THE VICE CHAIR AND CHAIR AND
BEING THAT WE DON'T HAVE A
COMMITTEE, BUT WE CAN START AS A
SUBCOMMITTEE. SO WELCOME TO THE
ASSEMBLY BANKING AND FINANCE
COMMITTEE. WHETHER YOU ARE HERE
IN PERSON OR WHETHER YOU'RE
WATCHING VIRTUALLY, I AM
GRATEFUL THAT YOU HAVE JOINED US
RIGHT HERE IN ROOM FOUR, FOUR,
FOUR. I DO WANT TO NOTE THAT WE
ARE ACCEPTING WRITTEN TESTIMONY
THROUGH THE POSITION LETTER
PORTAL ON THE COMMITTEE'S
WEBSITE. WE DO HAVE NINE BILLS
ON THE AGENDA TODAY NÓ CONSENT
CALENDARS. SO WE WILL BE
LIMITING TESTIMONY TO TWO
MINUTES FOR EACH PRIMARY WITNESS
AND ADDITIONAL WITNESSES WILL
SIMPLY STATE THEIR NAME,
ORGANIZATION, AND POSITION WITH
THAT, IT IS TIME TO MOVE ON TO
THE HEARING AND WE HAVE AN
AUTHOR HERE. FILE ITEM NUMBER
TWO AB 2424 ASSEMBLY MEMBER
SCHIAVO AND THE RECOMMENDATION
ON FOR THIS IS DO PASS, AS
AMENDED, TO THE COMMITTEE ON
JUDICIARY AND WOULD LIKE TO
INVITE THE MEMBER UP TO THE DESK
TO PRESENT HER BILL. THAT WOULD
BE AB 2424 ASSEMBLY MEMBER
SCHIAVO, YOU'RE WELCOME TO COME
AND PRESENT WHEN YOU ARE READY.
GO AHEAD AND BEGIN. HELLO. THANK
YOU, MR. CHAIR. AND MEMBERS
TRICKLING IN, VERY MUCH
APPRECIATE. I FIRST, I WANT TO
THANK COMMITTEE STAFF FOR THEIR
WORK ON AB 2424 AND, MAKE CLEAR
THAT WE'LL BE TAKING THE
AMENDMENTS THAT WERE
RECOMMENDED, AND THANK YOU FOR
THE THOUGHTFUL PROCESS. WE
CALIFORNIA'S EXISTING
FORECLOSURE PROCESS IS, IN TOO
MANY INSTANCES, GROSSLY UNFAIR.
AS WE'LL EXPLAIN, THE CURRENT
PROCESS OBSCURES AND LEGITIMIZES
THE LARGE SCALE EXTRACTION OF
BILLIONS OF DOLLARS OF WEALTH
FROM LOW INCOME COMMUNITIES.
WHEN A MORTGAGER CAN'T PAY BACK
THEIR MORTGAGE LOAN, THE LENDER
IS ALLOWED TO SELL THE PROPERTY
AT ANY AUCTION. THE LENDER TAKES
BACK THE LOANS REMAINING.
BALANCE AND THE HOMEOWNER
RECEIVES SURPLUS FUNDS. IF THERE
ARE ANY. UNDER THIS PROCESS, THE
HOMEOWNER OFTEN LOSES TENS OR
HUNDREDS OF THOUSANDS OF DOLLARS
OF ACCRUED HOME EQUITY BECAUSE
OF THE AUCTION PROCESS. ON THE
OTHER SIDE OF THE LEDGER,
WEALTHY OR CORPORATE? SOMETIMES
ALL CASH INVESTORS DÍAS, BENEFIT
FROM THESE UNFAIR AND BELOW
MARKET SALE PROCESSES BY
ACQUIRING PROPERTIES AT A
BARGAIN RATE FOR EVERY DOLLAR
THE INVESTOR PURCHASES, THE
INVESTOR PURCHASER SAVES AND
BUYING THE PROPERTY THE
HOMEOWNER LOSES THAT IN EQUITY
FORECLOSED HOMEOWNERS ARE OFTEN
LOW INCOME ELDERLY IMMIGRANT OR
DISABLED. FREQUENTLY THE HOME IS
THEIR ONLY ASSET AND THE HOME
EQUITY IS THEIR LIFETIME SAVINGS
. THAT CUMULATIVE EFFECT OF
TAKING BILLIONS OF DOLLARS OF
HOME EQUITY FROM THESE CONSUMERS
PUTS ONCE HOUSING STABLE BUT LOW
INCOME COMMUNITIES AT RISK OF
HOMELESSNESS AND INHIBITS
ECONOMIC MOBILITY. AB 2424 WILL
REQUIRE FORECLOSING LENDERS TO
POSTPONE A FORECLOSURE SALE IF
THE HOMEOWNER PROVIDES THE
LENDER WITH A LISTING AGREEMENT
FOR SALE OF THE PROPERTY. THIS
WOULD ALLOW THE HOMEOWNER THE
OPPORTUNITY TO MAXIMIZE THE SALE
VALUE OF THEIR PROPERTY, WHILE
STILL ENSURING THE LENDER IS
MADE WHOLE. AB 2424 WOULD ALSO
SET A MINIMUM BID REQUIREMENT
FOR THE FIRST ATTEMPTED
FORECLOSURE AUCTION, SO THE
SECURED PROPERTY WILL NOT BE
SOLD BELOW A CERTAIN THRESHOLD,
CALCULATING IT 75% OF THE
PROPERTY'S MARKET VALUE. THIS
PROCESS WOULD ALLOW THE
HOMEOWNER TO THE OPPORTUNITY TO
RECOVER MORE OF THEIR EQUITY
THROUGH THE FORECLOSURE SALE
PROCESS, RETAINING ACCUMULATED
WEALTH IN CALIFORNIA'S MOST
VULNERABLE FAMILIES AND
COMMUNITIES ESTIMATES THAT
APPROXIMATELY 65,000 FORECLOSURE
SALES TOOK PLACE IN CALIFORNIA
DURING THE FOUR YEAR PERIOD FROM
2017 TO 2020, AND HAD ESTIMATED
AVERAGE LOSSES OF $115,000 IN
EQUITY FOR EACH. SADLY IN TOO
MANY REAL WORLD SOLUTIONS, 120
DAYS OF FAILURE TO MAKE A
MORTGAGE PAYMENT IS NOT ENOUGH
TIME TO CORRECT THE SITUATION.
THÀNH. FOR EXAMPLE, AN INSTANCE
OF DIVORCE OR THE PASSING OF AN
OWNER FOUR MONTHS JUST ISN'T
SUFFICIENT. SUFFICIENT FOR THE
MARITAL OR DECEASED ESTATE TO
MAKE ARRANGEMENT CGRTS TO EITHER
BRING THE LOAN CURRENT OR
OTHERWISE SELL THE PROPERTY FOR
FAIR MARKET VALUE. AB 2424
DOESN'T SEEK TO PREVENT THE
MORTGAGE HOLDER FROM GETTING
REPAID. IT ONLY SEEKS TO BALANCE
THE EQUITIES SO THAT BOTH THE
BANK AND THE OWNERS OF THE
PROPERTY GET A FAIR SHARE OF
THEIR INTEREST AND VALUE OF THE
HOME. HERE TODAY ARE ROBERT
HARRELL AND CECIL VOSSLER, WITH
CONSUMER FEDERATION OF
CALIFORNIA TO TESTIFY AS WELL.
PLEASE GO AHEAD. GOOD AFTERNOON,
MR. CHAIRMAN, AND MEMBERS.
ROBERT HARRELL I'M THE EXECUTIVE
DIRECTOR OF THE CONSUMER
FEDERATION OF CALIFORNIA. WE'RE
THE SPONSOR OF THE MEASURE. IN A
MOMENT, I'LL HAND IT OVER TO
SILVERSTER, AN ATTORNEY IN
PRIVATE PRACTICE WHO CAN TELL
SOME SOME CONTEXT WHAT I'D LIKE
TO DO IF. WOULD YOU MIND IF I
INTERRUPTED YOU? NOT AT ALL. WE
HAVE TO SEIZE THE MOMENT OF A
QUORUM. INDEED AND SO IF YOU'LL
GIVE US THE LIBERTY TO DO THAT,
MADAM SECRETARY, WILL YOU CALL
ROLL? GRAYSON HERE. CHEN. HERE.
CERVANTES DIXON. MIKE. FONG.
BRIAN MAIENSCHEIN. PETRIE-NORRIS
BLANCA. RUBIO HERE. SORIA AND WE
HAVE ESTABLISHED A QUORUM. SO
PLEASE. YEAH. WE'RE CELEBRATING.
THANK YOU, MR. CHAIRMAN. SO
WE'RE THE SPONSOR OF THE MEASURE
. WE'VE BEEN WORKING ON THIS
ISSUE FOR A FEW YEARS NOW, ON
AND OFF. AND WHAT YOU SEE FAR
TOO OFTEN ARE PEOPLE WHO, PAID
THEIR MORTGAGE RELIGIOUSLY FOR
DECADES, IN SOME CASES LITERALLY
DECADES. GETTING CLOSE ISH TO
BEING ABLE TO PAY THEIR HOME OFF
DISPROPORTIONATELY LOW AND
MODERATE INCOME PEOPLE OF COLOR,
DISABLED RESIDENTS IN THE HOME,
AND THEN KIND OF FINANCIAL RUIN
OCCURS IN ONE WAY OR ANOTHER, IF
I COULD, MR. CHAIRMAN, TO SEE
THE REST OF MY TIME, I'D LIKE TO
READ A STATEMENT FROM SOMEONE
WHO WAS GOING TO BE A WITNESS
TODAY. BUT WHO, AS WILL BECOME
EVIDENT WHEN I READ HER
STATEMENT, IS NOT HERE TODAY. I
AM TESTIFYING ANONYMOUSLY. I'M
71 YEARS OLD, AND I LOST MY HOME
IN FORECLOSURE IN FEBRUARY OF
2024. I APOLOGIZE FOR MY ABSENCE
FROM THE COMMITTEE. I HOPE TO
SPEAK ANONYMOUSLY BECAUSE I FEEL
TOO MUCH SHAME AND PAIN TO
TESTIFY IN PERSON. I BOUGHT MY
HOME IN SANTA CRUZ IN 1987. BY
2024, MY HOME WAS WORTH 1.4
MILLION, BUT IT WAS SOLD AT A
FORECLOSURE AUCTION FOR
APPROXIMATELY $850,000 TO PAY
OFF A $790,000 LOAN. ALTHOUGH I
HAD BUILT UP A LIFE SAVINGS OF
$600,000 IN HOME EQUITY, I ONLY
RECEIVED $55,000 FROM THE
FORECLOSURE OF MY HOME. I
BELIEVE THAT THE LOAN THAT WAS
FORECLOSED WAS PREDATORY. MY
BROKER HAS BEEN ARRESTED FOR AN
UNRELATED FRAUD. I THOUGHT HE
WAS HELPING ME REFINANCE, BUT
FORECLOSURE WENT THROUGH. I LIVE
IN SHAME THAT I LET HIM TAKE
ADVANTAGE OF ME AND THAT I DID
NOT SEEK HELP FROM A LEGAL
SOURCE SOONER. I HAVE NOT YET
BEEN ABLE TO TELL MY DAUGHTER
ABOUT WHAT HAPPENED. I RAISED
BOTH MY CHILDREN IN THAT HOME.
ONE OF MY CHILDREN HAS SINCE
PASSED AWAY. MY HUSBAND DIED IN
THAT HOME. OVER THE PAST 35
YEARS, I WORKED HARD TO PROVIDE
FOR MY FAMILY AND BUILT UP A
LIFE SAVINGS OF OVER HALF $1
MILLION OF HOME EQUITY. IT WAS
ALL THE MONEY I HAD SAVED FOR
RETIREMENT. NOW MY HOME IS GONE,
ALONG WITH VIRTUALLY ALL OF MY
LIFE SAVINGS. I BELIEVE IT IS
UNFAIR THAT ALL MY 35 YEARS OF
ACCUMULATED EQUITY CAN BE
EXTINGUISHED DUE TO MY FAILURE
TO MAKE A LOAN PAYMENT. I HOPE
THE LEGISLATURE TAKES PROTECTIVE
ACTION TO PROTECT THE LIFE
SAVINGS OF OTHER BORROWERS WHO,
DUE TO CIRCUMSTANCE, FIND
THEMSELVES IN FORECLOSURE. THANK
YOU FOR YOUR TIME. AND MR.
CHAIRMAN. WITH THAT, WE URGE THE
COMMITTEE TO SUPPORT THIS BILL.
THANK YOU FOR YOUR TESTIMONY.
NEXT WITNESS, MY NAME IS CECIL
VOSSLER. I'M THE PRINCIPAL OF
THE VOSLER LAW FIRM IN OAKLAND,
A FIRM EXCLUSIVELY HANDLING
HANDLING CASES RELATED TO
PREDATORY LENDING AND
FORECLOSURE OF PREDATORY LOANS.
MANY OF MY CLIENTS, PAST AND
PRESENT, HAVE LOST THEIR HOMES
IN FORECLOSURE. ONE OF MY
CLIENTS HAD HER $800,000 HOME
SOLD FOR $50,000 AT 77 YEARS
OLD, AS A RETIRED IMMIGRANT
WIDOW WITH A DEPENDENT ADULT
DAUGHTER, SHE LOST $750,000 SHE
HAD SAVED UP IN HOME EQUITY, HER
LIFE SAVINGS. ANOTHER CLIENT AT
86 AND WITH COGNITIVE DECLINE,
HAD HER OAKLAND PROPERTIES, A
PRIMARY RESIDENCE AND A RENTAL
PROPERTY SOLD FOR $205,000
COMBINED IN A FORECLOSURE
AUCTION. THOSE PROPERTIES WERE
WORTH $1.5 MILLION. TOGETHER
AFTER SAVING FOR HER LIFETIME,
BUILDING UP A SUBSTANTIAL
SAVINGS AND INTERGENERATIONAL
WEALTH, THIS 86 YEAR OLD WOMAN
WAS LEFT WITH NOTHING. WITHOUT
LEGAL INTERVENTION, SHE WOULD
LIKELY BE DEAD OR PUSHING HER
LAST REMAINING BELONGINGS IN A
SHOPPING CART DOWN THE STREETS
OF OAKLAND. LIKE SO MANY OTHER
PEOPLE, IT'S PROFOUNDLY UNFAIR
THAT SOMEBODY CAN DO THE RIGHT
THING FOR SO MANY YEARS BUY A
HOME, MAKE THEIR PAYMENTS FOR
DECADES, AND SAVE EQUITY FOR
RETIREMENT. JUST TO HAVE THAT
EQUITY STRIPPED FROM THEM. AT
THE MOMENT THEY NEED IT THE
MOST. THE MOMENT THEY'RE LOSING
THEIR HOME. IF THIS BILL DOESN'T
GIVE THE LENDERS A HAIRCUT, IT
PROTECTS THE BORROWERS FROM THE
WORST ELEMENTS OF OUR
FORECLOSURE SYSTEM, ONE THAT CAN
BE OFTENTIMES VERY INEQUITABLE.
IT'S THE PRODUCT OF GOOD FAITH
NEGOTIATIONS WITH THE BANKS AND
TRUSTEES AND OTHERS. AND IT'S A
COMMON SENSE REFORM WHICH COULD
OFFER PROTECTIONS TO BORROWERS
IN THEIR GREATEST MOMENT OF NEED
. THANK YOU. THANK YOU FOR YOUR
TESTIMONY. ARE THERE ANY OTHER
WITNESSES IN THE ROOM IN
SUPPORT? PLEASE COME TO THE
MICROPHONE, STATE YOUR NAME,
YOUR, WHO YOU'RE REPRESENTING
AND YOUR POSITION. GOOD
AFTERNOON. CASSIE MANCINI, ON
BEHALF OF THE CALIFORNIA SCHOOL
EMPLOYEES ASSOCIATION AND STRONG
SUPPORT. GOOD AFTERNOON, DANNY
CANTWELL. KAISER ON BEHALF OF
THE CALIFORNIA LOW INCOME
CONSUMER COALITION IN SUPPORT.
THANK YOU. ANY OTHERS? SEEING
NONE, WE WILL MOVE TO
OPPOSITION. IS THERE ANYBODY IN
THE ROOM THAT PLEASE COME
FORWARD? YOU HAVE TWO MINUTES.
THANK YOU, MR. CHAIR. AND
MEMBERS, MIKE BALLOUT, SPEAKING
ON BEHALF OF THE UNITED TRUSTEES
ASSOCIATION, I WANT TO SAY VERY
CLEARLY, LIKE I NEVER SAID
BEFORE, MAYBE IN ALL THESE YEARS
WE ARE NOT OPPOSED TO AB 2424,
WE HAVE REMOVED OUR OPPOSITION
TO THE BILL BASED ON THE
DISCUSSIONS WITH THE SPONSOR AND
AUTHORS AND AUTHOR AND WORK WITH
YOUR COMMITTEE. AND WE WANT TO
THANK YOU AND THE COMMITTEE FOR
YOUR THOUGHTFUL, EVALUATION OF
THE BILL, THERE ARE THINGS THAT
I AGREE WITH AND I DISAGREE WITH
IN THE PRESENTATION. BUT HERE'S
ONE THING WE ALL AGREE ON
FORECLOSURE OUGHT TO BE THE LAST
RESORT. WHEN A LOAN GOES UNPAID,
ALL KINDS OF THINGS CAN HAPPEN
TO PEOPLE THAT CAUSE THEM TO, GO
INTO DEFAULT ON A LOAN. AND MANY
TIMES, THE BEST OPTION IS TO
SELL THE PROPERTY IN A FAIR
MARKET SALE BETWEEN A WILLING
BUYER AND WILLING SELLER. WE'VE
BEEN TALKING TO, MR. HARRELL AND
MR. VOSSLER FOR YEARS ABOUT
THIS, AND WE THINK THIS IS A
FAIR APPROACH, AND IT CONTAINS
ELEMENTS LIKE, YOU CAN ASK
SOMEBODY ELSE TO GET IN LINE TO
RECEIVE NOTICES OF FORECLOSURE
DOCUMENTS IF THEY OCCUR ON YOUR
PROPERTY, YOUR SON, YOUR
DAUGHTER, YOUR YOUR LAWYER, YOUR
FINANCIAL PLANNER. OFTEN
SOMEBODY CAN HELP YOU EXPLAIN
WHAT'S GOING ON AND AVOID
FORECLOSURE. BUT BUT ANOTHER
PRINCIPLE WE AGREE ON IS NO ONE
SHOULD LOSE THEIR HOUSE TO
FORECLOSURE WHEN THEY'RE
ACTIVELY TRYING TO SELL IT. AND
THAT IS THE PRINCIPLE AT PLAY IN
THE BILL, AS AMENDED. GIVE
PEOPLE TIME TO LIST THE PROPERTY
FOR SALE, AND IF THEY HAVE A
BUYER, GIVE THEM A LITTLE MORE
TIME TO AVOID FORECLOSURE.
