STATE GOVERNMENT RELATIONS
Two IBA Priority Bills Pass Final House Votes
House Bill 1284 and Senate Bill 188, two key IBA priority bills, both passed this week on final votes in the House. HB 1284 (Deposit Account Agreements) is legislation that addresses the recent Indiana Supreme Court rulings that created significant challenges to financial institutions as it relates to making ongoing changes to account agreements. SB 188 (Actions on Deposit Accounts) reduces the statute of limitations for actions upon deposit accounts from six years to two years.
HB 1284 required a concurrence vote based on an amendment the Senate added several weeks ago. The bill passed the House 66-20 on Wednesday. SB 188 passed the House on Tuesday 60-34. Both bills now head to the governor’s desk for his signature or veto.
Below are bills the IBA is tracking as we move into the last week of Session.
- 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.
- House Bill 1084 – Privacy of firearms financial transactions.
- Senate Bill 4 – Fiscal and administrative matters.
FEDERAL GOVERNMENT RELATIONS
ABA, State Associations Seek Congressional Hearing on Credit Unions
The American Bankers Association, Indiana Bankers Association and all 51 other state bankers associations Wednesday urged lawmakers in the House and Senate to hold a hearing to determine whether the credit union industry’s tax exemption is justified by the community benefit it produces. In a letter to the leaders of the House Ways and Means Committee and Senate Finance Committee, the groups said that credit unions have strayed from their original mission as nonprofits designed to provide consumer financial services to those in need. Instead, they acquire banks, issue subordinated debt and offer nationwide membership.
“Credit union growth, while theoretically positive for the communities credit unions serve, is only beneficial if it is accompanied by congressional oversight and careful regulatory supervision that accounts for the potential consequences of that growth on the credit union model...As credit unions continue to grow, Congress has a responsibility to ensure that disclosure and transparency requirements keep pace and provide adequate documentation of responsible stewardship of taxpayer funds,” the associations said.
The associations added that they welcome competition and recognize that it benefits U.S. households. However, they also believe that American taxpayers deserve accountability and that financial institutions awarded special tax and regulatory treatment should live up to their stated missions, noting it has been two decades since Congress last held a hearing on the credit union tax exemption. “Hearings once every 20 years are not enough for the 140 million consumers who use credit unions, nor the taxpayers who subsidize their services,” they said.
FHFA Announces Changes to Credit Score Modernization Effort
The Federal Housing Finance Agency announced Thursday that in response to public input, it is making changes to its planned implementation of new credit score requirements for single-family loans acquired by Fannie Mae and Freddie Mac. Specifically, the agency will release historical data on the Vantage Score 4.0 model early in the third quarter of 2024 and will work toward providing similar data to support the transition to the FICO 10T model.
In addition, FHFA said it will align implementation of the transition from the classic FICO credit score model and the bi-merge credit reporting requirement so both will take place in the fourth quarter of 2025. Finally, the agency is announcing more stakeholder forums for sharing perspectives on the sequencing of project milestones and expected uses of the historical data to support the new models.
CFPB Planning New Rules for Data Brokers Later This Year
Consumer Financial Protection Bureau Director Rohit Chopra said Wednesday that the bureau will propose new rules under the Fair Credit Reporting Act later this year to limit certain activities of data brokers, including those that sell personal data overseas. He didn’t elaborate on what changes the rules would propose.
Chopra’s comments were in response to an executive order from President Biden directing various nonbanking agencies to protect personal data collected by companies and potentially accessed by foreign actors. The president also “encouraged” the CFPB “to protect Americans from data brokers that are illegally assembling and selling extremely sensitive data, including that of U.S. military personnel.”
The CFPB announced last year that it was considering potentially sweeping changes to FCRA rule Regulation V, including extending FCRA liabilities to cover consumer-identifying information.
McConnell to Step Down as Senate Republican Leader
Sen. Mitch McConnell, R-Ky., announced Wednesday that he will step down as the Senate Republican leader in November. McConnell, who has led the Senate Republicans since 2007, said he will serve the remainder of his Senate term, which ends in 2027.
Bowman Shares Concerns About Data Behind Debit Interchange Fee Proposal
Federal Reserve Governor Michelle Bowman said Wednesday that she remained concerned about the data underpinning the Fed’s proposal to further lower the debit card interchange fee cap under Regulation II. In a speech to the Florida Bankers Association, Bowman said that while the proposal was based on a survey conducted by the Fed, the resulting analysis overlooks gaps in the data and ignores the broader context, such as the potential effect of the rule on bank capital and earnings. The analysis also does not account for recent revisions to Reg II, which may have the unintended consequence of increasing the incidence of fraud in bank debit card programs, she added.
“The pain here will likely be felt broadly by banks and their customers, and will continue to trickle down to smaller institutions, including community banks, even if those banks are not directly subject to the interchange fee cap,” Bowman said. “The consequences for bank debit card programs, and the customers who rely on those programs, may be significant.”
Bowman also reiterated her concern about a broad range of regulatory proposals – from increased capital requirements to implementation of the Community Reinvestment Act – and the cumulative effects they could have on the banking industry. “In many ways, more can be counterproductive and harmful when it comes to regulatory reform,” she said. “When reforms are disproportionate to risk or fail to promote safety and soundness in an efficient way, those changes can harm the competitiveness of the U.S. banking system, impede the ability of banks to manage their risks and even result in the allocation of capital by regulators instead of by bank management.”