STATE GOVERNMENT RELATIONS
Register Today for 2021 IBA Regional Meetings
Register today and join us for a series of regional meetings around the state. The IBA has implemented these meetings in an effort to facilitate grassroots communication between the bankers we serve and the legislators who serve our state. The meetings include an hour-long update on the IBA, including legislative information and advocacy opportunities. Following the update, local legislators from the Indiana General Assembly will meet for lunch with bankers from the community. This year, three regional meetings remain, each beginning at 11:00 a.m. local time. Follow the links below for your preferred location and register today!
Fair Oaks
The Farmhouse Restaurant at Fair Oaks Farms
New Date! Monday, October 4
Click here to register
Evansville
The Bauerhaus
Tuesday, October 5
Click here to register
Fort Wayne
The Landmark Centre
New Date! Monday, October 25
Click here to register
FEDERAL GOVERNMENT RELATIONS
Action Alert: Urge Lawmakers to Oppose New IRS Reporting Rules
The Biden Administration is proposing a sweeping expansion of tax information reporting aimed at raising revenue to help offset the cost of additional spending programs in the American Families Plan. While the initial draft of the Biden administration’s $3.5 trillion spending plan currently does not include the IRS reporting proposal, the language could be added over the coming weeks as the current package is debated. We must continue our grassroots efforts to ensure that this provision stays out of future drafts of the bill.
Contact your lawmakers today to express your opposition to any new IRS reporting that leads to increased compliance costs, damages your customer relationships and threatens customer privacy. In addition to the current action alert seeking bank employee participation, we have created an action alert with messaging specifically designed for bank customer engagement. Please consider sharing this unique action alert link so they may urge Congress to protect their financial privacy!
Update from Washington: This week the U.S. House of Representatives Financial Services Committee held a hearing in which Indiana’s Rep. Trey Hollingsworth discussed the IRS reporting proposal during testimony by Treasury Secretary Janet Yellen. Click to view a portion of Rep. Trey Hollingsworth’s comments in the hearing.
Federal Government Issues Guidance for Federal Contractors Vaccine Mandate
The federal government’s Safer Federal Workforce Task Force issued guidance last Friday that requires COVID-19 vaccination of all employees of federal contractors. Banks that conduct business with the federal government or that have branches on military bases or other federal property are subject to the executive order and guidance.
The guidance expands upon President Biden’s recent executive order that requires federal contractors to follow COVID-19 workplace safety requirements published by the task force. The guidance requires federal contractors to ensure all employees are vaccinated for COVID-19 by Dec. 8, unless the employee is legally entitled to an accommodation for a disability or sincerely held religious belief, practice, or observance. Contractors must review employees’ documentation to provide vaccination status.
The guidance also requires employees of federal contractors and visitors to contractor workplaces to comply with published guidance by the Centers for Disease Control and Prevention for masking and physical distancing at the workplace. Specifically, in areas of high or substantial community transmission, fully vaccinated people must wear a mask in indoor settings, according to the guidance. Individuals who are not fully vaccinated must wear a mask indoors and in certain outdoor settings regardless of the level of community transmission in the area.
Senators Question Yellen Over Tax Reporting Proposal
Treasury Secretary Janet Yellen faced tough questions on Tuesday from members of the Senate Banking Committee on the Biden administration’s controversial proposal to require financial institutions to report gross inflows and outflows on customer accounts as a way to close the so-called “tax gap.” Several lawmakers panned the idea during the hearing.
“There are obvious privacy concerns for all Americans here,” said Sen. Cynthia Lummis (R-Wyo.) “This represents a dramatic new regulatory burden for community banks and credit unions.” She also raised concern that her constituents “will find alternatives to traditional banks just to thwart IRS access to their personal information.” Sen. Bill Hagerty (R-Tenn.) added that, if enacted, the proposal “will be an extensive compliance burden,” and also noted that “there’s a huge concern . . . on the part of the American public” about the IRS’s ability to protect their data.
Attempting to defend the $600 de minimis threshold floated by the administration, Yellen said that “it’s important to have comprehensive information so that individuals can’t game the system and have multiple accounts.” The Indiana Bankers Association, along with national and the other state bankers associations, has vigorously opposed the proposal, and joined last week in writing to lawmakers to urge them to keep it out of future versions of the budget resolution, regardless of the de minimis threshold.