FORECLOSURE IS THE FINAL REMEDY
WHEN NOTHING ELSE WORKS. AND SO
WE'RE PROUD TO HAVE WORKED ON
THE BILL, REMOVE OUR OPPOSITION.
THERE ARE SOME OPERATIONAL
DETAILS THAT WILL CONTINUE TO
WORK ON WITH THE AUTHOR IN GOOD
FAITH, BUT WE ARE, PROUDLY NOT,
NOT OPPOSED TO THE BILL. NOW
THANK YOU SO MUCH FOR YOUR
TESTIMONY AND I SEE A LINE
ALREADY FORMED, OTHERS THAT ARE
IN OPPOSITION. IF YOU'LL JUST
STATE YOUR NAME, ORGANIZATION
AND YOUR POSITION. THANK YOU.
JASON LANE, CALIFORNIA BANKERS
ASSOCIATION. WE ARE PLEASED TO
REMOVE OPPOSITION TO THE BILL.
THANK YOU. THANK YOU, INDIRA
MCDONALD HERE ON BEHALF OF THE
CALIFORNIA MORTGAGE BANKERS
ASSOCIATION. ALSO PLEASED TO
REMOVE OPPOSITION FROM THE BILL
AND ON BEHALF OF THE CALIFORNIA
LINE LAND TITLE ASSOCIATION, I
WAS ASKED TO MAKE A SIMILAR
COMMENT AND LOOK FORWARD TO
WORKING WITH THE AUTHOR ON THE
OUTSTANDING DIALOG ON
AMENDMENTS. THANK YOU, MR.
CHAIR, AND MEMBERS. CLIFF COSTA,
ON BEHALF OF THE CALIFORNIA
MORTGAGE ASSOCIATION. ALSO HERE.
PLEASED TO REMOVE OUR
OPPOSITION. LOOK FORWARD TO
WORKING OUT THOSE LAST REMAINING
ISSUES AND THANK THE CHAIR AND
THE COMMITTEE FOR THEIR HARD
WORK. THANK YOU. GOOD AFTERNOON.
SHERRY MCCUE, REPRESENTING THE
CALIFORNIA CREDIT UNION LEAGUE.
ALSO PLEASED TO REMOVE HER
OPPOSITION. THANK YOU. GOOD
AFTERNOON, MR. CHAIR AND
MEMBERS. AUTHOR ROB MURRAY,
CALIFORNIA CHAMBER OF COMMERCE.
ALSO REMOVING OPPOSITION DUE TO
AMENDS. THANK YOU. THANK YOU
VERY, VERY MUCH FOR THAT. ANY
OTHERS IN OPPOSITION? SEEING
NONE. WE'LL BRING THIS TO THE
COMMITTEE FOR QUESTIONS OR
COMMENTS, PLEASE. ASSEMBLY
MEMBER DIXON THANK YOU. CHAIR.
SO I JUST WANT TO BE CLEAR,
THERE'S NO OPPOSITION ON. ON THE
ALL THE LINE OF PEOPLE. YES
WELL, NO. THAT'S GREAT TO SEE
THIS KIND OF COOPERATION ON A
VERY IMPORTANT MATTER. SO THANK
YOU VERY MUCH. I'LL BE PLEASED
TO SUPPORT IT. I'LL MOVE
SUPPORT. WE DO HAVE A MOTION.
I'LL SECOND THAT. AND WE HAVE A
SECOND. ASSEMBLYMEMBER RUBIO.
YEAH. I JUST WANTED TO ALSO
THANK YOU FOR, AND THANK THE
COMMITTEE FOR THEIR WORK. I KNOW
IT'S DIFFICULT TO COME TOGETHER,
BUT NEGOTIATIONS, WORK THAT WAY.
SO I REALLY APPRECIATE YOU ALL
WORKING WITH THE OPPOSITION TO
GET THIS DONE. I WANT TO BE ABLE
TO, GIVE AN INCREDIBLE AMOUNT OF
CREDIT TO THE ASSEMBLY MEMBER,
TO THE AUTHOR, AND YOUR OFFICE,
AS WELL AS THE SPONSORS AND THE
CHIEF CONSULTANT FOR REALLY
DIVING IN AND DOING SOME HARD
WORK. HOWEVER I DO HAVE SOME
COMMENTS, HAVING, THANKED YOU
FOR YOUR GOOD WORK AND US BEING
ABLE TO MOVE FORWARD, AS YOU
KNOW, FROM OUR DISCUSSIONS THAT
WE'VE HAD, THAT I AM NOT OPPOSED
TO THE IDEA OF MAKING
FORECLOSURE SALES MORE
COMPETITIVE AND I AM NOT FULLY
OPPOSED TO THE IDEA OF
INTRODUCING CONDITIONAL OFFERS
OFFERS IN THE PROCESS. BUT I
JUST DON'T THINK WE'RE QUITE
THERE YET. I THINK THERE'S A LOT
OF WORK THAT WE GOT TO DO TO GET
THROUGH ALL THE DETAILS, TO
ENCOURAGE THE OPPOSITION TO, I
ENCOURAGE THE OPPOSITION TO
THINK CREATIVELY ABOUT WHAT THAT
PROCESS COULD LOOK LIKE OR HOW
IT COULD WORK, BECAUSE I DON'T
THINK THIS ISSUE IS GOING AWAY,
NOR SHOULD IT. SO WITH THAT,
WITH THE AUTHOR, I'D LIKE TO
MAKE CLOSING STATEMENT. THANK
YOU SO MUCH. I APPRECIATE THAT
AND APPRECIATE EVERYONE COMING
TOGETHER AND CONTINUING TO WORK
ON THIS ISSUE. AND FOR THE, THE
THOUGHTFUL FEEDBACK, YOU KNOW,
AT THE END OF THE DAY, WE WANT
TO MAKE SURE THAT PEOPLE ARE NOT
LOSING THEIR LIFE SAVINGS, THAT
THEY'VE INVESTED IN IN THEIR
HOMES. RIGHT? THIS IS THE NEST
EGG THAT A LOT OF PEOPLE RELY
ON. AND THE ONLY ONE THEY HAVE A
LOT OF TIMES, AND SO, YOU KNOW,
WE WILL CONTINUE TO WORK ON THE
OTHER PIECES AND, AND MAY HAVE
TO BE IN A FUTURE ITERATION THAT
WE WORK ON SOME OF IT. BUT, YOU
KNOW, IN THE MIDDLE OF A HOUSING
CRISIS WHEN WE KNOW THERE'S SO
MUCH DEMAND, IT'S REALLY HARD TO
JUSTIFY WHY PEOPLE ARE GETTING
ROCK BOTTOM PRICES ON THESE
HOMES WHEN THEY SHOULD BE ABLE
TO RECOVER SOME OF THAT EQUITY.
AND WE HOPE THAT THIS BILL IS
GOING TO MAKE A BIG DIFFERENCE
TO BE ABLE TO DO THAT. SO
APPRECIATE AND I VOTE AND THANK
YOU SO MUCH. THANK YOU SO MUCH.
AND WE DO HAVE A MOTION FROM
ASSEMBLYMEMBER DIXON, SECOND
FROM ASSEMBLYMEMBER RUBIO. SO
SECRETARY, PLEASE CALL THE ROLL
ON THE BILL AB 2424. THE MOTION
IS DUE PASS AS AMENDED. AND
REFERRED TO COMMITTEE ON
JUDICIARY. GRAYSON, A GRAYSON.
AYE. CHEN CHIEN AYE. CERVANTES
DIXON. DIXON. AYE. MIKE. FONG.
HI MIKE. FONG. AYE. MAIENSCHEIN
PETRIE-NORRIS. HI.
PETRIE-NORRIS. AYE. BLANCA
RUBIO. AYE. SORIA. SORIA AYE.
THE BILL HAS SEVEN BILLS. I'M
SEVEN VOTES. THIS BILL HAS SEVEN
VOTES. WE'LL KEEP THE ROLL OPEN
FOR ABSENT MEMBERS. THANK YOU.
SO IT DOES PASS. SO THANK YOU.
THANK YOU SO VERY MUCH. WE WILL
MOVE TO THE NEXT ITEM. ITEM
NUMBER. WELL WE'LL GO BACK. ITEM
NUMBER ONE ASSEMBLY MEMBER
GABRIEL AB 2432. THE
RECOMMENDATION IS DO PASS TO THE
COMMITTEE ON APPROPRIATIONS AND
A SIMILAR ASSEMBLY MEMBER,
GABRIEL, JUST WHEN YOU'RE READY,
PLEASE FEEL FREE TO START WITH
YOUR OPENING STATEMENTS. NICE TO
SEE YOU. THANK YOU, MR. CHAIR
AND COLLEAGUES, AND A SPECIAL
THANK YOU TO YOUR COMMITTEE
STAFF AND YOU FOR YOUR
THOUGHTFUL ASSISTANCE AND
FEEDBACK ON THIS MEASURE. I AM
PLEASED TODAY TO PRESENT AB
2432, WHICH WOULD ESTABLISH A
PERMANENT SOURCE OF FUNDING FOR
PROGRAMS SERVING VICTIMS OF
VIOLENT CRIME MODELED ON THE
BIPARTISAN FEDERAL VICTIMS OF
CRIME ACT, OR VOCA. AB 2342
MAKES IT EASIER FOR STATE AND
LOCAL PROSECUTORS TO HOLD BAD
ACTORS ACCOUNTABLE. ENHANCED
DETERRENCE, SUPPORT CRIME
VICTIMS, AND PROTECT OUR
COMMUNITIES IN SEVERAL IMPORTANT
WAYS. MOST IMPORTANTLY, AB 2432
WILL HELP PROVIDE ESSENTIAL
FUNDING FOR PROGRAMS THAT
PROVIDE VITAL AND IN SOME CASES,
EVEN LIFE SAVING SERVICES TO
VICTIMS OF CRIME IN THE STATE OF
CALIFORNIA. THIS YEAR,
CALIFORNIA'S CRIME VICTIM
SERVICE PROVIDERS, WHO PROVIDE
CRITICAL SUPPORT TO VICTIMS OF
HUMAN TRAFFICKING, DOMESTIC AND
SEXUAL VIOLENCE, AND CHILD ABUSE
, FACE AN EXPECTED REDUCTION OF
FEDERAL FUNDING OF APPROXIMATELY
$170 MILLION, A CUT OF
APPROXIMATELY 40. THIS WOULD BE
DEVASTATING IN PRACTICE, THAT
MEANS FEWER STAFF, LONGER WAIT
TIMES, LESS ASSISTANCE, AND
FEWER OF THE VITAL SERVICES
PROVIDED BY SO MANY OF THESE
NONPROFITS, WHETHER THEY BE
DOMESTIC VIOLENCE SERVICE
PROVIDERS, RAPE CRISIS CENTERS,
LEGAL ASSISTANCE PROVIDERS, OR
THOSE WHO HELP VICTIMS OF HUMAN
TRAFFICKING TO PREVENT THIS
TRAGEDY, AB 2423 WOULD CREATE A
STATE ANALOG TO THE VIOLENCE
AGAINST VICTIMS OF CRIME ACT SO
THAT WE CAN BETTER RAISE
ADDITIONAL FUNDS AND BETTER
SUPPORT THESE ESSENTIAL PROGRAMS
AND SERVICES. I'M PROUD THAT
THIS MEASURE IS SUPPORTED BY A
BROAD COALITION OF LAW
ENFORCEMENT, VICTIM SERVICES,
AND CRIMINAL JUSTICE GROUPS THAT
INCLUDES ATTORNEY GENERAL ROB
BONTA, THE CALIFORNIA
PARTNERSHIP TO END DOMESTIC
VIOLENCE, THE COALITION TO
ABOLISH SLAVERY AND TRAFFICKING,
CALIFORNIA WOMEN'S LAW CENTER,
AND THE VENTURA, LOS ANGELES AND
SANTA CLARA COUNTY DISTRICT
ATTORNEYS, AMONG OTHERS. IT HAS
NO RECORDED OPPOSITION WITH ME
TODAY TO TESTIFY IN SUPPORT OF
THIS MEASURE ARE MARIKO, THE
EXECUTIVE DIRECTOR FROM HAVEN,
WHICH PROVIDES CRITICAL SERVICES
TO CRIME VICTIMS IN STANISLAUS
COUNTY, AND EVAN AKRAM, THE
SPECIAL ASSISTANT TO THE
ATTORNEY GENERAL ON WHITE COLLAR
AND CORPORATE PROSECUTIONS.
THANK YOU AND RESPECTFULLY
REQUEST YOUR AYE VOTE. THANK
YOU. YOU HAVE TWO MINUTES EACH,
PLEASE. ASSEMBLY MEMBER GRAYSON
AND MEMBERS OF THE COMMITTEE. MY
NAME IS MARIKO, AND I'M THE
EXECUTIVE DIRECTOR OF HAVEN AND
STANISLAUS COUNTY. I'M HERE
TODAY TO SPEAK IN SUPPORT OF AB
2432, ESTABLISHING A NEW REVENUE
STREAM FOR CRIME VICTIMS IN
CALIFORNIA. HAVEN IS A PRIVATE,
NONPROFIT PROVIDING SERVICES TO
SURVIVORS OF DOMESTIC VIOLENCE,
SEXUAL ASSAULT, AND HUMAN
TRAFFICKING IN STANISLAUS
COUNTY, INCLUDING EMERGENCY
SHELTER SINCE 1977. LAST YEAR,
HAVEN HELPED OVER 2500 SURVIVORS
OF ABUSE AND VIOLENCE FUNDING
FOR CRIME VICTIM SERVICES IN
CALIFORNIA HAS NOT KEPT UP WITH
THE INCREASED DEMAND. AS WE COME
OUT OF THE PANDEMIC, MORE PEOPLE
ARE SEEKING HELP WHILE OUR
RESOURCES TO SERVE THEM ARE
SHRINKING. NOR CAN WE RETAIN THE
EXPERIENCED STAFF THEY NEED WHEN
WE CAN'T KEEP UP WITH
COMPETITIVE WAGES. IN JULY OF
2022, OUR FUNDING INCLUDED TWO
HOUSING GRANTS AND A LEGAL GRANT
FUNDED BY VOCA. TODAY, THOSE
GRANTS ARE GONE, KNOCKING OUT
MOST OF OUR HOUSING PROGRAM AND
TWO THIRDS OF OUR LEGAL PROGRAM.
TODAY, IF SOMEONE CALLS FOR HELP
WITH THE RESTRAINING ORDER, IT
WILL TAKE TIME TO FIND SOMEONE
WHO CAN PROVIDE LEGAL ASSISTANCE
AND EVEN MORE TIME TO GET AN
APPOINTMENT. WHEN SOMEONE IS
HUNTING YOU, SOMEONE WHO KNOWS
ALL THE PLACES YOU'LL GO TO HIDE
AND ALL THE PEOPLE WHO WILL HELP
YOU THAT TIME MATTERS. TWO YEARS
AGO, THERE WAS A GOOD CHANCE WE
COULD PROVIDE TRANSITIONAL
HOUSING ASSISTANCE TO ANYONE IN
OUR EMERGENCY SHELTER. NOW WE'RE
VERY LIMITED IN THE DIRECT
ASSISTANCE WE CAN PROVIDE, AND
OUR MASTER LEASE UNITS ARE GONE.
TODAY SOMEONE IN OUR SHELTER IS
UNLIKELY TO FIND THEIR OWN
HOUSING IN THE 4 TO 6 WEEKS
THEY'RE ABLE TO STAY WITH US.
CRIME VICTIMS IN CALIFORNIA
DESERVE BETTER. THEY COME TO US
BECAUSE THEY ARE IN A SYSTEM
THAT'S ALREADY FAILED THEM ONCE,
AND WHEN WE CAN'T MEET THEIR
NEEDS IN A TIMELY MANNER,
THEY'RE FAILED AGAIN. THEY NEED
TO KNOW WHEN THEY PICK UP THE
PHONE, THEIR CALL WILL BE
ANSWERED QUICKLY. WE CAN'T
ENSURE THAT WITHOUT THE FUNDING
PROVIDED BY THIS MEASURE. YOUR
SUPPORT FOR AB 2432 WILL ENSURE
OUR LIFE SAVING PROGRAMS
CONTINUE. THANK YOU. AND I
RESPECTFULLY ASK FOR YOUR AYE
VOTE. THANK YOU FOR YOUR
TESTIMONY. NEXT WITNESS. THANK
YOU. GOOD AFTERNOON, MR. CHAIR,
AND HONORABLE MEMBERS OF THE
COMMITTEE. I APPRECIATE THE
OPPORTUNITY TO DISCUSS AB 2432
WITH YOU ON BEHALF OF ONE OF THE
COAST SPONSORS, ATTORNEY GENERAL
ROB BONTA. WE ALSO WOULD LIKE TO
THANK THE CHIEF CONSULTANT FOR
THE DETAILED BILL ANALYSIS, AND
WE APPLAUD ASSEMBLY MEMBER
GABRIEL FOR HIS AUTHORSHIP OF AB
2432. CURRENTLY THE DEFAULT
CRIMINAL FINE IN CALIFORNIA IS
$10,000 PER FELONY CONVICTION.
