. The general court finds that the financial marketplace is currently regulated by the banking department and the insurance department, 2 independent state agencies lacking common focus.

II. In order to provide unified oversight of the financial market, the general court hereby creates a department of financial services. The general court hereby intends to foster closer communication among officials responsible for the regulation of financial instruments and institutions and to strengthen the role of state government in encouraging a sound state economy and a financial climate free from unreasonable risk for New Hampshire citizens.

2 Department of Financial Services Established. On July 1, 2004, the banking department and the insurance department shall be abolished and a department of financial services shall be established. The powers, duties, functions, responsibilities, programs, operations, and funding of the banking and insurance departments shall be transferred to the department of financial services and exercised and performed by the commissioner.

3 Commissioner and Assistant Commissioner. The governor, with the consent of the council, shall appoint as the first commissioner of the department of financial services either the bank commissioner or the insurance commissioner who is in office at the time the department is created. The commissioner shall serve as the commissioner of the department of financial services for the remainder of his or her original term as either bank commissioner or insurance commissioner. The governor, with the consent of the council, shall appoint the person not selected as commissioner of the department of financial services to be the assistant commissioner of the department for the remainder of his or her original term as either bank or insurance commissioner. The commissioner and assistant commissioner shall be unclassified employees and shall continue to be paid at the same salary specified in RSA 94:1-a, I in effect on June 30, 2004 until the end of each of their original terms of office as either bank or insurance commissioner. Subsequent commissioners shall be appointed in accordance with the provisions of RSA 21-G:8.

4 Division Directors. The commissioner shall nominate a director, division of insurance, and a director, division of banks, for appointment by the governor, with the consent of the council. Division directors shall serve at the pleasure of the commissioner. The directors of the division shall be qualified by reason of professional competency, education, and experience.

5 Employees. All employees of the banking department and the insurance department shall be transferred to the department of financial services to the extent the commissioner of the department of financial services deems necessary to continue to carry out the functions of the former banking and insurance departments and shall, insofar as practicable and necessary, continue to perform the duties they heretofore performed, at the same rate of pay.

6 Commission Established. A commission is hereby established to examine the current insurance and banking laws and recommend all necessary legislation to allow the merger of the banking department and insurance department to take place under the provisions of sections 1-5 of this act.

7 Membership and Compensation.

I. The members of the commission shall be as follows:

(a) Three members of the house of representatives, appointed by the speaker of the house from the commerce committee.

(b) Three members of the senate, appointed by the president of the senate from the banks and insurance committees.

(c) Two members of the banking department, appointed by the bank commissioner.

(d) Two members of the insurance department, appointed by the insurance commissioner.

(e) The attorney general, or designee.

(f) The state treasurer, or designee.

II. Legislative members of the commission shall receive mileage at the legislative rate when attending to the duties of the commission.

8 Duties. The commission shall examine state law and make legislative recommendations necessary to accomplish the merger of the insurance and banking departments, and shall study the personnel structure of both departments to determine which positions are necessary to carry out the duties of the new department of financial services. The commission shall propose any legislation on or before January 1, 2004.

9 Chairperson; Meeting. The members of the commission shall elect a chairperson from among the legislative members. The first meeting of the commission shall be called by the first-named house member. The first meeting of the commission shall be held within 45 days of the effective date of this section.

10 Report. The commission shall report its findings and any recommendations for proposed legislation to the speaker of the house of representatives, the senate president, the house clerk, the senate clerk, the governor, and the state library on or before January 1, 2004.

11 Effective Date.

I. Sections 6-10 of this act shall take effect upon its passage.

II. The remainder of this act shall take effect July 1, 2004.

LBAO

03-0320

1/2/03

HB 154-FN - FISCAL NOTE

AN ACT establishing a department of financial services.

FISCAL IMPACT:

The Banking and Insurance Departments have determined this bill will increase state restricted revenues and expenditures by an indeterminable amount in FY 2005 and each year thereafter. There is no fiscal impact on county and local revenue or expenditures.

METHODOLOGY:

The Departments state that the commission identified in this bill will begin meeting upon passage of the bill, but the Departments will not experience a fiscal impact until FY 2005, when the new Department of Financial Services is established. This fiscal impact is indeterminable, however, because the Departments cannot determine the fiscal impact of the proposed commission's recommendations. Expenditures will increase for the new positions identified in the bill; a Director for Insurance and a Director for Banking. These new positions will report to the Commissioner and Assistant Commissioner of the Department of Financial Services and be filled by the present banking and insurance commissioners. Any expenditure of the Department of Financial Services will pass through to insurance companies and banks doing business in the state, as is the current practice of the Bank and Insurance Departments.