Advocating for Community Banks

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2026 Legislative Successes 

The 2026 legislative session concluded with a number of significant victories for CCBN and California community banks. September 30 marked Governor Newsom's deadline to act on legislation sent to his desk, and all bills have now been signed or vetoed. The Governor signed the majority of measures that reached him while vetoing nearly 100 bills.

Throughout the year, CCBN worked to defeat, narrow, or improve proposals that would have imposed disproportionate compliance, litigation, or operational burdens on community banks. Several of the most consequential bills opposed by CCBN either failed to advance, were substantially narrowed, or were amended to remove provisions of concern. These outcomes reflect sustained advocacy by CCBN, its members, and industry partners.

Successful Advocacy Day at the Capitol

In March, community bankers from across California came together for CCBN's Advocacy Day at the State Capitol. Throughout the day, members met with legislators and staff to reinforce the essential role community banks play in supporting local economies and to highlight how certain proposals could create unintended consequences if not carefully tailored. A key theme in every conversation was the importance of maintaining a competitive and viable state charter system. These meetings helped establish the foundation for CCBN's advocacy throughout the remainder of the legislative session.

Significantly Narrowed State Community Reinvestment Act Proposal

AB 801 (Bonta) was signed by the Governor, but the final bill looks very different from the proposal introduced at the beginning of the year. As introduced, AB 801 would have created a broad state-level Community Reinvestment Act framework. CCBN and the banking industry raised significant concerns with the scope of the proposal, particularly its impact on state-chartered institutions. Following extensive advocacy and negotiations, the bill was substantially narrowed to mortgage lending and includes a Home Mortgage Disclosure Act (HMDA) reporting threshold, addressing key industry concerns. CCBN moved to a neutral position on the amended bill. Given where AB 801 began, the final version represents a significant legislative victory for community banks. We expect proponents may return with another broader California CRA proposal in 2027.

Defeated Consumer Fraud Liability Legislation

A significant victory was the defeat of AB 2674 (Schiavo), which raised serious concerns regarding financial institution liability related to consumer fraud. The bill would have required banks to implement specified preventive measures when financial abuse or deception was suspected, mandated investigations upon customer notice, and authorized civil enforcement, creating substantial compliance and litigation exposure. The proposal was similar to AB 909, which CCBN helped halt in 2025. After CCBN and other stakeholders lobbied the bill, AB 2674 was gutted and amended to address an entirely different subject, eliminating the provisions of concern to financial institutions.

Defeated Digital Financial Assets Legislation

CCBN took an Oppose Unless Amended position on AB 2285 (Valencia) due to concerns regarding its treatment of digital asset services and staking rewards. CCBN raised these concerns with legislators, and members of the Senate Banking Committee also expressed reservations about the proposal. The author ultimately pulled the bill, making AB 2285 dead for the 2026 legislative session.

Defeated Automated Decision Systems Proposal

CCBN opposed AB 1018 (Bauer-Kahan), which sought to regulate automated decision systems and raised concerns regarding costs, cybersecurity, anti-fraud efforts, and duplicative regulation of financial institutions already subject to extensive federal and state requirements. The bill never reached the Governor and is dead for the year, representing another important outcome for CCBN members.

Prevented Expansion of Beneficiary Notification Requirements to Bank Accounts

SB 1288 (Laird) seeks to ensure beneficiaries are notified of assets left to them following an accountholder's death and can access those assets promptly. Although Senator Laird initially considered applying the proposal broadly to accounts with designated beneficiaries, the final bill is limited to securities accounts. CCBN advised the Senator that it would oppose an expansion to bank accounts, and he elected to leave the bill as-is. This avoided a new mandate on bank deposit accounts in 2026, although an expanded proposal could return in 2027.

Defeated PACE Expansion

Another positive development was the defeat of SB 1041 (Arreguin), which would have expanded Property Assessed Clean Energy (PACE) financing to cover a broader range of wildfire home-hardening projects. The PACE industry has advocated for this expansion for several years, arguing that reforms enacted in 2018 were too narrow. However, concerns remained regarding consumer protections and the potential impacts of a broader expansion. The bill failed to advance, preventing the proposed expansion from becoming law this year.

Kept State Bank Proposal from Advancing

CCBN also successfully opposed an effort to revive a state-owned bank proposal similar to AB 2243, which CCBN opposed and which died earlier in the year. The revived concept would have created a California Public Financial Infrastructure Commission, backed by a $4 million General Fund appropriation, to develop a state-owned financial institution capable of holding state revenues and providing financing for housing, infrastructure, climate projects, small businesses, disaster recovery, and local governments. CCBN proactively opposed the effort to revive the proposal, and it ultimately never surfaced before the end of session.

Mitigated Mortgage Forbearance Legislation

Governor Newsom signed AB 1841 and AB 1847 (Harabedian), both related to mortgage forbearance for survivors of the Los Angeles fires. The bills double the mortgage forbearance window available by law from 12 months to 24 months and require servicers to offer borrowers the option to defer repayment of missed payments until the end of the loan, unless prohibited by investor contract terms or servicing guidelines. CCBN moved to neutral on AB 1841 earlier in the session, and following significant late-session amendments, the industry also moved to neutral on AB 1847. The amendments helped address key operational and servicing concerns raised during the legislative process.

Looking Ahead

The 2026 session produced meaningful results for CCBN: major liability and regulatory proposals were defeated, a sweeping state CRA proposal was substantially narrowed, an attempt to expand beneficiary notification requirements to bank accounts was avoided, and another state bank proposal was kept from advancing. Several of these concepts are likely to return in 2027. CCBN will continue to engage early and aggressively to protect community banks, preserve a strong state charter, and ensure that California policy recognizes the unique role community banks play in the communities they serve.