THAT APPLIES EQUALLY TO
INDIVIDUAL DEFENDANTS, AND THAT
APPLIES EQUALLY TO CORPORATIONS.
THERE ARE CERTAIN SPECIALIZED
CRIMINAL FINES THAT MAY RESULT
IN A MORE SERIOUS FINE. FOR
EXAMPLE, THERE IS A FINANCIAL
PENALTY ENHANCEMENT AVAILABLE TO
THE JUDGE THAT PUNISHES ANY
DEFENDANT, WHETHER INDIVIDUAL OR
CORPORATE, WHO COMMITS MULTIPLE
RELATED FELONIES OR SPECIFIED
TYPES, AND TAKES ABOVE A CERTAIN
SPECIFIED AMOUNTS. THIS PROPOSED
ENHANCEMENT THAT WE FIND IN 2432
WOULD APPLY TO CORPORATE
DEFENDANTS AND CORPORATE
DEFENDANTS ONLY. IT WOULD
SUPPLEMENT THE EXISTING
FINANCIAL PENALTY ENHANCEMENT BY
GIVING THE COURT ADDITIONAL
DISCRETION TO IMPOSE FINANCIAL
PENALTIES THAT MORE MATCH THE
SERIOUSNESS OF THE CRIME.
WHENEVER THE CRIME WAS COMMITTED
BY A CORPORATION, THEN THE BILL
WOULD HOLD CORPORATIONS
ACCOUNTABLE FOR THEIR CRIMINAL
WRONGDOING. IT STILL REQUIRES
THE PROSECUTOR TO PROVE INTENT
WITH EACH CRIME. THAT'S BEING
CHARGED, AND TO PROVE EACH CRIME
BEYOND A REASONABLE DOUBT BEFORE
THE ENHANCEMENT WOULD BE SOUGHT.
AS MENTIONED EARLIER, 2432 IS A
WIN WIN DUE TO DECLINING VOCA
FUNDING THAT'S LINKED TO FEDERAL
PROSECUTION. ÓRDENES ATTORNEY
GENERAL BONTA RECENTLY JOINED A
COALITION OF AGS REPRESENTING 32
STATES AND TERRITORIES, URGING
CONGRESS TO PROVIDE CRITICAL
SUPPORT AND SERVICES TO VICTIMS
AND SURVIVORS OF CRIME BY TAKING
STEPS TO INCREASE VOCA FUNDING
WITH SHORT TERME BRIDGE FUNDING.
AND LAST BUT NOT LEAST, YOU MAY
BE ASKING, WHY IS THIS BILL
BEFORE THIS PARTICULAR COMMITTEE
? THE ANSWER IS SIMPLE THAT IN
AN EARLIER VERSION, OUR
DEFINITION OF CORPORATION WAS
PEGGED OR REFERENCED OR
INCORPORATED. THE DEFINITION OF
CORPORATIONS THAT'S FOUND IN THE
CORPORATIONS CODE. THE BILL HAS
SINCE EVOLVED, AND IT NOW HAS A
SELF-CONTAINED AND DEFINITION OF
CORPORATION IN THE AMENDMENT
THAT DOES NOT REFERENCE THE
CORPORATION CODE. I'M HAPPY TO
ANSWER ANY QUESTIONS, AND WE
RESPECTFULLY REQUEST YOUR AYE
VOTE. SO THE STATE MAY CREATE A
SUPPLEMENTAL STATE FUNDING
STREAM FOR VOCA AND CALIFORNIA
VICTIMS COMPENSATION BOARD BY
SUPPORTING PROSECUTING AGENCIES
WITH BRINGING THESE CRIMINAL
CASES FORWARD ON BEHALF OF
VULNERABLE CALIFORNIANS. THANK
YOU. THANK YOU FOR YOUR
TESTIMONY, AND WE WILL TURN TO
THE PUBLIC. ANY OTHER FOLKS IN
THE ROOM THAT WOULD LIKE TO
STATE YOUR SUPPORT, NAME,
ORGANIZATION AND POSITION? OAN
NATASHA MINSKER SMART JUSTICE
CALIFORNIA AND STRONG SUPPORT
LISA MANTERO MORE WITH THE
STANISLAUS FAMILY JUSTICE CENTER
AND ALSO THE CALIFORNIA FAMILY
JUSTICE NETWORK. STRONG SUPPORT.
WITH GREENBERG TRAURIG, ON
BEHALF OF THE CALIFORNIA
PARTNERSHIP TEN DOMESTIC
VIOLENCE, A PROUD CO-SPONSOR
ALSO ASKED TO REGISTER SUPPORT
FOR THE CRIME VICTIMS ALLIANCE
AND THE LOS ANGELES DISTRICT
DISTRICT ATTORNEY'S OFFICE.
THANK YOU. GRACE GLASER, ON
BEHALF OF VALERIE, US AND THE
COALITION TO ABOLISH SLAVERY AND
TRAFFICKING, PROUD CO-SPONSORS
AND IN SUPPORT, AND ALSO IN
ADDITION, WITH THE CENTER FOR
THE PACIFIC ASIAN FAMILY, TRI
VALLEY HAVEN PEACE OVER VIOLENCE
PROJECT, SANCTUARY, YWCA, GOLDEN
GATE, SILICON VALLEY WINEMAKERS,
WILD IRIS, FAMILY COUNSELING AND
CRISIS CENTER, REACH AND EAST
LOS ANGELES WOMEN'S CENTER.
THANK YOU, CHRISTY BRODEUR
DERMODY, REPRESENTING CALICO
CENTER, WHICH IS THE CHILD
ADVOCACY CENTER OF ALAMEDA
COUNTY IN STRONG SUPPORT. HOLLY
FLEMING WITH CHILDREN'S ADVOCACY
CENTERS OF CALIFORNIA PROUD TO
BE A CO-SPONSOR AND STRONG
SUPPORT. I'M ALSO ASKED TO SPEAK
ON BEHALF OF HOLMBRIDGE VICTIMS
EMPOWERMENT SUPPORT TEAM WOMEN,
INC, JEWISH FAMILY SERVICES OF
LA, INTERFACE CHILD AND FAMILY
SERVICES, SHELTER FROM THE STORM
AND HOUSE OF RUTH IN SUPPORT.
GOOD AFTERNOON CATHY. KATIE ON
BEHALF OF THE CHILDREN'S
ADVOCACY CENTER FOR CHILD ABUSE
ASSESSMENT AND TREATMENT, WHICH
IS IN COVINA, AND ALSO ON BEHALF
OF THE COLLABORATIVE OF ALL OF
THE CHILDREN'S ADVOCACY CENTERS
IN LOS ANGELES COUNTY IN STRONG
SUPPORT. DENISE WYATT, EXECUTIVE
DIRECTOR, FAMILY HEALING CENTER,
CHILD ADVOCACY CENTER IN STRONG
SUPPORT, FRESNO COUNTY. GOOD
AFTERNOON, CHERYL MARCEL, CEO OF
STAND UP CLASSER IN STRONG
SUPPORT. THANK YOU. AND WITH
THAT, WE WILL MOVE ON TO
OPPOSITION. YES. THANK YOU. YES
OPPOSITION. TWO MINUTES. YES.
I'LL BE MUCH SHORTER THAN THAT.
THANK YOU. OH NO. NO GOOD
AFTERNOON, MR. CHAIR. AND
MEMBERS. AUTHOR ROBERT MURRAY
FOR THE CALIFORNIA CHAMBER OF
COMMERCE. WE ARE, REGRETFULLY
OPPOSED TO AB 2032 AT THIS TIME.
I WANT TO FIRST APOLOGIZE FOR
THE LACK OF OPPOSITION LETTER.
YOU KNOW, AGAIN, THAT'S ON US IN
THE MESS OF THIS YEAR. AND I HAD
CLIENTS REACH OUT TO ME LATE IN
THE GAME. SO MY APOLOGIES FOR
THAT DELAY, I APPRECIATE THE
AUTHOR'S OFFICE REACHED OUT TO
US AND WE'VE STARTED THOSE
TALKS. BUT AGAIN, THAT'S AN
APOLOGY ON OUR SIDE FOR THE
DELAYED NATURE OF THEM,
SENSITIVE TO THE CONCERNS AROUND
THE LACK OF MONEY FOR VICTIMS
AND THE VOCA FUNDING FEDERALLY.
MY BROTHER IS A DA, YOU KNOW,
TALKS ALL THE TIME ABOUT THE
LACK OF SERVICES FOR VICTIMS AND
THE ISSUES WHEN HE PROSECUTES.
SO ABSOLUTELY SENSITIVE THERE.
STILL GATHERING INFORMATION FROM
OUR MEMBERS AROUND THE PENALTY
SIZE, HOW IT AFFECTS THEM,
THINGS LIKE THAT. SO I CAN'T
SHARE THOSE POINTS AT THIS TIME,
BUT I LOOK FORWARD TO WORKING
WITH THE AUTHOR ON IT. AND
AGAIN, APOLOGIES FOR THE LATE
NOTICE. THANK YOU. THANK YOU SO
MUCH. ANY OTHER MEMBERS OR ANY
OTHER, FOLKS IN THE ROOM?
OPPOSITION, PLEASE STEP FORWARD.
SEEING NONE, I WILL BRING IT TO
THE COMMITTEE. ANY QUESTIONS OR
OR COMMENTS? YES. ASSEMBLY
MEMBER DIXON, THANK YOU, CHAIR.
AND THANK YOU, REPRESENTATIVE
FROM CAL CHAMBERS. I WAS CURIOUS
WHY THERE WERE NO BUSINESS,
POSITIONS ON THIS, I THINK THE
MERITS OF YOUR BILL. ASSEMBLY
MEMBER, ARE, COMPELLING AND ONE
WOULD EMPATHIZE WITH ALL OF
THESE VICTIMS RIGHTS. I'VE BEEN
A STRONG ADVOCATE OF VICTIMS
RIGHTS ORGANIZATIONS FOR MANY,
MANY YEARS. I'M TRYING TO
UNDERSTAND THE NEXUS BETWEEN A
CORPORATION FOUND GUILTY FOR
SOMETHING THAT HAS NOTHING TO DO
WITH ANY OF THESE VICTIMS
SITUATIONS. SADLY, AND IT
APPEARS TO ME, CORRECT ME IF I'M
WRONG, THAT YOU'RE JUST LOOKING
FOR DEEP POCKETS IN THE IN THE
BUSINESS COMMUNITY, THAT
ASSUMING THAT THEY SHOULD PAY,
IS TO ME, THIS IS AN EXAMPLE.
WHY COMPANIES HAVE TO LEAVE
CALIFORNIA. IT'S SUCH AN
ANTI-BUSINESS MEASURE THAT
THEY'RE THE DEEP POCKETS AND
THEY'RE BEING SCAPEGOATED FOR
CRIMES THEY DID NOT COMMIT, BUT
HAVE TO PAY A SERIOUS, PENALTY
UP TO $25 MILLION, IS THAT
CORRECT? I MEAN, IT'S JUST
SHOCKING TO ME. AND I THINK THE
NEEDS OF EVERY ONE OF THESE
ORGANIZATIONS IS COMPELLING AND
MERITS THIS. AND I'M SORRY THAT
THEY HAVE TO FEEL THAT THEY HAVE
TO LOOK TO CORPORATIONS TO FUND
FOR A CRIME THAT THEY DID NOT
COMMIT, I'M, I'M JUST SHOCKED
THAT WE ARE JUST REALLY POINTING
THE FINGER AT BUSINESSES IN
CALIFORNIA. HARDWORKING, SMALL,
ALL CORPORATIONS ARE NOT FORTUNE
500 COMPANIES. THEY COULD BE
FAMILY OWNED CORPORATIONS, $25
MILLION CAN DESTROY A COMPANY.
JUST BECAUSE THE DISTRICT
ATTORNEY THINKS THAT THIS SHOULD
BE PART OF THE PENALTY PROCESS.
AND IT'S A MONEY GATHERING,
USURIOUS PROCESS TO GO AFTER
BUSINESSES HAVE NOTHING TO DO
WITH THIS. IF THEY WERE INVOLVED
DIRECTLY IN THE CRIME THAT
AFFECTED AND CREATED THOSE
VICTIMS 100. BUT I'M TRYING TO
UNDERSTAND THE NEXUS. SO WHAT IS
COMPELLING THIS? YEAH, IT'S A
FAIR QUESTION, ASSEMBLY MEMBER.
AND I'LL JUST SAY PART OF THE
YOU KNOW, WE HAD A VERY
DIFFERENT PRESENTATION OF THIS
BILL IN PUBLIC SAFETY, TRYING TO
FOCUS ON THE DETERRENT ASPECT OF
THIS AND HOW IT AFFECTS WHITE
COLLAR FRAUD. SO LET ME SAY A
COUPLE THINGS. FIRST OF ALL,
THIS BILL IS BASED ON THE
FEDERAL LAW. THE VICTIMS OF
CRIME ACT, THAT HAS FUNDED ALL
OF THESE PROGRAMS AND ALL OF
THESE WONDERFUL FOLKS HAVE
GOTTEN WHO ARE DOING GOD'S WORK,
HAVE GOTTEN THEIR PROCEEDS TO
FUND THEIR WORK FROM THE FEDERAL
VOCA BILL, WHICH IS DISTRIBUTED
THROUGH THE STATE OF CALIFORNIA.
THAT WAS A BIPARTISAN MEASURE
SIGNED INTO LAW BY PRESIDENT
REAGAN IN 1984. THE IDEA HERE
THAT WHEN CORPORATIONS ARE
COMMITTING MISCONDUCT,
COMMITTING CRIMES, FOUND GUILTY
BY A JURY OF COMMITTING THAT
MISCONDUCT, THAT PART OF THE
RESTITUTION THAT THEY SHOULD PAY
TO VICTIMS, OFTEN THERE ARE
MANY, MANY VICTIMS OF THAT
CORPORATE. IT COULD BE A LARGE
FINANCIAL FRAUD. THINK OF THE
SUBPRIME MORTGAGE CRISIS IN THE
LETTER SUBMITTED BY THE ATTORNEY
GENERAL'S OFFICE, THEY POINT OUT
AN OIL SPILL IN SANTA BARBARA
COUNTY, WHERE THE PIPELINE
COMPANY WHO WAS FOUND GUILTY OF
BREAKING THE LAW OF COMMITTING
CORPORATE, YOU KNOW, MISCONDUCT,
PAID A $3 MILLION FINE WHEN THE
ESTIMATE WAS THAT THEY HAD
CAUSED OVER $200 MILLION IN
DAMAGE TO THE RESIDENTS OF SANTA
BARBARA COUNTY, TO THE
ENVIRONMENT, TO THE PEOPLE
THERE. SO THE IDEA HERE IS NOT
SIMPLY THAT WE'RE LOOKING FOR
DEEP POCKETS. THIS IS THIS IS
NOT SOMETHING THAT IS MEANT TO
JUST GO AFTER AND TAKE MONEY
FROM BUSINESSES. THIS IS ABOUT
WHEN PEOPLE BREAK THE LAW, HARM
LARGE NUMBERS OF CALIFORNIANS,
AND THEN UNFORTUNATELY HAVE BEEN
ABLE TO SKIRT JUSTICE BY PAYING
THESE VERY SMALL FINES THAT DO
NOT APPROXIMATE THE HARM THAT
THEY HAVE CAUSED. I'LL NOTE FOR
YOU ALSO, THIS IS AN APPROACH
THAT HAS BEEN ADOPTED IN BOTH
RED STATES AND BLUE STATES. AS
YOU CAN SEE IN THE ANALYSIS,
TEXAS, THE STATE OF TEXAS HAS A
VERSION OF THIS. THEY BELIEVE
THAT WHEN CORPORATIONS BREAK THE
LAW, WHEN THEY ARE FOUND GUILTY
BY A JURY OF BREAKING THE LAW,
THAT THEY SHOULD PAY FINES, THAT
THAT ARE COMMENSURATE WITH THE
HARM THAT THEY HAVE CAUSED TO
PEOPLE. SO PART OF WHAT I DIDN'T
EMPHASIZE HERE IS THE DETERRENT
ASPECT OF THIS, THE
ACCOUNTABILITY ASPECT OF ALL OF
THIS. AND AGAIN, WE'RE NOT
MAKING THIS UP OUT OF WHOLE
CLOTH. WE ARE SIMPLY COPYING
WHAT HAS BEEN DONE ON A
BIPARTISAN BASIS AT THE FEDERAL
LEVEL AND WHAT HAS BEEN DONE IN
RED AND BLUE TO OTHER RED AND
BLUE STATES. OKAY, LET ME YOU
PROVIDED SOME GOOD INFORMATION
FOR ME. LET ME JUST FOLLOW UP
WITH THE QUESTION. SO IF THERE
WAS A CRIME OIL SPILL, A COUPLE
OF QUESTIONS. DID THE JUDGE
DETERMINE THE PENALTY? THE FINE.
