STAND. COM. REP. 2231

Honolulu, Hawaii

, 2004

RE: S.B. No. 2904

S.D. 1

 

 

Honorable Robert Bunda

President of the Senate

Twenty-Second State Legislature

Regular Session of 2004

State of Hawaii

Sir:

Your Committee on Commerce, Consumer Protection and Housing, to which was referred S.B. No. 2904 entitled:

"A BILL FOR AN ACT RELATING TO ESCROW DEPOSITORIES,"

begs leave to report as follows:

The purpose of this measure is to update the laws governing the licensing and regulation of escrow depositories.

The Department of Commerce and Consumer Affairs testified in support of the measure. Hawaii Resort Escrow, Inc. submitted comments on the measure.

This measure comprehensively updates the laws governing the licensing and regulation of escrow depositories which were enacted over thirty years ago. Among other things, this measure:

(1) Allows limited liability companies to be licensed as escrow depositories;

(2) Strengthens confidentiality requirements, consistent with standards applicable to state-regulated financial institutions;

(3) Authorizes criminal background checks and the fingerprinting of escrow depository officers and directors;

(4) Increases bonding requirements;

(5) Requires the disclosure of potential risks to customers of escrow depositories that are eligible to deposit escrow funds in sweep accounts;

(6) Establishes procedures for receivership; and

(7) Simplifies the process for voluntary termination of an escrow depository.

Your Committee finds that the amendments proposed in this measure reflect current industry practices, reduce the regulatory burden on businesses, and provide for greater regulatory flexibility while ensuring consumer protection.

Your Committee has amended this measure for purposes of clarity and to reflect preferred drafting style, and to specify that the appropriation section shall take effect on July 1, 2004.

As affirmed by the record of votes of the members of your Committee on Commerce, Consumer Protection and Housing that is attached to this report, your Committee is in accord with the intent and purpose of S.B. No. 2904, as amended herein, and recommends that it pass Second Reading in the form attached hereto as S.B. No. 2904, S.D. 1, and be referred to the Committee on Ways and Means.

Respectfully submitted on behalf of the members of the Committee on Commerce, Consumer Protection and Housing,

____________________________

RON MENOR, Chair