STATE GOVERNMENT RELATIONS
DNR Announces Applications for HPF Grant Available
The Indiana Department of Natural Resources is now accepting applications for the Historic Preservation Fund grant, which provides funding to support the rehabilitation of sites listed on the National Register of Historic Places. Grants can support architectural and historical projects, archaeological projects, and acquisition and development (rehabilitation) projects. To be eligible for a grant, applicants must be tax-exempt nonprofit organizations, educational institutions or local government units. Eligible properties must be listed individually or as contributing resources within listed historic districts in the National Register of Historic Places. Federal preservation standards must be met regarding rehabilitation activities. The proposal deadline is Friday, Oct. 6, at 5 p.m. Applicants should review the instruction packets carefully to note updates to the application and submission requirements. DNR must have received proposals by the deadline.
FEDERAL GOVERNMENT RELATIONS
Labor Department Releases Overtime Proposed Rule
The U.S. Department of Labor Wednesday released a proposed rule that would significantly increase the number of employees subject to the Fair Labor Standards Act's overtime and minimum wage requirements. Under the proposal, employees who earn up to $1,059 per week, or $55,068 annually, would automatically be subject to these requirements. Current regulations issued in 2019 set the salary level at $684 per week or $35,568 annually. Above that level, an employee may be exempted from federal overtime and minimum wage requirements if the employee performs certain duties.
The proposal also would require DOL to automatically update the salary level every three years. In addition, the proposal would increase the amount of income an employee must receive to be classified as a "highly compensated employee" (HCE) to $143,988. An employee who earns a salary above the HCE threshold is subject to a less stringent "duties test" to be exempted from federal overtime and minimum wage requirements. The proposal also requires DOL to update the HCE threshold every three years.
Among the proposal's critics is the Partnership to Protect Workplace Opportunity, which expressed concerns about the rulemaking. "We're disappointed DOL has decided to move forward despite repeated requests from PPWO and the regulated community to abandon or at least delay the rulemaking until the economy stabilizes," the coalition said in response to Wednesday's announcement. "This rulemaking will lead to a substantial reduction in access to entry-level executive, administrative and professional salaried positions. It will reduce opportunities, especially for recent graduates and younger professionals hoping to begin their careers."
Report: FDIC Needs to Improve Threat Information Sharing with Financial Institutions
The Federal Deposit Insurance Corp.’s Office of Inspector General said in a new report the agency could improve the effectiveness of its processes to ensure that financial institutions receive actionable and relevant information about threats and vulnerabilities resulting from cyberattacks, financial crimes and natural disasters.
The report is a follow-up to a 2022 review that concluded the FDIC had not established adequate processes to analyze and disseminate actionable threat information to the financial institutions it supervises.
In the new report, which is partially redacted, the OIG still found the agency lacking in its capacity to share information about cyber and non-cyber-related threats. The office made 10 recommendations to improve the FDIC's processes, and the agency pledged to complete all corrective actions by March 31, 2024. They include improving controls over the recording of computer security incidents reported by banks and service providers, establishing procedures for sharing non-cyber-related threat information and developing performance measures for the agency's external threat-sharing activities.
Banking Regulators Propose Long-Term Debt Requirement for Larger Banks
On Tuesday banking regulators unveiled a proposed long-term debt requirement for banks with more than $100 billion in assets. The requirement is part of a package of proposed rulemakings that the Federal Deposit Insurance Corp., Office of the Comptroller of the Currency and Federal Reserve have been pursuing since before the recent bank failures.
Under the proposed rule, a covered bank would be required to have a minimum outstanding amount of eligible long-term debt that is at least 6% of the institution's total risk-weighted assets, 2.5% of its total leverage exposure (if it is required to maintain a minimum supplementary leverage ratio) and 3.5% of its average total consolidated assets, whichever is greater. Banks would have three years to comply with the requirement after the date they become subject to the rule, but partial compliance would be scaled up during the phase-in period.