SO THAT WASN'T THE COMPANY. I
MEAN, IT WAS IT SHOULD HAVE BEEN
MORE OR LESS WHATEVER THAT WAS
AT THE DISCRETION OF THE JUDGE.
THAT SO. SO PART OF THE
CHALLENGE WE HAVE RIGHT NOW IS
THAT THE FINES IN THE STATE OF
CALIFORNIA ARE LIMITED BY LAW,
AND WE HAVE SOME OF THE LOWEST
IN THE NATION. SO EVEN THOUGH
THERE ARE A VARIETY OF THINGS
THAT THE JUDGE CAN LOOK AT,
ULTIMATELY THE PROSECUTOR
DOESN'T HAVE THE ABILITY TO SEEK
LARGER FINES, AND THE JUDGE
DOESN'T HAVE THE ABILITY TO
GRANT THOSE LARGER FINES. SO
WHAT WE'RE DOING IS PROVIDING
ADDITIONAL FLEXIBILITY FOR THE
PROSECUTORS TO SEEK THIS WHITE
COLLAR ENHANCEMENT AT THEIR
DISCRETION. AND THEN AND THEN AT
THE DISCRETION OF THE JUDGE. AND
IF YOU LOOK IN THE ANALYSIS, YOU
CAN SEE THERE IS A WHOLE RANGE
OF CIRCUMSTANCES THAT WE ASK THE
COURT TO TAKE INTO CONSIDERATION
WHEN THEY'RE ASSESSING THE FINE.
I WILL TELL YOU PART OF THE
REASON WE HAVE THAT $25 MILLION
IN THERE, MOST OF THE TIME, THE
FINE WILL BE PEGGED TO THE LOSS
SUFFERED BY THE COMMUNITY OR THE
HARM INFLICTED ON THE COMMUNITY,
AS WE HAVE SEEN, THOUGH, IN
CASES INVOLVING WILDFIRES AND
OTHER LARGE NATURAL DISASTERS,
CORPORATE CRIMINAL MISCONDUCT
CAN SOMETIMES RESULT IN THE LOSS
OF HUMAN LIFE. WE HAVE SEEN
PEOPLE THAT HAVE BEEN KILLED IN
THE STATE OF CALIFORNIA BY
CRIMINAL NEGLIGENCE AND OTHER
CRIMINAL CONDUCT BY
CORPORATIONS, SO THAT $25
MILLION IS IN THERE FOR THE
ABSOLUTE MOST HORRIFIC CASES
WHERE A AGAIN, THIS IS A
CORPORATION THAT HAS BEEN FOUND
GUILTY BY A JURY OF BREAKING THE
LAW THAT HAS RESULTED IN THE
LOSS OF HUMAN LIFE, POTENTIALLY
THE LOSS OF LIFE OF MANY PEOPLE,
AS WE HAVE SEEN IN SOME OF THESE
WILDFIRES. I DON'T WANT TO
EXCUSE ANY CORPORATION IF THEY
IF THEY'VE BEEN FOUND GUILTY OF
COMMITTING A LOT, THERE'S A FINE
THERE'S A PENALTY, APPROPRIATE,
PENALTIES SHOULD BE, LAID
AGAINST THEM. I TOTALLY AGREE.
I, I'M CONCERNED AGAIN WITH THE
NEXUS TO THE VICTIM'S RIGHTS. IF
THEY WERE VICTIMS OF THE OIL
SPILL, 100. THAT'S A LEGITIMATE
VICTIM OF THAT PARTICULAR CRIME.
BUT BROADENING IT TO INCLUDE ALL
KINDS OF VICTIMS RIGHTS BEYOND
THE SCOPE OR THE DEFINITION OF
THE CRIME COMMITTED TO ME, LOOKS
LIKE IT'S A AGGRANDIZING OF A
CRIME. AND THEN AGAIN, THE
PROSECUTORS AND HAVE NO WONDER
THE DA'S WANT THIS. SO IT GOES
INTO A SPECIAL FUND AND WHO
KNOWS WHERE IT GOES. THE VICTIMS
SHOULD RECEIVE THE VICTIM OF THE
CRIME, IN MY OPINION, SHOULD
RECEIVE THE FINE. YEAH. DO YOU
MIND? DO YOU MIND? LET ME LET ME
JUST CLARIFY THAT, AND THEN I'LL
TURN IT OVER TO OUR COLLEAGUE
FROM THE ATTORNEY GENERAL'S
OFFICE, THE CALIFORNIA
CONSTITUTION. AND ACTUALLY STATE
LAW REQUIRE RESTITUTION TO THE
VICTIM. YES, I THE FIRST THING
THAT IS GOING TO HAPPEN IS THOSE
VICTIMS OF THE OIL SPILL. BUT
PART OF WHAT WE TRY TO DO AS WE
DO WITH CRIMINAL PUNISHMENTS IS
TO CREATE DETERRENCE, RIGHT?
THAT'S WHY WE SOMETIMES WE'LL
PUT PEOPLE IN JAIL OR APPLY
OTHER, OTHER PUNISHMENTS. SO WE
HAVE GOTTEN INTO A SITUATION
NOW, AND THIS WAS PART OF THE
THEORY, I THINK, OF THE FEDERAL
BILL THAT PRESIDENT REAGAN
SIGNED WHERE CORPORATIONS CAN
WRITE OFF THE HARM THEY IMPOSE
ON THE COMMUNITY AS SIMPLY A
COST OF DOING BUSINESS. RIGHT.
AND SO THESE ADDITIONAL
DISCRETIONARY FINES THAT, AGAIN,
THESE ARE GOING TO BE RESERVED
FOR THE MOST EGREGIOUS CASES,
RIGHT? SO MONEY THAT WENT INTO
VOCA WAS FROM THINGS LIKE ENRON
AND OTHER THINGS WHERE LITERALLY
IN SOME CASES, MILLIONS OF
AMERICANS WERE HARMED. IT'S TO
IMPOSE AN ADDITIONAL MEASURE OF
DETERRENCE. IT JUST SO HAPPENS
THAT IT PROVIDES A REALLY
IMPORTANT FUNDING SOURCE FOR A
LOT OF THESE FOLKS. OVER HERE
WHO ARE DOING GOD'S WORK. BUT
IT'S THAT ADDITIONAL, YOU KNOW,
THE RESTITUTION TO THE
INDIVIDUAL IS THE FIRST BOX THAT
WE CHECK. AND THAT'S ACTUALLY IN
IN THE TEXT OF THIS LEGISLATION.
DO YOU WANT TO GO OVER AND
BEYOND THAT? YES. WHICH AGAIN,
MODELING WHAT WAS DONE ON THE
BIPARTISAN FEDERAL LEGISLATION,
WHAT STATES LIKE TEXAS HAVE
DONE? I DON'T KNOW IF THE WITH
THE WITNESS LIKE TO CLARIFY OR
MAKE A CLARIFYING STATEMENT.
YES. AS THE ASSEMBLY MEMBER SAID
. SO RESTITUTION DIRECTLY TO THE
VICTIMS IS FIRST. THAT ALWAYS
HAPPENS. THEN THERE'S A QUESTION
OF PUNISHMENT FOR THE CRIMINAL
DEFENDANT. IF THE CRIMINAL
DEFENDANT IS AN INDIVIDUAL, WE
TALK ABOUT INCARCERATION. WE
TALK ABOUT ALTERNATIVES TO
INCARCERATION. WE TALK ABOUT
PROBATION. WHEN IT'S A
CORPORATION, THAT'S A DEFENDANT.
THEY'VE ALREADY PAID RESTITUTION
TO THE VICTIM. AND NOW WE'RE
TALKING ABOUT PUNISHMENT BECAUSE
THEY'VE COMMITTED A CRIME RIGHT
NOW, THE ONLY THING THERE IS A
FINE, AND IT MAXES AT $10,000,
$10,000 IS NO LONGER AN ADEQUATE
PUNISHMENT FOR CORPORATIONS.
THEY'VE PAID THE VICTIMS. THEY
PAID THEM BACK. BUT WE DON'T
WANT, AGAIN, CRIMES TO JUST BE
PAY THE VICTIM BACK AND MOVE ON.
THERE SHOULD BE PUNISHMENT
PEGGING THE PUNISHMENT TO TWO
TIMES THE HARM HAS BECOME THE
MODERN TREND FOR CORPORATIONS
THAT COMMIT VAST HARMS. EITHER
WIDE SCALE FRAUDS AT FINANCIAL
INSTITUTIONS CAN COMMIT
ENVIRONMENTAL CRIMES, FIRES OR
THINGS LIKE THAT. SO THE DEFAULT
IN THIS BILL IS YOU PAY ONCE TO
THE VICTIMS. THAT'S THE
RESTITUTION, AND THEN YOU PAY UP
TO TWICE THE AMOUNT OF THE HARM
AS A MAXIMUM, AS THE CORPORATE
PUNISHMENT. WHO DETERMINES THE
HARM. THAT'S UP TO THE JUDGE. SO
NORMALLY THE RESTITUTION IS
DETERMINED FIRST. AND THAT'S A
FACTUAL FINDING BY THE COURT.
AND IT'S SLUGGED OUT BETWEEN THE
PROSECUTION AND THE DEFENSE. THE
JUDGE MAKES A FINDING THAT
RESTITUTION IS X. THAT'S THE
AMOUNT OF HARM. AND THEN THE
JUDGE CAN UPWARDS UP TO EXCUSE
ME, DOUBLE IT. WHATEVER THE
JUDGE THINKS IS NECESSARY FOR
ADEQUATE PUNISHMENT, ADEQUATE
DETERRENCE, SO THAT THAT KIND OF
ACTIVITY IS NO LONGER JUST A
COST OF DOING BUSINESS. AND
TEXAS, THE UNITED STATES,
ILLINOIS, OREGON, WASHINGTON,
NEW JERSEY ARE ALL STATES THAT
HAVE ADOPTED LAWS LIKE THIS.
AGAIN, WHERE THE BENCHMARK IS
TWICE THE AMOUNT OF HARM IS THE
CAP. THERE'S AN ALTERNATIVE BASE
AMOUNT ALSO. SO IF THAT DOESN'T
WORK, THAT'S WHY WE HAVE THE $25
MILLION IN THERE AS A AS AN
ALTERNATIVE. SOMETIMES LIKE A
FIRE, IT MAY BE THAT THE HARM IS
VERY DIFFICULT TO DETERMINE. AND
YOU HAVE A BALLPARK. WE ALL
AGREE IT'S BETWEEN 10 MILLION
AND $15 MILLION. BUT WE CAN'T
GET AN EXACT AMOUNT. THE JUDGE
THEN HAS THE DISCRETION TO HIT
THAT BALLPARK WITH THE 25
MILLION AND USE ALL THE FACTORS
THAT WE HAVE LISTED IN THE BILL.
THE SERIOUSNESS OF THE OFFENSE.
IS THIS A FIRST OFFENSE? IS THIS
THE THIRD OFFENSE? HOW LARGE IS
THE CORPORATION? HOW SMALL ALL
OF THOSE FACTORS. ALL RIGHT, I
APPRECIATE THAT. YOU DID A VERY
FINE JOB. SO THANK YOU FOR
EXPLAINING THAT I APPRECIATE
THAT. THANK YOU VERY MUCH. MAY I
ADD SOMETHING, ACTUALLY WE'RE
GOING TO WE'RE GOING TO TURN TO
COMMITTEE, IF YOU DON'T MIND,
OTHER MEMBERS OF THE COMMITTEE
WITH QUESTIONS OR COMMENTS
SEEING NONE. WITH THAT ASSEMBLY
MEMBER, WOULD YOU LIKE TO CLOSE?
YEAH. THANK YOU, THANK YOU VERY
MUCH. APPRECIATE THE AGAIN,
APPRECIATE THE EXCELLENT, AND
THOUGHTFUL FEEDBACK FROM YOU AND
YOUR COMMITTEE. AND I WOULD
RESPECTFULLY REQUEST AN AYE
VOTE. THANK YOU. SO VERY MUCH.
DO I HAVE A MOTION AND A SECOND?
I HAVE A MOTION FROM ASSEMBLY
MEMBER FONG AND A SECOND FROM
ASSEMBLY MEMBER SORIA. SECRETARY
WILL YOU PLEASE CALL THE ROLL ON
THE BILL? AB 2432. THE MOTION IS
DUE. PASS AND REFERRED TO
COMMITTEE ON APPROPRIATIONS.
GRAYSON. HI. GRAYSON. I CHEN.
CHEN I CERVANTES. DIXON DIXON.
NOT VOTING. MIKE FONG I MIKE
FONG I MAIENSCHEIN MAIENSCHEIN I
PETRIE-NORRIS I PETRIE-NORRIS I
BLANCO. RUBIO I MARCO RUBIO I
SORIA SORIA I. THAT BILL HAS
SEVEN VOTES. THE BILL HAS SEVEN
VOTES. IT GETS OUT. BUT WE WILL
KEEP IT THE ROLL OPEN FOR ABSENT
MEMBER. THANK YOU VERY MUCH.
THANK YOU SO VERY MUCH. ITEM
NUMBER THREE AB 30 108.
ASSEMBLYMEMBER JONES JOAN
SAWYER. RECOMMENDATION IS Dð
PASS TO THE COMMITTEE ON PUBLIC
SAFETY. ASSEMBLYMEMBERS SAU JOAN
SAWYER. FEEL FREE TO OPEN UP
WITH YOUR STATEMENT AS YOU ARE
READY. GOOD MORNING. EXCUSE ME.
GOOD MORNING, CHAIR MEMBERS,
TODAY I PRESENT AB 3130 108,
WHICH WILL REINFORCE MORTGAGE
FRAUD AND PROVIDE RECOURSE FOR
VULNERABLE CALIFORNIANS WHO LOSE
THEIR LIFE'S WORK TO SHADY
MORTGAGE LENDERS. IN FEBRUARY,
THE FEDERAL TRADE COMMISSION AND
THE CALIFORNIA DEPARTMENT OF
FINANCIAL PROTECTION AND
INNOVATION WON A FEDERAL COURT
CASE AGAINST A LOS ANGELES BASED
MORTGAGE RELIEF SCAM. THE
COMPANY PROMISED TO LOWER
MORTGAGE PAYMENTS AND ALLOW
FAMILIES TO AVOID FORECLOSURE.
BAXLEY STOLE MILLIONS OF DOLLARS
FROM OVER 3000 PEOPLE
NATIONWIDE. THESE SCHEMES ARE
BECOMING MORE AND MORE COMMON,
AND THEY PROFIT BY DECEIVING THE
CALIFORNIANS MOST VALUABLE
POPULATIONS HOMEOWNERS WITH LOW
CREDIT VETERANS, NON-ENGLISH
SPEAKERS, AND THOSE WHO ARE
UNBANKED OR UNDERBANKED ARE ALL
PRIME TARGETS. PREDATORY BROKERS
WILL PINPOINT VICTIMS WHEN THEY
ARE IN FINANCIAL DISTRESS, THEN
CONVINCE THEM TO SIGN A MORTGAGE
THEY DON'T FULLY UNDERSTAND, OR
WHICH IS MISLEADING OR UNTRUE.
FOR MOST OF THESE PEOPLE, THEIR
ONLY ASSET AND SOURCE OF EQUITY
IS THEIR HOME. WHEN THEY SIGN A
PREDATORY MORTGAGE, THEY RISK
LOSING EVERYTHING.
UNFORTUNATELY, THE VAST MAJORITY
OF THESE CASES GO UNPROCESSED
MUTED. AS YOU KNOW, I RARELY
COME BEFORE THIS COMMITTEE, MY
MOTHER WAS A VICTIM OF A
MORTGAGE SCAM, MY FAMILY IS
BASICALLY LOST THEIR HOME TO
SOMEONE WHO TOOK OUT THE EQUITY
IN THE REVERSE MORTGAGE, SCHEME
SUPPOSED TO PAINT THE HOUSE,
TOOK OUT $800,000 INSTEAD OF
$8,000, EITHER A HOME, A HOME
THAT I GREW UP IN, A HOME THAT I
RODE MY BIKE IN, A HOME THAT I
HAD MY BIKE STOLEN FROM, AND A
HOME THAT WE WERE SUPPOSED TO BE
A LEGACY TO ALL MY FAMILY, AND
WAS SUPPOSED TO BE THE WEALTH
THAT WOULD BE GENERATIONAL FOR
MY NIECES AND NEPHEWS. WHEN
SOMEONE SIGNS THESE DOCUMENTS,
REGARDLESS OF THEIR
UNDERSTANDING, CURRENT LAW
CONSIDERS THEIR SIGNATURE A
LEGALLY BINDING AGREEMENT, WHICH
IS VIRTUALLY UNTOUCHABLE. THAT
IS, IN ADDITION TO THE NARROW
DEFINITION OF MORTGAGE FRAUD,
DETERS MOST ATTORNEYS FROM
TAKING ON THESE CASES, INCLUDING
DISTRICT ATTORNEYS WHOM I WENT
TO WHO REFUSED TO TAKE IT AND
SAID, THE ONLY WAY YOU RECOURSE
IS THROUGH A LAWSUIT. AND FOR
SENIORS LIKE MY 87 YEAR OLD
MOTHER, SHE DOESN'T HAVE THE
TENS OF THOUSANDS OF DOLLARS TO
GO THROUGH A LAWSUIT TO MAKE
THAT HAPPEN. THAT IN ADDITION TO
THE NARROW DEFINITION OF AB
3108, WILL CLARIFY THAT BROKERS
WHO DECEIVE AND MISGUIDE
CONSUMERS ARE COMMITTING
MORTGAGE FRAUD AND WILL GIVE
VICTIMS A CHANCE TO ACHIEVE
JUSTICE AND REGAIN THEIR HARD
EARNED MONEY WITH ME TO TESTIFY
IN SUPPORT OF THE BILL IS ROBERT
HARRELL ON BEHALF OF THE BILL'S
SPONSOR, THE CONSUMER FEDERATION
OF CALIFORNIA, AND CECIL
VOSSLER, A CONSUMER ATTORNEY
WITH EXPERIENCE IN PREDATORY
LENDING CASES. THANK YOU. THANK
YOU, SENATOR MEMBER, FOR YOUR
STATEMENT. WITNESSES TWO MINUTES
EACH. GOOD AFTERNOON, MR.
