§ 1461 Bank Asset Hypothecation Limits

Financial Code·California

AI SummaryVerified

This law limits how much collateral a commercial bank can pledge for a loan, allowing at most 150% of the loan amount without special permission.

Key Takeaways

•Collateral cannot be worth more than 150% of the borrowed amount.
•Exceeding the limit requires prior written consent from the commissioner.
•The rule applies to commercial banks and their borrowing activities.

Example

A bank wants to borrow $200,000 and offers a piece of equipment worth $350,000 as security.

The equipment's value is 175% of the loan, which is more than the allowed 150% limit, so the bank must get written approval from the commissioner before using it as collateral.

AI-generated — May contain errors. Not legal advice. Always verify source.

Official Source

View on CA.gov

§ 1461 Bank Asset Hypothecation Limits

Assets hypothecated by a commercial bank as security for moneys borrowed shall not exceed in value the amount borrowed by more than 50 percent except with the prior written consent of the commissioner. (Added by Stats. 2011, Ch. 243, Sec. 3. (SB 664) Effective January 1, 2012.)

Last verified: January 11, 2026

Key Terms

Assets hypothecated commercial bank prior written consent commissioner

References

Official text at leginfo.legislature.ca.gov
California Legislature. Financial Code. Section 1461.

Key Takeaways

Example

Key Terms

Related Statutes

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Key Takeaways

Example

Key Terms

Related Statutes

References