The FDIC board unanimously voted in favor of moving forward with the proposal. Chairman Martin Gruenberg said the agency anticipated that the proposed requirement would marginally increase funding costs for covered banks and result in a decline of about three basis points of net interest margins. While voting to advance the proposal, FDIC Vice Chairman Travis Hill and board member Jonathan McKernan said they had reservations that need to be addressed in coming months. "We need to acknowledge bank failures are an inevitable feature of a dynamic and innovative economy, and we should plan for those bank failures by focusing on strong capital and an effective resolution framework as our best hope for putting an end to the habit of privatizing gains and socializing losses," McKernan said.
Read an FDIC staff memo on the proposed rule
CFPB's Chopra Suggests that FDIC Revise Parts of the Proposal
Consumer Financial Protection Bureau Director Rohit Chopra said Tuesday the Federal Deposit Insurance Corp. should examine whether its newly proposed debt requirements should apply to certain institutions with assets of less than $100 billion, "such as those with high levels of 'uninsured' deposits or those that have grown very rapidly." In addition, Chopra encouraged the FDIC to reconsider its plans for a three-year transitional phase when a bank exceeds the $100 billion threshold instead of requiring immediate compliance.
Powell Says Fed Committed to Reaching 2% Inflation Target
While inflation has moved down from its peak, it remains too high, and the Federal Open Market Committee is prepared to raise the federal funds rate further if necessary, Federal Reserve Chairman Jerome Powell said last Friday. Speaking during the Kansas City Fed's annual economic symposium in Wyoming, Powell stressed that the Fed remains committed to lowering the rate of inflation to its target of 2%, and that will likely mean holding monetary policy at a restrictive level until it is confident that inflation is moving toward that objective.
Getting inflation down to 2% is expected to require a period of below-trend economic growth and some softening in labor market conditions, Powell said. Interest rates are up, and bank lending standards have tightened, but GDP growth has come in above expectations and above its longer-run trend; recent readings on consumer spending have been robust, and the housing sector is showing signs of picking back up after sharply decelerating over the past 18 months. Demand for labor and job openings are trending downward, but real wage growth has been increasing as inflation has fallen. Persistent above-trend growth and tightness in the labor market could warrant further tightening of monetary policy, he said.
"We see the current stance of policy as restrictive, putting downward pressure on economic activity, hiring and inflation," Powell said. "But we cannot identify with certainty the neutral rate of interest, and thus there is always uncertainty about the precise level of monetary policy restraint." The FOMC next meets Sept. 19-20.
Treasury Department, IRS Propose Digital Asset Regulations
Last Friday the Treasury Department and IRS released proposed regulations on the sale and exchange of digital assets by brokers as part of an effort to crack down on alleged tax cheats. The proposed rules would require brokers – including digital asset trading platforms, digital asset payment processors and certain digital asset-hosted wallets – to file information returns and furnish payee statements on dispositions of digital assets effected for customers in certain sale or exchange transactions. Additionally, they would require real estate reporting persons to report the fair market value of digital asset consideration received by real estate sellers in reportable transactions. Those same persons also would be required to file information returns and furnish payee statements for real estate purchasers who use digital assets.
"Under current law, taxpayers owe tax on gains and may be entitled to deduct losses on digital assets when sold, but for many taxpayers, it is difficult and costly to calculate their gains," the Treasury Department said in a statement. "These proposed rules require brokers to provide a new Form 1099-DA to help taxpayers determine if they owe taxes, and would help taxpayers avoid having to make complicated calculations or pay digital asset tax preparation services in order to file their tax returns. These regulations align tax reporting on digital assets with tax reporting on other assets, and, as a result, avoid preferential treatment between different types of assets."
Written comments will be accepted until Oct. 30, the Treasury Department said. A public hearing has been scheduled for Nov. 7, with a second public hearing on Nov. 8 if the number of requests to speak at the first hearing exceeds the number that can be accommodated in one day.
Read the Treasury Department statement
Consumer Spending Rose 0.8% in July; Prices Up 0.2%
According to a Commerce Department Report, the personal consumption expenditures index, the Federal Reserve's preferred measure of inflation, showed a 0.8% increase in consumer spending in July. According to the report, prices were up 0.2% compared with June and 3.3% year over year. Core PCE, which excludes food and energy costs, rose 0.2% compared with June, the report said.