CHAIRMAN. MEMBERS. ROBERT
HARRELL WITH THE CONSUMER
FEDERATION OF CALIFORNIA, IN A
WAY, THIS BILL IS SORT OF A
SISTER BILL TO THE BILL THAT YOU
HEARD AT THE BEGINNING OF THIS
HEARING BY ASSEMBLYMEMBERS
SCHIAVO, THE ASSEMBLY MEMBER WAS
VERY ELOQUENT IN TALKING ABOUT
NOT ONLY HIS PERSONAL CASE, BUT
THE PROBLEM HERE, WHAT HAPPENS
IS THE NOTICE OF DEFAULT WHEN
SOMEONE BEGINS TO GET IN SOME
SORT OF TROUBLE, WINDS UP
SERVING AS A SORT OF BAT SIGNAL,
TO FRAUDSTERS AND SCAM ARTISTS,
THAT YOU HAVE SOMEONE WHO IS IN
SOME SORT OF FINANCIAL DURESS
AND AT RISK OF LOSING THEIR
HOME. AND WHAT INEVITABLY
HAPPENS IS THE SCAMMERS AND
FRAUDSTERS KIND OF COME OUT OF
THE WOODWORK, ALONG WITH SOME
LEGITIMATE FOLKS WHO MIGHT BE
ABLE TO HELP THE HOMEOWNER IN
DISTRESS. BUT WHEN YOU SIGN THAT
CONTRACT, AS THE ASSEMBLY MEMBER
IS, THE AUTHOR SAID, THAT WINDS
UP BECOMING AN EXTRA BIND EVEN
IF THE CONTRACT WAS PRODUCED IN
A FRAUDULENT MANNER INTENDED TO
MISLEAD THE CONSUMER. AND SO
WHAT YOU HAVE IS THE MORE RECENT
SCAM, WHICH MR. VOSSLER WILL GO
INTO A BIT MORE DETAIL ABOUT
OVER THE LAST 3 OR 4 YEARS IN
PARTICULAR, IS TO TAKE SOMEONE
WHO'S UNDER DURESS AND SHIFT
THEM OVER FROM A RESIDENTIAL
LOAN PRODUCT THAT THEY'VE BEEN
IN INTO A COMMERCIAL PRODUCT
THAT SERVES TWO IMPORTANT
PURPOSES. ONE, YOU HAVE FEWER
CONSUMER PROTECTIONS IN THE
COMMERCIAL LENDING SPACE THAN
YOU DO IN THE RESIDENTIAL
LENDING SPACE. AND TWO, MANY OF
THESE PRODUCTS WIND UP WITH SOME
SORT OF MASSIVE BALLOON PAYMENT
AFTER SIX MONTHS OR A YEAR. AND
A PERSON WHO'S UNDER THAT LEVEL
OF FINANCIAL DURESS, UNLESS A
MIRACLE SORT OF HAPPENS, THEY'RE
NOT GOING TO BE ABLE TO AFFORD
THAT BALLOON PAYMENT SIX MONTHS
OR A YEAR DOWN THE ROAD. SO WE
WOULD URGE YOUR SUPPORT FOR THIS
MEASURE AS THE SPONSOR OF IT.
THANK YOU, MY NAME IS SAL
VOSSLER. AGAIN, I'M WITH THE
VOSLER LAW FIRM, AND I HANDLE
PRIMARILY PREDATORY LENDING
CASES LIKE WHAT WE'RE TALKING
ABOUT RIGHT NOW. IN 2001,
CALIFORNIA ENACTED LEGISLATION
TO COMBAT PREDATORY LENDING,
WHICH TYPICALLY OCCURS IN THE
SUBPRIME MORTGAGE MARKET. THOSE
PROVISIONS ARE CODIFIED IN
DIVISION 1.7 OF THE FINANCIAL
CODE, AND THEY APPLY TO CONSUMER
LOANS, NOT TO COMMERCIAL LOANS.
IN PRACTICE, IN ORDER TO EVADE
THESE CONSUMER PROTECTION
STATUTES, PREDATORY LENDERS AND
BROKERS WILL STEER BORROWERS
INTO SIGNING COMMERCIAL LOAN
DOCUMENTS WHICH ARE UNSUITABLE
FOR THEM. THIS INCLUDES MY 91
YEAR OLD CLIENT WHO'S ON SOCIAL
SECURITY MAKING $1,400 A MONTH,
AND SHE WAS STEERED BY HER
BROKER INTO A COMMERCIAL LOAN
WHICH REQUIRED HER TO MAKE A
BALLOON PAYMENT OF $850,000.
AFTER ONE YEAR. THIS, OF COURSE,
IS MANIFESTLY IMPOSSIBLE, AND MY
CLIENT HAD NO DISCERNIBLE
COMMERCIAL INTEREST IN THE
PROPERTY. YET THE BROKER GOT HER
TO SIGN THOSE DOCUMENTS ANYWAY,
WORSE, HER BROKER HAD ACTUALLY
STEERED HER INTO FOUR SUCH LOANS
IN A FOUR YEAR PERIOD, CONSUMING
A MAJORITY OF HER ACCUMULATED
HOME EQUITY. APPROXIMATELY
$700,000 GONE IN FOUR YEARS, SHE
WAS LOSING HER HOME IN
FORECLOSURE WHEN HER DAUGHTER
CAME TO ME FOR HELP, THESE LOANS
AND THESE TACTICS ARE METHODS
THAT PREDATORY LOAN BROKERS AND
LENDERS WILL USE TO QUICKLY
LIQUIDATE AND APPROPRIATE A
HOMEOWNER'S ACCUMULATED HOME
EQUITY. WE'VE HAD CONVERSATIONS
WITH MORTGAGE BROKERS AND
LENDERS AND ADVOCATES IN THIS
SPACE, AND IT SEEMS THAT
EVERYBODY RECOGNIZES THAT THIS
IS A MAJOR PROBLEM, AND OUR GOAL
IS A NARROW ONE. WE WANT TO MAKE
SURE THAT THE BORROWERS WHO THE
LEGISLATURE HAS ALREADY SAID
SHOULD BE PROTECTED FROM THESE
KINDS OF PRACTICES, THAT THEY'RE
COVERED BY THE UMBRELLA OF
DIVISION 1.7, EVEN WHEN OR
ESPECIALLY WHEN THEY'RE THE
VICTIMS OF FRAUD. AND I'VE
ALREADY SHARED A NUMBER OF MY
CASES WITH THE COMMITTEE. THIS
IS MY PRIMARY AREA OF PRACTICE,
AND I URGE YOUR SUPPORT. THANK
YOU FOR YOUR TESTIMONY. WE WILL
TURN TO THOSE IN THE ROOM IN
SUPPORT. PLEASE COME TO THE
MICROPHONE, STATE YOUR NAME,
ORGANIZATION AND POSITION. THANK
YOU. DANNY. KENDALL KIZER, ON
BEHALF OF THE CALIFORNIA LOW
INCOME CONSUMER COALITION IN
SUPPORT. THANK YOU. ANY OTHERS
IN SUPPORT? SEEING NONE WE WILL
GO TO OPPOSITION. IS THERE
OPPOSITION IN THE ROOM. SEEING
NONE. LET'S BRING IT TO THE
COMMITTEE FOR QUESTIONS OR
COMMENTS. SEEING NO WE HAVE A
MOTION BY ASSEMBLYMEMBER DIXON
AND A SECOND BY ASSEMBLYMEMBER
SORIA. WOULD YOU LIKE TO CLOSE?
AND I WANT TO KNOW AND I WANT TO
THANK YOU. YOU KNOW, WHEN I WENT
TO, TO THE PROPER AUTHORITIES
ABOUT THIS, WHAT WAS DISTRESSING
THAT THEY SAID THEY GET FIVE OF
THESE A WEEK. THAT'S FIVE
SENIORS OR MORE A WEEK THAT ARE
BEING SCAMMED. AND, JUST IN LOS
ANGELES ALONE. AND SO I THANK
YOU. YOU WILL BE HELPING QUITE A
FEW PEOPLE WHO WHO CAN'T HELP
THEMSELVES. AND A REQUEST THEY
ASK FOR YOUR VOTE. THANK YOU,
ASSEMBLY MEMBER JOHN SAWYER. WE
DO HAVE A MOTION AND A SECOND
SECRETARY. PLEASE CALL THE ROLL
ON THE BILL. AB 3108. THE MOTION
IS DUE PASSED AND REFERRED TO
COMMITTEE ON PUBLIC SAFETY.
GRAYSON A GRAYSON. AYE. CHEN.
CHEN AYE. CERVANTES. DIXON.
DIXON. AYE. MIKE FONG. MIKE.
FONG. AYE. MAIENSCHEIN.
MAIENSCHEIN AYE. PETRIE-NORRIS.
BLANCO. RUBIO BLANCA. RUBIO.
AYE. SORIA. SORIA AYE. THE BILL
HAS SEVEN VOTES. THE BILL HAS
SEVEN VOTES. IT GETS OUT. WE
WILL KEEP THE ROLL OPEN FOR
ABSENT MEMBERS. THANK YOU,
MISTER CHAIR. AND COMMITTEE.
THANK YOU SIR. NEXT IS FILE ITEM
NUMBER FOUR AB 2935. THE
RECOMMENDATION IS DO PASS, AS
AMENDED TO THE COMMITTEE ON
HUMAN SERVICES. ASSEMBLY MEMBER
MAIENSCHEIN. AND WHEN YOU'RE
READY. YOU CAN BEGIN WITH YOUR
OPENING STATEMENT. THANK YOU SIR
. WELL, THANK YOU VERY MUCH, MR.
CHAIR. AND MEMBERS, I WANT TO
BEGIN BY ACCEPTING THE
AMENDMENTS AS PROPOSED IN THE
ANALYSIS. AB 2935 IS IMPORTANT
LEGISLATION TO PROTECT FOSTER
YOUTH. FOSTER YOUTH ARE
ESPECIALLY VULNERABLE TO HAVING
THEIR IDENTITIES STOLEN DUE TO
THE LARGE NUMBER OF PEOPLE WHO
HAVE ACCESS TO THEIR PERSONAL
INFORMATION. EACH TIME A FOSTER
CHILD CHANGES PLACEMENTS,
ADDITIONAL INDIVIDUALS GAIN
ACCESS TO THEIR INFORMATION,
INCLUDING THEIR SOCIAL SECURITY
NUMBER. CHILDREN HAVE ALWAYS
BEEN AN ATTRACTIVE TARGET FOR
IDENTITY THIEVES BECAUSE THEIR
CREDIT REPORTS ARE CLEAN AND ARE
OFTEN LEFT UNMONITORED FOR MANY
YEARS, PROVIDING AMPLE TIME TO
CAUSE SUBSTANTIAL DAMAGE TO THE
CHILD'S CREDIT. ONCE A FOSTER
YOUTH REACHES 14, OR IF THEY
COME INTO THE SYSTEM AFTER THE
AGE OF 14. CURRENT LAW REQUIRES
COUNTY WELFARE DEPARTMENTS TO
CHECK WITH THE THREE CREDIT
BUREAUS TO SEE IF A CREDIT
REPORT EXISTS. BECAUSE CHILDREN
SHOULD NOT HAVE CREDIT REPORTS,
THE EXISTENCE OF A REPORT IS
LIKELY THE RESULT OF FRAUD.
HOWEVER, OUR CURRENT LAWS ONLY
COME INTO PLAY AFTER A YOUTH HAS
BEEN VICTIMIZED. THIS BILL SEEKS
TO PREVENT IDENTITY THEFT IN THE
FIRST PLACE BY REQUIRING THE
CREDIT BUREAUS TO AUTOMATICALLY
FREEZE AN INDIVIDUAL'S CREDIT
REPORTS WHEN THEY RECEIVE AN
INQUIRY FROM A COUNTY WELFARE
DEPARTMENT REGARDING A FOSTER
YOUTH. PLACING THE AUTOMATIC
FREEZE WILL PREVENT ACTORS FROM
BEING ABLE TO OPEN ACCOUNTS IN A
CHILD'S NAME WITH ME TO TESTIFY
IN SUPPORT IS ED HOWARD ON
BEHALF OF CHILDREN'S ADVOCACY
INSTITUTE. YOU HAVE TWO MINUTES.
THANK YOU. GOOD AFTERNOON, MR.
CHAIR, AND MEMBERS. ED HOWARD,
SENIOR COUNSEL, THE CHILDREN'S
ADVOCACY INSTITUTE. PLEASED TO
SPONSOR THIS BILL. WE WERE GOING
TO HAVE A WITNESS WHO WAS A
FORMER FOSTER YOUTH COME WITH ME
TODAY. BUT REGRETTABLY, SHE WAS
UNABLE TO COME. WITH YOUR
PERMISSION, I WILL READ AN
ABRIDGED VERSION OF WHAT HER
STATEMENT WOULD HAVE BEEN. THANK
YOU, MY NAME IS KYRA ANDERSON. I
WAS THE SECOND OLDEST CHILD OF
EIGHT, AND ON MOST DAYS I WAS
CALLED MOM AS I WAS MORE PRESENT
THAN OUR OWN MOTHER. WHEN I WAS
15 YEARS OLD, I WENT INTO FOSTER
CARE. AT 17, I STARTED WORKING
WITH THE INTENTION OF SAVING UP
TO MOVE OUT AND ACCESS EXTENDED
FOSTER CARE. IT WAS THEN THAT I
LEARNED I NEEDED A DECENT CREDIT
SCORE TO RENT AN APARTMENT. I
DECIDED I SHOULD CHECK MY CREDIT
REPORT. IT CAME AS A SHOCK WHEN
I LEARNED THAT I ACTUALLY HAD A
CREDIT SCORE, EVEN THOUGH I
WASN'T SUPPOSED TO. MY CREDIT
SCORE WAS 319. I DISCOVERED THAT
MY BIOLOGICAL FATHER HAD BEEN
OPENING ACCOUNTS USING MY SOCIAL
SECURITY NUMBER, AS WELL AS
GETTING BUSINESS LOANS UNDER MY
NAME. SHORTLY AFTER I TURNED 18,
MY FOSTER PARENTS HANDED ME ALL
MY BELONGINGS IN A TRASH BAG,
AND IN THE MIDDLE OF THE NIGHT
TOLD ME TO LEAVE. I HAD NOWHERE
TO GO. I COULDN'T RENT AN
APARTMENT. I WORKED FOUR JOBS TO
COMBAT THE IMPACT OF MY LOW
CREDIT SCORE. I SPENT COUNTLESS
HOURS ON THE PHONE, FORCED TO
RETELL MY STORY TO A PLETHORA OF
STRANGERS AS I WROTE ENDLESS
AMOUNTS OF APPEALS. SAME
DOCUMENTS AND STORY OVER AND
OVER. OFTENTIMES AS CREDIT
BUREAUS DENIED MY CLAIMS BECAUSE
THEY SAW MY FATHER USING MY
SOCIAL SECURITY NUMBER AS,
QUOTE, JUSTIFIED. SINCE HE WAS
MY PARENT, I FELT LIKE I WAS
DROWNING IN MY OWN PLEAS FOR
HELP. MY EXPERIENCE DEALING WITH
THE BUREAUS WAS COLD AND
IMPERSONAL AND PERSONAL. SOME
QUESTIONED WHY I DIDN'T JUST
CALL MY FATHER AND ASK HIM TO
CLOSE MY ACCOUNTS AND STOP USING
MY SOCIAL SECURITY NUMBER. ALL
OF THIS TOOK SEVERAL
OVERWHELMING YEARS. YEARS. DID I
FINALLY BRING MY CREDIT SCORE
BACK UP? YES. BUT DOES WHAT
HAPPENED TO ME STILL IMPACT ME
TO THIS VERY DAY? ALSO YES.
WHILE DEALING WITH ALL OF THESE
BATTLES, MY BROTHER ENDED UP
COMMITTING SUICIDE AT 20 YEARS
OLD. I DIDN'T LEARN UNTIL AFTER
HE PASSED THAT HE HAD ALSO BEEN
VICTIMIZED BY OUR FATHER'S
IDENTITY FRAUD. I HOPE WE CAN
ALL COME TOGETHER TODAY SO THAT
LESS FOSTER CHILDREN HAVE TO
SUFFER THROUGH THESE CRIMES. I
WILL OBSERVE THE OBVIOUS. KYRA
DID NOTHING WRONG. WE, BY FORCE
OF LAW, MADE HER LIFE OUR
RESPONSIBILITY. I RESPECTFULLY
ASK FOR YOUR I VOTE. THANK YOU
FOR YOUR TESTIMONY TO THOSE IN
THE ROOM IN SUPPORT. PLEASE STEP
FORWARD. NAME, ORGANIZATION AND
POSITION, PLEASE. MR. NICOLE
MORALES, ON BEHALF OF CHILDREN
NOW IN SUPPORT. THANK YOU. ANY
OTHERS SEEING NONE THOSE IN
OPPOSITION, PLEASE STEP FORWARD.
