STATE GOVERNMENT RELATIONS
Lawmakers Return to Statehouse
Indiana lawmakers returned to the Statehouse this week to begin the 2023 legislative session, during which they'll craft the state's next two-year spending plan — balancing new spending on education and public health while spurring economic growth with tax breaks and community development initiatives.
Holcomb Makes Case for Historic Expenditures
Gov. Eric Holcomb used his seventh State of the State address on Wednesday to convince supermajority Republicans to spend historic amounts to fix the state's sagging public health and support public education. He urged the General Assembly to achieve three goals: Secure Indiana's place in the economy of the future, transform the delivery of public health across the state and make unprecedented investments.
FEDERAL GOVERNMENT RELATIONS
Congresswoman Houchin Selected to Serve on House Financial Services Committee
Congresswoman Erin Houchin (R-IN-09) has announced she will serve on the House Financial Services Committee in the 118th Congress.
"I'm honored to be appointed to the Financial Services Committee to give Hoosiers a seat at the table on the economic issues that matter most to them,” she said. “This committee will play a pivotal role in establishing oversight of the Biden Administration and fighting against their growth-stifling policies. As a small business owner, it will be my priority to bring common-sense solutions to protect consumers and investors, give Americans control over their personal financial data and be a voice for rural banking. It's important to me to help build a framework that encourages innovation in financial technology while keeping citizens safe. These are the issues that Hoosier families are discussing at their kitchen table. As a new member of this committee, I will work tirelessly to help Hoosiers protect their wallets and secure their futures."
Houchin's selection continues the legacy of Hoosiers serving on the Financial Services Committee, with at least one Indiana representative serving on the committee since 2013.
"Congresswoman Erin Houchin will be an excellent addition to an already exceptional roster of Republicans on the Financial Services Committee," said Chairman McHenry. "Her experience as an entrepreneur and leadership in the Indiana State Senate will provide a fresh perspective as Committee Republicans work to expand opportunities for small businesses to grow and support American workers. I'm certain Erin will continue to be a strong voice for Indiana families as a member of the committee.
GOP Roster Announced for House Financial Services Committee
The House Republican Steering Committee announced GOP members of congressional committees for the 118th Congress. With the exception of David Kustoff (Tenn.), all Republican committee members from the previous Congress who were re-elected will return to the committee. As expected, Patrick McHenry of North Carolina will chair the committee.
With the GOP majority, several new members will be added on the Republican side. Previously sitting representatives who will be added are Dan Meuser (Pa.), Scott Fitzgerald (Wis.), Andrew Garbarino (N.Y.), Young Kim (Calif.), Byron Donalds (Fla.) and Mike Flood (Neb.).
Other freshman members of Congress joining Congresswoman Houchin on the committee are Mike Lawler (N.Y.), Zach Nunn (Iowa), Monica De La Cruz (Texas), and Andy Ogles (Tenn.).
CFPB Proposes Public Registry of Nonbank Contract Terms
The Consumer Financial Protection Bureau has proposed creating a public registry of terms and conditions in non-negotiable, nonbank contracts that seek to have customers waive their ability to take specific actions, such as petitioning for bankruptcy or suing the company. The agency indicated that such contact language suggests the terms are legally enforceable when they are not.
The proposed registry would focus on nonbanks subject to the CFPB's supervisory jurisdiction, and the information would be posted on the agency's website. "This proposal does not affect how the bureau can apply its functions for monitoring and assessing risks posed by covered terms and conditions used by depository institutions and credit unions subject to its authority under [Consumer Financial Protection Act] sections 1022, 1025 and 1026," the bureau said.
Nonbanks would need to register their covered contract terms and conditions annually with the agency, although there would be exceptions for certain smaller entities. The proposal comes roughly a month after CFPB announced it plans to create a separate registry listing nonbank financial firms that run afoul of specific local, state or federal consumer protection laws.
Powell: Federal Reserve Not 'Climate Policymaker'
Speaking at a central bank symposium in Sweden on Tuesday, Fed Chairman Jerome Powell said that barring congressional action, it would be inappropriate for the Federal Reserve to use monetary policy or supervisory tools to promote a greener economy or achieve other climate-based goals. Powell said the Fed's independence in setting monetary policy "has served the American public well." However, that independence means the agency should "stick to our knitting" and not wander off to pursue perceived social benefits that are not tightly linked to its statutory goals and authorities, he said. The Fed has "narrow, but important, responsibilities" regarding climate-related financial risks, but it is up to elected lawmakers to set direction on climate policy.
"Decisions about policies to directly address climate change should be made by the elected branches of government and thus reflect the public's will as expressed through elections," Powell said, adding, "We are not, and will not be a climate policymaker."
Fed Governor Michelle Bowman made a similar argument during a speech to the Florida Bankers Association, saying the agency views its role on climate "as a narrow focus on supervisory responsibilities and limited to our role in promoting a safe, sound and stable financial system." She also noted that the Fed's recent climate guidance only applies to banks with more than $100 billion in assets.
"While this climate supervision effort is a new area of focus, it has been a longstanding supervisory requirement that banks manage their risks related to extreme weather events and other natural disasters that could disrupt operations or impact business lines," Bowman said.
FHFA Seeks Comment on Proposed Fintech 'Tech Sprints'
The Federal Housing Finance Agency is seeking public comment on a proposed series of "tech sprints" to solicit input on financial technology solutions that could benefit the housing market. FHFA envisions tech sprints as competitions in which participants are given "problem statements" associated with fintech in housing finance so they can come up with solutions to guide agency strategy. The agency plans to conduct two tech sprints each year for the next three years, with each event expected to attract an average of 200 participants. Comments on the proposal must be submitted to the agency by Feb. 9.
New York Fed: Short-Term Inflation Expectations Fall
Consumer inflation expectations declined in the short term, held steady in the medium term and edged up slightly in the long term, according to the Federal Reserve Bank of New York's monthly Survey of Consumer Expectations released Monday. Household income growth expectations increased to a series high, and households' expectations about the future financial situation improved in December.
Median inflation expectations decreased at the one-year horizon, falling by 0.2 percentage points to 5%, the lowest reading since July 2021. Expectations at the three-year horizon remained unchanged at 3%, while median five-year-ahead inflation expectations dipped 0.1 percentage points to 2.4%. The median expected growth in household income increased by 0.1 percentage points to 4.6% in December, a new series high. However, median household spending growth expectations fell sharply to 5.9% from 6.9% in November.
Perceptions of credit access compared to a year ago improved slightly from the previous month, though the share of households reporting more difficulties in obtaining credit compared to a year ago hovered around a series high. The average perceived probability of missing a minimum debt payment over the next three months dipped 0.4 percentage points to 11.4% in December.
Lawyers Call for Libor Act Clarity on Synthetic Rate
Legal experts say the Federal Reserve's final rulemaking for the Adjustable Interest Rate (Libor) Act does not include U.S. use of synthetic Libor, which could clash with the U.K. Financial Conduct Authority's intention to maintain a synthetic U.S. Libor. Industry lawyers are calling for further clarification from the Fed to reduce future "disruptive litigation."