Powell, Yellen Discuss Persistent Inflation, Systemic Risk
Higher inflation rates “will likely remain so in the coming months,” Federal Reserve Chairman Jerome Powell acknowledged Tuesday in testimony before the Senate Banking Committee. He noted that the effects of inflation on the economy “have been larger and longer-lasting than anticipated,” but added that “they will abate,” and begin to fall back toward the Fed’s longer-run 2% target.
Powell attributed much of these upward pressures on prices to persistent supply chain issues, noting that “this is really a mismatch between demand and supply. We need those supply blockages to abate before inflation can come down.” Meanwhile, Treasury Secretary Janet Yellen expressed her view that inflation at year-end would be “probably closer to 4%. That already almost must be the case, based on what’s happened this year.”
Powell and Yellen also discussed what they view as the most significant risks to the economy beyond the COVID-19 pandemic. Powell flagged cyber risk as the most significant threat to the banking industry. “We have a very highly capitalized banking system, one that is much better at measuring its risks” and banks are “well-fortified” against losses from loan defaults, Powell said. “The risk we haven’t really faced the full brunt of yet is a successful cyberattack on a financial institution of some kind – be it a financial market utility, a bank or some other type of financial institution. . . . It’s a very high priority to be ready for it.”
Yellen added that “there are threats to financial stability that have come from growth of activity in the shadow banking sector,” many of which came to light during the pandemic, as well as climate-related risks – both of which she said she is working to address in her role as head of the Financial Stability Oversight Council.
SBA Issues Final Rule on PPP Loan Review Decision Appeals Process
The Small Business Administration has issued a final rule outlining procedures for appealing final SBA Paycheck Protection Program loan review decisions to its Office of Hearings and Appeals. The final rule mostly adopts the procedures established in a previously issued interim final rule from August 2020, with minor changes. Most significantly, under the final rule, a timely appeal by a PPP borrower of a final SBA loan review decision will extend the deferment period of the PPP loan. Previously, a timely appeal did not result in deferral of payment under the PPP loan.
Under the final rule, borrowers have 30 days to appeal their loan review decisions. The rule specified that “the clock for counting days will begin only after the borrower has received the actual final SBA loan review decision document.” The final rule also made several additional changes to streamline the appeal filing process.
In related news, the Government Accountability Office issued a report earlier this week that concluded that changes in the PPP led to increased lending to the smallest businesses and in underserved locations. Specifically, as a result of a series of changes that Congress and the SBA made to the PPP since its inception, “[b]y the time PPP closed in June 2021, lending in traditionally underserved counties was proportional to their representation in the overall small business community...while lending to businesses with fewer than 10 employees remained disproportionately low, it increased significantly over the course of the program.”
Fed Adjusting Supervisory Approach: Bowman
The Federal Reserve is working to adjust its supervisory approach as the banking industry evolves, Federal Reserve Gov. Michelle Bowman said. In public remarks on Tuesday, Bowman said the future of community banking and banking supervision are deeply interconnected, and the Fed is studying the implications of industry changes on its supervision. Bowman said the pandemic has shown that amid increasing financial services choices, consumers have sought the security of FDIC-insured institutions. She noted deposits at FDIC-insured institutions rose by 22% from 2019 to 2020, while community bank small-business lending rose 39%.
CFPB: Total Credit Card Balances Fell by Record Amount in 2020
Following the onset of the COVID-19 pandemic, credit card debt fell to $811 billion in the second quarter of 2020 before rebounding to $825 billion by the end of the year – still the largest six-month decline on record, according to the biennial Credit CARD Act report released by the Consumer Financial Protection Bureau on Thursday.
Despite shocks to the financial system from the COVID-19 pandemic, credit card market conditions remain relatively stable, the report indicated, with stability supported by robust fiscal measures, lower consumer spending, and voluntary industry relief programs. Consumers opened 84.8 million new credit card accounts in 2020, a 21.5% decline from the prior year. Of the new credit card accounts, 53.7 million were general-purpose, the lowest since 2013, and 31.1 million were private-label.
In 2020, roughly 24 million cards were issued to consumers with super-prime credit scores, 13 million to prime, 7 million to near-prime, 5 million to subprime and 5 million to consumers with deep subprime scores, the CFPB noted. Credit card delinquency rates declined in 2020, erasing six years of increases, due to government financial relief during the COVID-19 pandemic.
FHFA Extends Multifamily Forbearance
Fannie Mae and Freddie Mac will continue offering COVID-19 forbearance to qualifying multifamily property owners as needed, the Federal Housing Finance Agency indicated last Friday. This is the fourth extension of the programs, which were set to expire Sept. 30.