SEEING NONE, WE WILL BRING IT TO
COMMITTEE FOR QUESTIONS OR
COMMENTS. ASSEMBLY MEMBER
PETRIE-NORRIS VERY BRIEFLY. WHAT
A NIGHTMARE. WHAT AN ABSOLUTE
NIGHTMARE. SO THANK YOU SO MUCH
ASSEMBLY MEMBER MAIENSCHEIN FOR
SHINING A LIGHT ON THIS AND
BRINGING THIS FORWARD. WE'D LOVE
TO COAUTHOR. THANK YOU. YOU BET.
THANK YOU. ANY I'LL JUST SAY ONE
MORE THING. YES. ASSEMBLY
MEMBER. DIXON. THANK YOU. CHAIR
AND THANK YOU FOR BRINGING THIS
FORWARD. I MEAN, SOMETIMES I
OFTEN WONDER WHY WE HAVE SO MANY
BILLS TO CONSIDER. AREN'T THERE
ENOUGH LAWS? AND YOU BRING
ATTENTION TO SOMETHING THAT IS
REALLY ESSENTIAL. AND I THANK
YOU AND THANK YOU ON BEHALF OF
YOUR CLIENTS THERE. THANK YOU
VERY MUCH. THANK YOU. THANK YOU
FOR THOSE COMMENTS. DO I HAVE A
MOTION OR A SECOND? THANK YOU.
SO I HAVE A MOTION FROM ASSEMBLY
MEMBER PETRIE-NORRIS, SECOND
FROM ASSEMBLY MEMBER RUBIO.
SECRETARY, PLEASE CALL THE ROLL
ON THE BILL. AB 2935. THE MOTION
IS TO PASS AS AMENDED AND
REFERRED TO COMMITTEE ON HUMAN
SERVICES. GRAYSON A GRAYSON AYE.
CHEN CHEN. AYE. CERVANTES.
DIXON. DIXON. AYE MIKE. FONG.
MIKE. FONG. AYE. MAIENSCHEIN.
AYE MAIENSCHEIN. AYE.
PETRIE-NORRIS. PETRIE-NORRIS.
AYE BLANCA. RUBIO. RUBIO. AYE.
SORIA SORIA AYE HAS EIGHT VOTES.
THANK YOU, THANK YOU. THE BILL
HAS EIGHT VOTES. IT GETS OUT. WE
WILL KEEP THE ROLL OPEN FOR
ABSENT MEMBERS. WITH THAT WE
WILL GO TO THE NEXT ITEM. ITEM
NUMBER FIVE AB 2618. VICE CHAIR
CHEN, YOU ARE PRESENTING AB
2618. THE RECOMMENDATION IS DO
PASS TO THE COMMITTEE ON LOCAL
GOVERNMENT. PLEASE WHEN YOU ARE
READY. THANK YOU. THANK YOU, MR.
CHAIR. APPRECIATE YOUR TIME.
AGAIN. I WANTED TO THANK YOU FOR
YOUR TIME, FOR ALLOWING ME TO
PRESENT AB 2618. FIRST OFF, I
WANT TO THANK THE COMMITTEE FOR
WORKING WITH MY STAFF ON THIS
BILL UNTIL JANUARY 1ST, 2026.
GOVERNMENT CODE SECTION 53601.8
ALLOWS, BUT DOES NOT MANDATE, A
LOCAL AGENCY TO DEPOSIT UP TO
50% OF THEIR OVERALL SURPLUS
FUNDS WITH A DEPOSITORY
INSTITUTION THAT USES RECIPROCAL
DEPOSITS AS A MEAN OF
COLLATERALIZATION. USING
RECIPROCAL DEPOSITS ALLOWS THE
DEPOSITORY INSTITUTION TO ACCEPT
A DEPOSIT FROM A LOCAL AGENCY
EXCEEDING THE FEDERAL DEPOSIT
INSURANCE CORPORATION OR
NATIONAL CREDIT UNION
ASSOCIATION STANDARD INSURANCE
LIMIT OF $250,000, WHILE
MAINTAINING FULL INSURANCE
COVERAGE OVER THE ENTIRETY OF
THE LOCAL AGENCY DEPOSIT, UNLESS
EXTENDED ON JANUARY 1ST, 2026.
THE MAXIMUM 50% OF LOCAL AGENCY
FUNDS THAT MAY BE PLACED USING
TRIPLE DEPOSITS WILL BE REDUCED
TO 30. AB 2618 ELIMINATES THE
JANUARY 1ST, 2026 SUNSET DATE,
THEREBY EXTENDING CURRENT LAW
AND THE PERMISSIVE ABILITY FOR
LOCAL AGENCIES TO DEPOSIT UP TO
50% OF THEIR OVERALL SURPLUS
FUNDS WITH THE DEPOSITORY
INSTITUTION THAT USES RECIPROCAL
DEPOSITS AS A MEANS OF
COLLATERALIZATION. HERE TO
TESTIFY WITH ME, WE HAVE JASON
LANE, DIRECTOR OF GOVERNMENT
RELATIONS FOR THE CALIFORNIA
BANKERS ASSOCIATION. HE'LL MAKE
ALL MY LEGALESE MUCH SIMPLER.
THANK YOU. YOU HAVE TWO MINUTES.
THANK YOU, MR. CHAIR. MEMBERS OF
THE COMMITTEE, I'M JASON LANE,
CALIFORNIA BANKERS ASSOCIATION.
APPRECIATE ASSEMBLY MEMBER CHEN.
I'M CARRYING THIS BILL FOR US.
WE'RE REMOVING A SUNSET DATE TO
A PORTION OF THE GOVERNMENT LAW
THAT ALLOWS LOCAL AGENCIES TO
CONTINUE TO INVEST SURPLUS
DOLLARS IN COMMUNITY BANKS AND
CREDIT UNIONS. THAT ENSURES THAT
THOSE DEPOSITS THEN HELP THE
LOCAL COMMUNITY. THE THEORY IS,
IS IT KEEPS THE DOLLARS LOCAL
AND COMMUNITY BANKS AND CREDIT
UNIONS CAN THEN GO OUT AND MAKE
LOANS INTO THE COMMUNITY, WHICH
IN TURN HELPS THE LOCAL ECONOMY.
VÆ THE PROVISION OF LAW THAT WAS
ENACTED IN 2019 BY ASSEMBLY
MEMBER MCCARTY INCREASED THE
THRESHOLDS THAT A LOCAL AGENCY
COULD INVEST USING RECIPROCAL
DEPOSITS. TO, TO 50% OF ITS
SURPLUS FUNDS. PREVIOUSLY, IT
WAS 30. WE'RE REMOVING THE
SUNSET DATE TO THAT LAW, THIS
ALSO ENSURES THAT BECAUSE OF THE
COMMUNITY BANK OR CREDIT UNION
CAN PARTICIPATE THOSE DEPOSITS
OUT TO OTHER COMMUNITY BANKS AND
CREDIT UNIONS. IT ENSURES THAT
EVERY DOLLAR OF THOSE LOCAL
AGENCY FUNDS ARE FDIC INSURED.
SO WE URGE YOUR SUPPORT AND
PASSAGE OF THIS BILL TODAY.
THANK YOU. THANK YOU FOR YOUR
TESTIMONY. THOSE IN SUPPORT,
PLEASE COME FORWARD. NAME
ORGANIZATION AND POSITION. GOOD
AFTERNOON, CHAIR AND MEMBERS,
ROBERT WILSON, CALIFORNIA CREDIT
UNION LEAGUE HERE IN SUPPORT.
THANK YOU. THANK YOU. ANY OTHERS
SEEING NONE. WE'LL GO TO
OPPOSITION. ANYONE IN THE ROOM
IN OPPOSITION. PLEASE COME
FORWARD. SEEING NONE. LET'S TAKE
IT TO THE COMMITTEE FOR
QUESTIONS OR COMMENTS. WE HAVE,
WE HAVE ASSEMBLYMEMBER
PETRIE-NORRIS, WILL ACCEPT THE
MOTION FROM YOU. AND SECOND,
FROM ASSEMBLYMEMBER DIXON. THANK
YOU SO VERY MUCH. WE DO HAVE A
MOTION AND A SECOND, MEMBER,
WOULD YOU LIKE TO CLOSE? VICE
CHAIR, I RESPECTFULLY ASK FOR
MR. CHAIR. THANK YOU. THANK YOU
FOR YOUR BRIEF CLOSING.
SECRETARY, WILL YOU PLEASE CALL
THE ROLL ON AB 2618? THE MOTION
IS DUE. PASS AND REFERRED TO
COMMITTEE ON LOCAL GOVERNMENT.
GRAYSON GRAYSON I CHEN I CHEN I
CERVANTES. I CERVANTES I DIXON.
DIXON I MIKE FONG I MIKE FONG I
MAIENSCHEIN I MAIENSCHEIN I
PETRIE-NORRIS I PETRIE-NORRIS I
BLANCO RUBIO MARCO RUBIO I SORIA
SORIA I. THE BILL HAS NINE
VOTES. CONGRATULATIONS. VICE
CHAIR. UNANIMOUS. YOUR BILL GETS
OUT WITH NINE VOTES. THANK YOU,
MR. CHAIR. THANK YOU. VICE CHAIR
CHEN, YOUR NEXT UP AGAIN BY ITEM
NUMBER SIX AB 2981.
RECOMMENDATION Dð PASS TO
COMMITTEE ON APPROPRIATIONS. YOU
MAY BEGIN WHEN YOU'RE READY.
THANK YOU, MR. CHAIR. APPRECIATE
IT. FIRST I WANT TO AGAIN THANK
THE COMMITTEE AND FOR WORKING
WITH MY STAFF ON THIS BILL. AND
WE'LL BE TAKING ALL THE
COMMITTEE AMENDMENTS. AB 2981 IS
DESIGNED TO ADDRESS THE PROBLEM
THAT THE CURRENT COMMERCIAL
LENDER IS LICENSING APPLICATION
PROCESS WITH THE DPI IS
INCOMPATIBLE WITH HOW VERY
SOPHISTICATED AND HIGH VALUE
PRIVATE CREDIT PROVIDERS
CAPITAL. IN SHORT, THE
APPLICATION ASKS QUESTIONS THAT
ARE NOT SUITED FOR PUBLICLY
TRADED CORPORATIONS WITH SPECIAL
PURPOSE LENDING ENTITIES. AB
2981 DOES NOT EXEMPT THESE BDC
LENDERS FROM REGULATION, RATHER
DEEMS THEM TO BE LICENSEES AND
SUBJECT TO THE SAME REGULATIONS
AS OTHER COMMERCIAL LENDERS. IN
THIS WAY, THE LICENSING
RESOURCES CAN BE MORE FOCUSED ON
COMMERCIAL LENDERS WHO ARE
MAKING SMALL BUSINESS LOANS TO
ATTRACT COMPANIES TO CALIFORNIA
THAT ARE ENGAGED IN PERIODIC AND
LARGE VOLUME COMMERCIAL LENDING
PROJECTS. AB 2981 RELIEVES
INSTITUTIONAL FINANCE LENDERS
FROM DPI AND LICENSURE IF THEY
DO NOT MAKE ANY CONSUMER LOANS
IN THE PRECEDING CALENDAR YEAR,
IT HAS MADE FIVE OR FEWER
COMMERCIAL LOANS OR THE
PRINCIPAL AMOUNT OF ALL LOANS
MADE BY THE FINANCE LENDER IN
THE PRECEDING CALENDAR YEAR HAVE
EACH EXCEED $350,000. HERE TO
TESTIFY, WE HAVE SARAH J. ASHER,
LEÓN ON BEHALF OF ARES
MANAGEMENT, LLC. THANK YOU. YOU
HAVE TWO MINUTES. HELLO. THANK
YOU, MR. CHAIR AND MEMBERS, FOR
ALLOWING ME TO SPEAK IN SUPPORT
OF AB 2981. I'M SARAH
OCHTERLONY. I'M AN ATTORNEY FOR
NON-DEPOSITORY FINANCIAL
SERVICES COMPANIES WHO DO
BUSINESS OR WANT TO DO BUSINESS
IN CALIFORNIA, INCLUDING ARES
CAPITAL CORPORATION. THÀNH, I AM
I'M BASED IN COLORADO, WHERE I
WAS APPOINTED BY THE CURRENT AND
PAST GOVERNOR TO REPRESENT THE
STATE AT LARGE ON THE COLORADO
BANKING BOARD, WHICH IS THE
SUPERVISORY AUTHORITY OVER
COLORADO CHARTERED BANKS, TRUST
AND MONEY TRANSMITTERS. AND I
WAS PREVIOUSLY A TRIAL ATTORNEY
WITH THE US DEPARTMENT OF
TREASURY'S OFFICE OF THRIFT
SUPERVISION AND AN ACTING DEPUTY
ENFORCEMENT DIRECTOR AND ONE OF
THE FOUNDING EMPLOYEES OF THE
CONSUMER FINANCIAL PROTECTION
BUREAU. I'M HERE ON BEHALF OF
ERIS CAPITAL CORPORATION. ERIS
CAPITAL HAS A LENDING PORTFOLIO
OF APPROXIMATELY $22.9 BILLION,
WHICH CONSISTED OF 505 PORTFOLIO
COMPANIES BACKED BY 232
DIFFERENT PRIVATE EQUITY
SPONSORS. THIS TYPE OF
COMPLICATED CORPORATE SETUP FOR
THESE PRIVATE CAPITAL BUSINESSES
HAS HAS BECOME AN ISSUE WITH
LICENSING WHEN IT COMES TO THE
DFP. B THE THESE BUSINESS
DEVELOPMENT COMPANIES WOULD
GREATLY BENEFIT FROM AB 2981,
FORMERLY SPEAKING, MOST BDCS ARE
CLOSED END FUNDS THAT HOLD A
PORTFOLIO OF LOANS AND TRADE ON
THE STOCK MARKET. BDCS GIVEN
THEIR STATUS AS REGISTERED
INVESTMENT COMPANIES UNDER THE
INVESTMENT COMPANY ACT OF 1940,
ARE REQUIRED TO DISTRIBUTE AT
LEAST 90% OF THEIR NET
INVESTMENT INCOME TO
SHAREHOLDERS AND ARE SUBJECT TO
OVERSIGHT BY THE SEC. ARES
GENERALLY TARGETS AS BORROWERS
THE TOP 2% LARGEST COMPANIES IN
THE US. THEIR BORROWERS ARE
SOPHISTICATED AND THE LOANS ARE
VERY LARGE, OFTEN MANY MILLIONS
OF DOLLARS. HERE IN CALIFORNIA,
ARIES SERVED AS THE
ADMINISTRATIVE AGENT, JOINT LEAD
ARRANGER, AND JOINT BOOKRUNNER
FOR A NEW SENIOR SECURED CREDIT
FACILITY TO SUPPORT THE
CONTINUED GROWTH PLAN FOR
AVETTA. AVETTA IS A SUPPLY CHAIN
RISK MANAGEMENT SAAS PLATFORM
THAT CONNECTS GLOBAL ENTERPRISE
CUSTOMERS TO CONTRACTORS AND
SUPPLIERS. IT IS HEADQUARTERED
BOTH IN OREM, UTAH AND IRVINE,
CALIFORNIA. THIS IS JUST ONE
EXAMPLE OF THE KINDS OF LOANS
THAT ARIES PUTS INTO CALIFORNIA
BUSINESS. THE PROBLEM IS THAT
THE LICENSE APPLICATION WITH THE
DFP IS INCOMPATIBLE WITH THIS
PRIVATE LENDER BUSINESS MODEL AB
2981 IS DESIGNED TO ADDRESS THE
PROBLEM THAT THE CURRENT
COMMERCIAL LENDER LICENSING
APPLICATION PROCESS IS NOT
CONSISTENT WITH HOW VERY
SOPHISTICATED AND HIGH VALUE
PRIVATE CREDIT PROVIDES CAPITAL.
CALIFORNIA FINANCIAL CODE
SECTION 22 100 REQUIRES ANY
INDIVIDUAL OR COMPANY THAT
ENGAGES IN THE BUSINESS OF
MAKING COMMERCIAL LOANS OR
ACTING AS A BROKER TO OBTAIN A
FINANCE LENDER LICENSE USING
SOMETHING CALLED THE NATIONAL
MORTGAGE LICENSING SYSTEM. THE
LICENSE APPLICATION REQUIRES
DETAILED, SENSITIVE PERSONAL
INFORMATION ABOUT FINANCE
COMPANY OWNERS, INCLUDING
FINGERPRINTS AND PERSONAL
FINANCIAL DISCLOSURES. AND IF
YOU CAN, Ó. YOU BET. MOVE TO
CLOSING. THANK YOU, IN ANY CASE,
WE'RE HOPING THAT THIS WILL THIS
BILL WILL STREAMLINE THE LICENSE
APPLICATION PROCESS IN ORDER TO
IMPROVE OPPORTUNITIES FOR LARGE
COMMERCIAL LENDING IN THE STATE
OF CALIFORNIA. THANK YOU SO VERY
MUCH FOR YOUR TESTIMONY. ANY
OTHERS IN THE ROOM IN SUPPORT?
PLEASE COME FORWARD SEEING NONE.
OPPOSITION ANY OPPOSITION IN THE
ROOM IF YOU WILL COME FORWARD.
NAME NOT, NOT IN OPPOSITION, BUT
WE DO NOT HAVE ROBERT HARRELL
WITH THE CONSUMER FEDERATION OF
CALIFORNIA. WE DON'T HAVE AN
OFFICIAL POSITION ON THE BILL.
