STATE GOVERNMENT RELATIONS
Bill to Undo Indy's Mile Square Property Tax Passes House
The Indiana House of Representatives approved legislation that would take away Indianapolis' ability to impose a fee on downtown property owners to help pay for the operating costs of a homeless shelter and various improvements in the city's Mile Square, a mechanism authorized by the legislature only a year ago.
The IBA is tracking several bills as the 2024 legislative session progresses, including:
- Senate Bill 188 – Actions on deposit accounts
- House Bill 1284 – Deposit account agreements
- House Bill 1209 – Rule against perpetuities
- House Bill 1183 – Foreign ownership of agricultural land
FEDERAL GOVERNMENT RELATIONS
Lawmakers Express Skepticism About Proposed Capital Requirements
House lawmakers from both parties expressed skepticism Wednesday about proposed interagency rules to raise capital standards for larger banks, with Republicans concerned about regulatory overreach and Democrats concerned about the possible unintended effects on other sectors of the economy, such as green energy investment. The House Financial Services Subcommittee on Financial Institutions and Monetary Policy held a hearing on what Chairman Rep. Andy Barr, R-Ky., said was an "onslaught" of proposed banking regulations, although lawmakers mainly discussed the U.S. implementation of the Basel III endgame standards.
"Federal banking regulators should scrap their faulty Basel III endgame proposal and reevaluate what –if anything – may need to be done," Barr said. "At most, the regulators need to start over – undertake proper analysis, follow proper administrative procedures and re-propose a significantly different rule."
Committee Democrats were more favorable to the proposed rule but still expressed concern about what it might mean for driving bank customers to the unregulated nonbank market, investment in renewable infrastructure and the availability of affordable housing. "For me, the key issue is not the straightforward effect – it's the knock-on effects, and the those are difficult to predict," Ranking Member Rep. Bill Foster, D-Ill., said. "I've become a great believer in unintended consequences of regulation. And so the area that I've been mainly focusing on trying to understand how banks will change their business in response to these changes in capital requirements."
"These regulations are being sold as we're going to harmonize with Europe: 'It's Basel. It's something the whole world is doing,' when in fact these regulations go far beyond Basel in most cases," Rep. Brad Sherman, D-Calif., said. "This is not harmony with Europe. This is an attempt to move toward standards that Europe has."
Watch a recording of the hearing
FOMC Leaves Rates Unchanged
The Federal Open Market Committee Wednesday announced that it would once again leave the federal funds rate unchanged at 5.25-5.5%, adding that FOMC members do not expect it will be appropriate to reduce the target range until they have gained greater confidence that inflation is moving sustainably toward the Federal Reserve's 2% target. Last year, the FOMC began hitting the pause button on a series of rate hikes that started in early 2022. Yesterday's decision marked the fifth time that the committee has left the target range untouched.
During a news conference after the announcement, Federal Reserve Chairman Jerome Powell said that FOMC members believe that the rate is likely at its peak, and that if the economy evolves as expected, the committee can begin dialing back the rate at some point later this year.
"But the economy has surprised forecasters in many ways since the pandemic and ongoing progress toward our 2% inflation objective is not assured," Powell said. "The economic outlook is uncertain, and we remain highly attentive to inflation risks. We are prepared to maintain the current target range for the federal funds rate for longer if appropriate."
OCC Proposes Revised Process for Approving Bank Mergers
The Office of the Comptroller of the Currency Monday proposed a new rule to end the time limit for automatic approvals of mergers of the banks that it supervises. At the same time, the agency released a policy statement on how it would analyze future merger and acquisition applications, focusing on separating mergers that can be quickly approved from those that require more scrutiny. The OCC said it views the statement as summarizing existing policy rather than setting new standards.
"Merger applications exist along a spectrum," Acting Comptroller of the Currency Michael Hsu said in a speech at the University of Michigan. "Some have significant deficiencies. Others are straightforward because the acquiring bank is a model of safety and soundness and has earned the trust of the community and supervisors. The majority lie somewhere in between and require varying degrees of scrutiny and multiple rounds of inquiry. The transparency provided in our proposed policy statement effectively proposes chalk lines demarcating these three groups."
Hsu said the proposed changes seek to preserve and promote a diverse and dynamic U.S. banking system. Later this year, the agency plans to publicly release data on the bank mergers that it supervises. It also plans to hold a symposium on the topic at its Washington, D.C., headquarters on Feb. 10. In the meantime, Hsu noted that, currently, certain merger applications are automatically approved by the OCC on the 15th day after the close of the comment period unless the agency takes action to remove the filing for expedited processing.
"The forthcoming [notice of proposed rulemaking] proposes to remove that, reflecting our view that bank mergers are significant corporate transactions that require the OCC to make a decision," Hsu said. The related policy statement sets forth the features of applications and indicators that are generally consistent with OCC approval under the Bank Merger Act, as well as the features and indicators that raise supervisory or regulatory concerns that may be inconsistent with OCC approval, he added.
Read the proposed rule and policy statement
Read an OCC overview of the proposed rule and statement
House Passes $78B Bipartisan Tax Package
House lawmakers passed a $78 billion tax package that includes a short-term expansion of the child tax credit and the restoration of several business tax credits. The bill passed with overwhelming bipartisan support in a 357-70 vote but faces uncertainty in the Senate.