JUST IN LIGHT OF THE REST OF
TODAY'S AGENDA, WE JUST WANT TO
TREAD VERY CAREFULLY IN TERMS OF
LICENSING, STREAMLINING. AND SO
WE LOOK FORWARD TO ENGAGING WITH
THE AUTHOR, SPONSOR AND DLP ON
THIS MEASURE. THANK YOU. THANK
YOU VERY MUCH. ANYONE ELSE IN
OPPOSITION SEEING NONE. LET'S
BRING IT TO THE COMMITTEE FOR
QUESTIONS AND COMMENTS. SEEING
NO QUESTIONS OR COMMENTS. DO I
HAVE A MOTION OR SO ASSEMBLY
MEMBER DIXON MOTION AND SIMILAR
MEMBER RUBIO WITH A SECOND, MR.
VICE CHAIR, I WANT TO THANK YOU
FOR BRINGING THIS FORWARD. I DO
APPRECIATE YOU AND THE SPONSORS
CANDOR, BY THE WAY, AND THE
WILLINGNESS TO THINK OF CERTAIN
WAYS OR DIFFERENT WAYS TO STRIKE
THE RIGHT BALANCE AND TO KEEP
THIS BILL AS NARROW AS POSSIBLE.
HOWEVER, AS THE ANALYSIS
EXPLAINS, THERE ARE A LOT OF
DETAILS TO REALLY WORK OUT IN
THIS. SO MY REQUEST IS THAT YOU
WORK WITH THE REGULATOR AND TRY
TO FIGURE OUT THOSE DETAILS AS
THE BILL WOULD MOVE FORWARD.
ABSOLUTELY. MR. CHAIR, YOU HAVE
MY COMMITMENT ON THAT, SIR.
THANK YOU SO VERY MUCH. AND WITH
THAT, WE DO HAVE A MOTION AND A
SECOND SECRETARY, PLEASE CALL
THE ROLL ON THE BILL. AB 2981.
THE MOTION IS DUE PASS AND
REFERRED TO COMMITTEE ON
APPROPRIATION. GRAYSON. AYE.
GRAYSON. AYE. CHEN CHEN. AYE.
CERVANTES. CERVANTES. AYE. DIXON
DIXON. AYE. MIKE. FONG. MIKE.
FONG. AYE. MAIENSCHEIN
MAIENSCHEIN. AYE. PETRIE-NORRIS.
BLANCO RUBIO. BLANCO. RUBIO.
AYE. SORIA SORIA. AYE. THE BILL
HAS EIGHT VOTES AND THAT BILL
HAS EIGHT VOTES. IT GETS OUT.
WE'LL HOLD THE ROLL CALL OPEN
FOR ABSENT MEMBER. THANK YOU,
MR. VICE CHAIR. AND I TOOK YOUR
AGREEMENT AS YOUR CLOSING
STATEMENT. BY THE WAY. YES, MR.
CHAIR, THANK YOU. THANK YOU SIR.
SORRY. THE NEXT BILL FILING
ORDER IS AB 2017, CHAIRMAN
GRAYSON, YOU'RE PRESENTING AB
2017. AT YOUR PLEASURE. THE
RECOMMENDATION IS TO PASS TO THE
COMMITTEE.
GOOD AFTERNOON, MR. CHAIR. VICE
CHAIR AND MEMBERS, I AM PLEASED
TO PRESENT AB 2017, WHICH WILL
HELP PREVENT FEE CREEP IN THE
BANKING INDUSTRY BY PROHIBITING
STATE CHARTERED FINANCIAL
INSTITUTIONS FROM CHARGING A
NONSUFFICIENT FUND OR A NSF FEE
TO A CONSUMER FOR A TRANSACTION
DECLINED INSTANTANEOUSLY OR NEAR
INSTANTANEOUSLY. THIS BILL WOULD
CODIFY INTO STATE LAW A RULE
THAT HAS BEEN PROPOSED BY THE
CONSUMER FINANCIAL PROTECTION
BUREAU, OR CFPB, IN JANUARY IN
ORDER TO PROACTIVELY SET
REGULATIONS TO PROTECT CONSUMERS
FROM ABUSIVE PRACTICES. AS NOTED
IN THE COMMITTEE'S ANALYSIS,
DESPITE THEIR MODEST USE OF
BANKING, USE BY BANKING
INSTITUTIONS, THE CFPB HAS BEEN
VERY CRITICAL OF NSF FEES FOR
THEIR CLEAR LACK OF PURPOSE.
CONSUMERS RECEIVE NO SERVICE AT
ALL IN EXCHANGE FOR THE FEE AND
THE FEES THEMSELVES, WHICH
AVERAGE $34. DO NOT REPRESENT
THE MARGINAL COST TO
INSTITUTIONS FOR DECLINING THE
TRANSACTION. IT HAS BEEN SHOWN
THAT NSF FEES ARE MOST LIKELY TO
BE ASSESSED ON FINANCIALLY
VULNERABLE CONSUMERS, INCREASING
FINANCIAL STRAIN, WHILE ALSO
NEGATIVELY AFFECTING A
CONSUMER'S OVERALL PERCEPTION OF
THE BANKING SYSTEM. BY
PROHIBITING A FINANCIAL
INSTITUTION FROM CHARGING A
CONSUMER AN NSF FEE WHEN THE
CONSUMERS ATTEMPT TO INITIATE A
TRANSACTION IS DECLINED
INSTANTANEOUSLY OR NEAR
INSTANTANEOUSLY DUE TO
NON-SUFFICIENT FUNDS, AB 2017
WILL REIGN IN JUNK FEES AND
PROTECT FINANCIALLY VULNERABLE
CONSUMERS FROM CHARGES THAT THEY
CANNOT AFFORD. SO WITH THAT, I
WOULD LIKE TO INTRODUCE MY
WITNESS, ROBERT HARRELL, WHO
WILL BE TESTIFYING ON BEHALF OF
CONSUMER FEDERATION OF
CALIFORNIA. YOU PROBABLY HAVEN'T
HEARD OF HIM, BUT HE IS GOING TO
BE A WITNESS AND TESTIFY TODAY,
MR. VICE CHAIR AND MEMBERS OF
THE CONSUMER FEDERATION OF
CALIFORNIA. I'LL BE QUITE BRIEF
ON THIS BILL, THESE ARE
TRANSACTIONS THAT ARE DENIED.
THE TRANSACTION DID NOT OCCUR.
YOU SHOULD NOT BE PAYING UPWARDS
OF 30 TO $35 FOR A TRANSACTION
THAT WAS DENIED, CFPB HAS TAKEN
A LOOK AT THIS, THE CONCERN IS
THAT IN THE LARGER LANDSCAPE OF
JUNK AND HIDDEN FEES, WHEN YOU
HAVE A BILL IN THE OTHER HOUSE
LOOKING AT OVERDRAFT FEES, AND
YOU HAVE ALSO, A SEPARATE
PROPOSAL WITH THE CONSUMER
FINANCIAL PROTECTION BUREAU AT
THE FEDERAL LEVEL ON OVERDRAFT
FEES, THERE'S NO PROPORTIONALITY
WHATSOEVER. THE TRANSACTION COST
OF NSF IS EXTREMELY SMALL, AND
YET 30, $35 IS BEING CHARGED, I
WOULD JUST FINALIZE BY NOTING A
REPORT FROM THE DEPARTMENT FROM
DFP ABOUT A YEAR AGO THAT NOTED
THAT BETWEEN OVERDRAFT AND NSF
FEES, THERE IS A BIG PROBLEM IN
CALIFORNIA WITH SOME STATE
CHARTERED CREDIT UNIONS CHARGING
A LOT OF THOSE FEES. SO WE URGE
THE COMMITTEE TO SUPPORT THIS
BILL. THANK YOU. HAPPY TO TAKE
ANY QUESTIONS. DO WE HAVE ANY
ADDITIONAL MEMBERS IN SUPPORT?
HELLO, DANNY. KENDALL KAISER, ON
BEHALF OF BOTH THE NATIONAL
CONSUMER LAW CENTER AND THE
CALIFORNIA LOW INCOME CONSUMER
COALITION, IN STRONG SUPPORT.
HELLO, BRIAN AUGUSTA, ON BEHALF
OF RISE ECONOMY IN SUPPORT.
ANYONE IS IN OPPOSITION. GOOD
AFTERNOON, MR. VICE CHAIR,
MEMBERS OF THE COMMITTEE, ROBERT
WILSON, CALIFORNIA CREDIT UNION
LEAGUE HERE IN OPPOSITION TO AB
2017. FIRST, I'D LIKE TO THANK
THE AUTHORS OFFICE STAFF FOR
TAKING TIME TO SIT DOWN WITH US
ON THE BILL. THESE TRANSACTIONS
ARE NOT PREVALENT AMONGST MY
MEMBERS, YOU MIGHT BE ASKING,
WHY ARE WE OPPOSED TO THE BILL?
WE'RE OPPOSED TO THE BILL FOR
TWO REASONS, WHICH ARE LAID OUT
IN THE COMMITTEE ANALYSIS. VERY
WELL, THE FIRST IS THERE'S A LOT
OF ACTION HAPPENING FEDERALLY ON
THIS WITH THE CFPB AS AS THE
CHAIR HAS INDICATED. SO WE WANT
TO MAKE SURE IF THE CFPB WERE TO
ZAG ONE WAY AND THIS BILL IS
GOING THE OTHER WAY, WE WANT TO
MAKE SURE THAT WE'RE ALL ON THE
SAME PAGE WHEN THOSE FINAL RULES
COME OUT. SOMETHING I THINK WE
CAN DEFINITELY IRON OUT, AND
THEN THE SECOND REASON IS
THERE'S JUST A LACK OF
DEFINITIONS IN THE BILL, WHICH I
KNOW IS SOMETHING THAT WE WILL
CONTINUE TO WORK ON, INSTANT
SEEMS PRETTY OBVIOUS, BUT WHAT
IS NEAR INSTANTANEOUS IS THAT
30S. IS THAT A MINUTE? IS THAT
FIVE MINUTES, WHO KNOW WE DON'T
REALLY KNOW. SO WE WANT TO MAKE
SURE WE IRON OUT THOSE
DEFINITIONS. AND THOSE ARE THE
SAME CONCERNS WE HAVE FEDERALLY
AS WELL. SO I LOOK FORWARD TO
CONTINUING CONVERSATIONS AND
HAPPY TO ANSWER ANY QUESTIONS.
THANK YOU. THANK YOU. ANY OTHER
WITNESSES IN OPPOSITION SEEING
NONE, I'LL TAKE THIS BACK TO
COMMITTEE. ANY QUESTIONS? NÓ. DO
WE HAVE A MOTION A SECOND? MOVE
SECOND. MOVED AND SECONDED, MR.
CHAIR, WOULD YOU LIKE TO CLOSE?
I RESPECTFULLY ASK FOR AN AYE
VOTE, JUST ONE QUICK THING, MR.
CHAIR. JUST WANT TO SAY THANK
YOU SO MUCH FOR WORKING WITH THE
OPPOSITION. AND I KNOW THAT
YOU'LL CONTINUE TO DO SO. THANK
YOU, MR. CHAIR. WITH THAT, MADAM
SECRETARY, ON THE BILL, AB 2017,
THE MOTION IS DUE PASSED AND
REFERRED TO COMMITTEE ON
APPROPRIATIONS. GRAYSON AYE.
GRAYSON. AYE. CHEN. CHIEN AYE.
CERVANTES. CERVANTES. AYE. DIXON
DIXON. NOT VOTING. MIKE. FONG
MIKE. FONG. AYE. MAIENSCHEIN.
MAIENSCHEIN. AYE PETRIE-NORRIS.
PETRIE-NORRIS. AYE. BLANCA RUBIO
. ANCA. RUBIO. AYE. SORIA. SORIA
AYE. THAT BILL HAS EIGHT VOTES.
THANK YOU, MR. CHAIR. THE BILL
IS OUT AND NEXT BILL, FILE ORDER
IS AB 2062. MR. CHAIR, IT'S YOUR
PLEASURE. THANK YOU SO MUCH.
JUST SLIDE ON OVER. I LIKE THIS
CHAIR MORE. THANK YOU SO MUCH,
MR. VICE CHAIR AND MEMBERS, I AM
SO PLEASED TO PRESENT ASSEMBLY
BILL 2062, WHICH WILL UPDATE AND
STRENGTHEN CALIFORNIA'S CREDIT
UNION CHARTER. CREDIT UNIONS CAN
EITHER RECEIVE A STATE CHARTER
OR A FEDERAL CHARTER, MAKING
SURE CALIFORNIA'S STATE CHARTER
IS COMPETITIVE IS VERY
IMPORTANT. WE WANT CREDIT UNIONS
TO FORM HERE, AND WE WANT THEM
TO SUCCEED IN THIS STATE AS A
FINANCIAL, AS A FINANCIAL SYSTEM
CHANGES AND THE LANDSCAPE FOR
CREDIT UNIONS SHIFTS, THE
LEGISLATURE MUST OCCASIONALLY
UPDATE AND MODERNIZE THE LAW.
THIS IS WHY EVERY FEW YEARS WE
SEE A BILL JUST LIKE AB 2062, AB
2062 WILL MAKE ASSORTED CHANGES
TO THE RULES AROUND MEMBERSHIP
APPLICATIONS, DECLARATION OF
DIVIDENDS AND VIRTUAL MEMBER
MEETINGS. THESE CHANGES ARE
MODEST, BUT THEY WILL HELP THE
CREDIT UNIONS BETTER SERVE THEIR
MEMBERSHIP. AND WITH THAT, I
WOULD LIKE TO INTRODUCE ROBERT
WILSON, WHO IS A GREAT WITNESS
ON THIS BILL. HE'LL BE
TESTIFYING ON BEHALF OF
CALIFORNIA CREDIT UNION ON HOW
GREAT THIS BILL IS AND HOW MUCH
HE SUPPORTS IT, THANK YOU, MR.
CHAIR. AND SOME ARE CALLING THIS
THE BILL OF THE YEAR. I WOULD
AGREE, I THANK YOU FOR AUTHORING
THIS, BILL. I THINK THE CHAIR
DID A GREAT JOB OF SUMMARIZING
THE CHANGES, HAPPY TO ANSWER ANY
QUESTIONS THE COMMITTEE HAS, BUT
THESE ARE VERY IMPORTANT MATTERS
TO MY MEMBERSHIP. KEEPING THE
CHARTER AS AS ATTRACTIVE AS
POSSIBLE IS GREAT, MY MEMBERS
LOVE HAVING THEIR REGULATOR IN
THEIR BACKYARD AS OPPOSED TO
BACK IN D.C. AND SO MAKING THESE
CHANGES IS A BIG DEAL TO MY
MEMBERSHIP. SO HAPPY TO ANSWER
ANY QUESTIONS. THANK YOU. ASK
FOR AN AYE VOTE. THANK YOU. ANY
ADDITIONAL WITNESSES IN SUPPORT?
ANYONE IN OPPOSITION? MOVE THE
SECOND. ANY OTHER QUESTIONS FROM
COMMITTEE, MR. CHAIR, WOULD YOU
LIKE TO CLOSE RESPECTFULLY ASK
FOR AN AYE VOTE? MADAM
SECRETARY, PLEASE CALL THE ROLL
ON THE BILL. AB 2062. THE MOTION
IS DUE PASSED AND REFERRED TO
COMMITTEE ON APPROPRIATIONS.
GRAYSON. AYE. GRAYSON AYE. CHEN.
AYE. CHEN. AYE. CERVANTES. AYE
CERVANTES. AYE. DIXON. DIXON.
AYE. MIKE. FONG AYE. MIKE. FONG.
AYE. MAIENSCHEIN. MAIENSCHEIN
AYE. PETRIE-NORRIS. AYE.
PETRIE-NORRIS AYE. BLANCO RUBIO.
BLANCO. RUBIO. AYE. SORIA SORIA.
AYE. THE BILL HAS NINE VOTES.
THANK YOU, MADAM SECRETARY. THE
BILL IS OUT, MR. CHAIR, YOUR
LAST BILL, AB 2993 AT YOUR
PLEASURE. THANK YOU VERY MUCH
AGAIN, MR. VICE CHAIR AND
MEMBERS, I AM PLEASED TO PRESENT
AB 2993, WHICH WILL ESTABLISH
IMPORTANT CONSUMER PROTECTIONS
IN THE HOME IMPROVEMENT LENDING
INDUSTRY. FIRST, I WOULD LIKE TO
ACCEPT THE COMMITTEE'S
AMENDMENTS THAT ARE OUTLINED IN
THE COMMITTEE ANALYSIS. THIS
BILL IS IN RESPONSE TO A PROBLEM
THAT HAS BECOME FAR, FAR TOO
COMMON. A CONTRACTOR SHOWS UP AT
A VULNERABLE CONSUMERS HOME. THE
CONTRACTOR CONVINCES THE
CONSUMER TO TAKE ON A NEW HOME
IMPROVEMENT PROJECT, SUCH AS AN
EXAMPLE HVAC OR A NEW SOLAR
ENERGY SYSTEM. THE CONTRACTOR
HELPS THE CONSUMER SIGN UP FOR A
CONSUMER LOAN WITH UNCLEAR
TERMS, BUT THE CONTRACTOR NEVER
ACTUALLY FINISHES THE JOB. AND
WHILE THE CONSUMER IS TRYING TO
RESOLVE MATTERS WITH THE
CONTRACTOR, THE LENDER COMES
KNOCKING AND DEMANDS PAYMENT. AS
A GENERAL CONTRACTOR MYSELF, I
DO NOT BELIEVE THE CUSTOMER
SHOULD HAVE TO PAY FOR A JOB
THAT IS NOT FINISHED. AND YET,
TIME AND TIME AGAIN, WE'RE
SEEING CASES JUST LIKE THIS.
THIS BILL ESTABLISHES NEW RULES
FOR FINANCE LENDERS WHO MAKE
HOME IMPROVEMENT LOANS. IN DOING
SO, THIS BILL SUPPORTS THE
EFFORTS OF THE CONTRACTORS,
STATE LICENSE BOARD TO REIN IN
UNSCRUPULOUS CONTRACTORS UNDER
AB 2993 HOME IMPROVEMENT LENDERS
MUST DO THE FOLLOWING. CONFIRM
THE TERMS OF THE LOAN WITH THE
PROPERTY OWNER BEFORE THE LOAN
AGREEMENT BECOMES FINAL. KEEP
IMPORTANT RECORDS ABOUT THE LOAN
AND THEN FOLLOW AN ESTABLISHED
TIMELINE FOR WHEN FUNDS GO TO
THE CONTRACTOR AND WHEN THE
BORROWER BORROWER STARTS
PAYMENT. THESE REFORMS WILL
ENSURE THAT BORROWERS UNDERSTAND
THE TYPES OF LOANS THEY ARE
AGREEING TO AND IT WILL HELP
ENSURE THAT THESE PROJECTS ARE
COMPLETED AS PROMISED. I WANT TO
THANK THOSE WHO HAVE SENT TO OUR
OFFICE, THEIR CONSTRUCTIVE
SUGGESTIONS, AND I AM COMMITTED
TO WORKING IN GOOD FAITH AS THE
BILL MOVES THROUGH THE
LEGISLATIVE PROCESS TO CRAFT A
BILL THAT PROTECTS CONSUMERS AND
REWARDS THOSE LENDERS AND
CONTRACTORS WHO FOLLOW THE RULES
AND DO RIGHT BY THEIR CUSTOMERS.
AND WITH THAT, I WOULD LIKE TO
HAVE MY WITNESSES SELF INTRODUCE
AS THEY TESTIFY. GOOD AFTERNOON,
VICE CHAIR AND COMMITTEE
MEMBERS, AND THANK YOU, ASSEMBLY
MEMBER GRAYSON. MY NAME IS
JOSEPH JARAMILLO. I'M A SENIOR
ATTORNEY WITH HOUSING AND
ECONOMIC RIGHTS ADVOCATES, OR
HERA. WE'RE A NONPROFIT LEGAL
SERVICES ORGANIZATION THAT
SERVE, LOW TO MODERATE INCOME
CONSUMERS THROUGHOUT THE STATE
WITH THEIR DEBT, CREDIT AND
HOUSEHOLD FINANCIAL CONCERNS AND
HERA SUPPORTS AB 2993 BECAUSE IT
WOULD ADD VERY IMPORTANT
CONSUMER PROTECTIONS FOR HOME
IMPROVEMENT, LOAN BORROWERS,
HOME IMPROVEMENT FINANCING HAS
EMERGED AS A UNIQUE NICHE
LENDING INDUSTRY IN THE PAST FEW
YEARS THAT HAS SOME UNIQUE
COMPONENTS THAT HAVE GIVEN RISE
TO THE PROBLEMS THAT ASSEMBLY
MEMBER GRAYSON HAS DESCRIBED.
THESE INCLUDE THE FACT THAT THE
FINANCE LENDERS ARE DEPUTIZING
CONTRACTORS AND THEIR
SALESPEOPLE TO GO DOOR TO DOOR
AND TELL A MARKET, NOT JUST THE
HOME IMPROVEMENTS THAT THEY'RE
SELLING, BUT THE FINANCING
ITSELF. AND ALSO THE FINANCE
LENDERS ARE DIRECTLY PAYING THE
FUNDS, THE LOAN PROCEEDS TO THE
CONTRACTORS. SO THIS IS CREATED
SOME SOMEWHAT PERVERSE
INCENTIVES FOR NOT ALL
CONTRACTORS, BUT THE
UNSCRUPULOUS ONES. YOU HAVE
CONTRACTORS THAT ARE GOING OUT
THERE AND MISREPRESENTING THE
TERMS OF THE FINANCING. MANY OF
OUR CLIENTS DON'T EVEN KNOW THEY
WERE SIGNED UP FOR FINANCING. A
LOT OF IT IS DONE THROUGH
ELECTRONIC SIGNATURES AND
ELECTRONIC TABLETS. AND SO WHEN
THEY'RE PUTTING IN THEIR CONSENT
TO THE HOME IMPROVEMENTS, THEY
DON'T REALIZE THEY'RE ALSO
SIGNING UP FOR AN EXPENSIVE
LOAN. AND OFTENTIMES TIMES THE
WORK IS NOT FINISHED BEFORE THE
LOAN PROCEEDS ARE DISBURSED TO
THE CONTRACTOR AND THE HOMEOWNER
GETS BILLED FOR WORK THAT'S NOT
FINISHED OR THAT'S NOT
FUNCTIONAL, INCLUDING SOLAR
PANELS, HVAC SYSTEMS, ETC. AND
SO IT'S LED TO A LOT OF
PROBLEMS. AND WE'VE WE'VE HELPED
SO MANY PEOPLE AND THERE'S SO
MANY PEOPLE THAT WE CAN'T HELP
BECAUSE THE LAW IS NOT STRONG
ENOUGH IN THIS AREA. AND SO AB
2993 REALLY ADDRESSES THESE
PROBLEMS BY CREATING A SYSTEM
WHEREBY THE HOME IMPROVEMENT
LENDER HAS TO COMMUNICATE ORALLY
WITH THE CUSTOMER, HAS TO TELL
THEM THE TERMS OF THE LOAN, MAKE
SURE THEY REALIZE THAT THEY ARE
GETTING INTO A LOAN TO PAY FOR
THESE HOME IMPROVEMENT CONTRACTS
, AND THAT WILL NOT RELEASE THE
FUNDS TO THE CONTRACTOR. ALL THE
FUNDS, THE FINAL FUNDS UNTIL THE
WORK IS DONE AND WILL NOT BILL
THE CUSTOMER UNTIL THEY HAVE
WHAT THEY SIGNED UP FOR, THE
PRODUCT THAT THEY WERE LOOKING
FOR, RIGHT NOW, THE BIG PROBLEM
IS WHEN WE RAISE THIS WITH THE
LENDER, YOU KNOW, WE'VE RAISED
IT WITH THE CONTRACTOR.
SOMETIMES THEY GO OUT OF
BUSINESS, THEY GO BANKRUPT. AND
SO WE CAN'T GET RELIEF FROM THE
CONTRACTOR. SO WE RAISE IT WITH
THE LENDER. AND THE LENDER'S
RESPONSE IS, WELL, WE'RE NOT
RESPONSIBLE FOR WHAT THE
CONTRACTOR TOLD YOU. YOU KNOW,
WE'RE NOT RESPONSIBLE. IF THEY
TOLD YOU IT WAS A FREE
GOVERNMENT PROGRAM OR YOU WOULD
HAVE TO PAY $100 LESS AND TAKE
THAT'S THAT'S THE CONTRACTOR'S
PROBLEM. THEY'RE NOT OUR AGENT.
AND YOU KNOW, IF THE WORK'S NOT
FINISHED, WELL, YOU KNOW, BRING
IT UP WITH THE CONTRACTOR, BUT
YOU STILL HAVE TO PAY US BACK ON
THIS LOAN BECAUSE YOU SIGNED UP
FOR IT. SO WE URGE YOUR SUPPORT
FOR THIS BILL. IT'S VERY
IMPORTANT. AND I WOULD LIKE TO
HAVE MY COLLEAGUE VERONICA SOTO
MILLER, WHO'S AN ATTORNEY FOR
ONE OF OUR CLIENTS, SHARE ONE OF
OUR CLIENT'S STORIES THAT THAT
SHOWS WHY THIS BILL IS
NECESSARY. THANK YOU. GOOD
AFTERNOON. THANK YOU FOR HAVING
US HERE. MY CLIENT, RODOLFO
BROUGH MORALES, COULD NOT BE
HERE TODAY, SO I WILL BE READING
A STATEMENT ON HIS BEHALF IN
DECEMBER OF 2022, A PERSON CAME
TO MY HOUSE TO TALK TO ME ABOUT
INSTALLING SOLAR PANELS. I WAS
TOLD THAT THE SOLAR PANELS WOULD
HELP ME SAVE MONEY ON MY ENERGY
BILL, AND I WOULD NOT HAVE TO
PAY AN ENERGY BILL AT ALL. THE
SALESPERSON IDENTIFIED HIMSELF
AS BOBBY AND SPOKE TO ME IN
ENGLISH, AND SOME SPANISH. ABOUT
TWO WEEKS LATER, I RECEIVED A
PHONE CALL FROM A PERSON WHO
CLAIMED HE WORKED WITH BOBBY,
AND HE EMAILED ME THE HOME
IMPROVEMENT CONTRACT, WHICH WAS
IN ENGLISH. I OPENED THE
CONTRACT ON MY PHONE AND SIGNED
IT VIA DOCUSIGN. I NEVER
RECEIVED A COPY OF THE HOME
IMPROVEMENT CONTRACT IN SPANISH,
WHICH IS MY NATIVE TONGUE. I AM
A MONOLINGUAL SPANISH SPEAKER. I
WAS NEVER FULLY EXPLAINED THE
TERMS OF THE CONTRACT EITHER.
SEVEN WEEKS LATER THE CONTRACTOR
CAME OUT AND THE SOLAR PANELS
WERE INSTALLED. THE CONTRACTOR,
HOWEVER, DID NOT FINISH THE JOB
AND THE PROPER PERMITS WERE
NEVER ISSUED AND PERMISSION TO
OPERATE WAS NEVER OBTAINED. I
WAS LEFT WITH A NONFUNCTIONING
PANELS. I CALLED THE CONTRACTOR
NUMEROUS TIMES WITH NO RESPONSE.
I ALSO CALLED THE FINANCING
COMPANY AND THEY INITIALLY TOLD
ME THAT THEY WOULD INVESTIGATE
AND GET BACK TO ME. THEY NEVER
DID. INSTEAD, I STARTED GETTING
BILLED BY THE FINANCE COMPANY ON
A MONTHLY BASIS. AFTER
CONTACTING THE FINANCING COMPANY
AGAIN, THEY ACKNOWLEDGED THAT
THEY HAD DISPERSED THE FUNDS TO
THE CONTRACTOR. THEY
ACKNOWLEDGED THAT THE CONTRACTOR
HAD NOT FINISHED THE JOB AS
STATED IN THE CONTRACT. DESPITE
ALL OF THIS, I WAS TOLD BY THE
FINANCE COMPANY THAT IT WAS MY
RESPONSIBILITY TO MAKE MY
MONTHLY PAYMENTS TO THEM UNTIL
THE CONTRACT WAS PAID IN FULL.
THERE MA'AM, YOU MAY WANT TO DO
A CLOSE IT UP. THANK YOU. THANK
YOU FOR YOUR TIME, BACK TO THE
COMMITTEE. ANY QUESTIONS OR
COMMENTS? IT'S BEEN MOVED. YES,
YES. NO I JUST WANT TO THANK THE
AUTHOR AND OUR CHAIR FOR TAKING
THIS ON TO PROTECT VULNERABLE
CONSUMERS ACROSS THE STATE OF
CALIFORNIA, FOR AT TIMES, IT IS
OUR DUTY AS THE LEGISLATURE TO
INTERVENE AND TO MAKE SURE THAT
WE ARE ESTABLISHING NEW
PROTECTIONS FOR CONSUMERS. SO
WITH THAT, EAGER TO SUPPORT, ARE
THERE ANY ADDITIONAL MEMBERS IN
SUPPORT IN THE WITNESSES? PLEASE
COME RIGHT NOW. KIM STONE STONE
ADVOCACY ON BEHALF OF THE
CALIFORNIA SOLAR AND STORAGE
ASSOCIATION IN THE SUPPORT OF
AMENDED POSITION. THAT'S A
HORRIBLE STORY. I'M SO SORRY AND
REALLY GRATEFUL FOR WORKING WITH
THE AUTHOR AND THE COMMITTEE.
DANNY KENDALL KAISER, ON BEHALF
OF BOTH THE NATIONAL CONSUMER
LAW CENTER AND CALIFORNIA LOW
INCOME CONSUMER COALITION, IN
STRONG SUPPORT. BRIAN AUGUSTA,
ON BEHALF OF THE NATIONAL
HOUSING LAW PROJECT AND REYES
ECONOMY AND SUPPORT ROBERT
HAROLD WITH THE CONSUMER
FEDERATION OF CALIFORNIA IN
SUPPORT OF THIS BILL. CHRIS
PETERSON WITH 4 TO 5 FINANCIAL
SUPPORT IF AMENDED. THANK YOU.
MCKINLEY THOMPSON MORLEY, ON
BEHALF OF THE SOLAR ENERGY
INDUSTRIES ASSOCIATION, IN
SUPPORT, IF AMENDED. THANK YOU.
MATT ROBINSON, ON BEHALF OF HOME
RUN FINANCING, REALLY APPRECIATE
THE CONVERSATION SO FAR. WE'RE
ALSO IN SUPPORT OF AMENDED
POSITION AND APPRECIATE SOME OF
THE AMENDMENTS MADE ALREADY.
THANK YOU VERY MUCH. ANY
WITNESSES IN OPPOSITION? IN THE
PUBLIC? NO SEEING NONE ANY FOLKS
IN THE COMMITTEE LIKE TO MAKE
ANY COMMENTS OR QUESTIONS? IF
NOT, MR. CHAIR, WOULD YOU LIKE
TO CLOSE? THANK YOU, MR. VICE
CHAIR. I JUST FOUND OUT
YESTERDAY THAT I HAVE VERY DEAR
FRIENDS THAT LIVE IN MORGAN HILL
THAT HAVE BECOME VICTIM TO THIS
VERY ISSUE THAT WE'RE ADDRESSING
IN THIS BILL. IT'S
HEARTBREAKING. IT'S, IT'S
DESTROYING LIVES OF FOLKS THAT
HAD NO IDEA WHAT THEY WERE
GETTING INTO AND HAVE NO WAY OF
RECOURSE TO GET OUT OF IT. AND
SO WITH THAT, I RESPECTFULLY ASK
FOR AND I UNDERSTAND THERE'S A
LOT OF WORK TO BE DONE, SOME
DETAILS TO GET THROUGH. WE'LL
GET THROUGH THOSE AS THE BILL
MOVES FORWARD. BUT WE MUST
ADDRESS THIS FOR OUR
CONSTITUENTS. THANK YOU. I
RESPECTFULLY ASK FOR AN AYE
VOTE. MR. CHAIR. ONCE AGAIN,
THANK YOU FOR YOUR LEADERSHIP.
IT'S BEEN MOVED AND SECONDED
WITH THAT, MADAM SECRETARY,
PLEASE CALL THE ROLL ON THE BILL
AB 2993. THE MOTION IS TO PASS
AS AMENDED AND REFERRED TO
COMMITTEE ON JUDICIARY. GRAYSON.
AYE. GRAYSON. AYE CHEN. CHEN.
AYE. CERVANTES. CERVANTES AYE.
DIXON. DIXON. AYE. MIKE. FONG.
MIKE FONG. AYE. MAIENSCHEIN.
MAIENSCHEIN. AYE. PETRIE-NORRIS
PETRIE-NORRIS. AYE. BLANCA.
RUBIO. BLANCA. RUBIO AYE. SORIA.
SORIA. AYE. THE BILL HAS NINE
VOTES. THE BILL IS OUT. THANK
YOU, MR. CHAIR. YES ALL RIGHT.
WE'RE GOING TO DO ADD ONS, FOR
MEMBERS THAT WERE NOT PRESENT
FOR CERTAIN VOTES. IF THE
SECRETARY COULD JUST START FROM
THE VERY BEGINNING AND WE'LL DO
ADD ONS FOR MEMBERS. LET'S FILE
ITEM ONE AB 2432. THE MOTION IS
TO PASS AND REFER TO COMMITTEE
ON APPROPRIATIONS. CERVANTES
CERVANTES. AYE. THAT BILL HAS
EIGHT VOTES. THAT BILL GETS OUT
WITH EIGHT VOTES. FILE ITEM TWO
ON THE BILL, AB 2424. THE. THE
MOTION IS TO PASS, AS AMENDED
AND REFER TO COMMITTEE ON
JUDICIARY. CERVANTES CERVANTES.
AYE. MAIENSCHEIN. MAIENSCHEIN.
AYE. THE BILL HAS NINE VOTES.
THAT BILL GETS OUT WITH NINE
VOTES. FILE ITEM THREE ON THE
BILL AB 3108. THE MOTION IS TO
PASS AND REFER TO COMMITTEE ON
PUBLIC SAFETY. CERVANTES.
CERVANTES. AYE. PETRIE-NORRIS
AYE. PETRIE-NORRIS. AYE. THE
BILL HAS NINE VOTES. THE BILL
GETS OUT WITH NINE VOTES. NEXT
FILE ITEM FOUR ON THE BILL AB
2935. THE MOTION IS TO PASS AS
AMENDED AND REFER TO COMMITTEE
ON HUMAN SERVICES. CERVANTES.
CERVANTES AYE. THAT BILL HAS
NINE VOTES. THAT BILL GETS OUT
WITH NINE VOTES. ONTO THE NEXT
29. 81 IS NEXT. YEAH FILE ITEM
SIX ON THE BILL, AB 2981. THE
MOTION IS TO PASS AND REFER TO
COMMITTEE ON APPROPRIATIONS.
PETRIE-NORRIS PETRIE-NORRIS.
AYE. THE BILL HAS NINE VOTES.
THAT BILL GETS OUT WITH NINE
VOTES.
THANK YOU. THANK YOU, MR. CHAIR.
WE HAVE COMPLETED OUR AGENDA FOR
TODAY'S HEARING AND. AND WITH
THAT, I DO BELIEVE THAT ALL
MEMBERS HAVE ADDED ON. THE
ASSEMBLY BANKING AND FINANCE
COMMITTEE IS NOW ADJOURNED