STATE GOVERNMENT RELATIONS
Register for Fort Wayne Regional Meeting
Join the IBA, banking peers and local legislators in northeast Indiana for the Fort Wayne regional meeting on Oct. 25. 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.
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 protect their financial privacy!
Broad Coalition of Business Trade Groups Pan Tax Reporting Proposal
Yesterday the American Bankers Association and Independent Community Bankers of America joined a broad coalition of business trade groups in a letter to House and Senate leaders urging them to reject a Biden administration proposal to require financial institutions to report information about gross inflows and outflows of all accounts above a de minimis threshold of $600. The proposal was originally floated as a way to shrink the so-called “tax gap.”
The trade groups emphasized, however, that regardless of the threshold, the proposal would create significant privacy concerns, increase tax preparation costs for both individuals and small businesses and create operational challenges for financial institutions.
“Lawmakers must fully understand the breadth of taxpayers who would be receiving a new form from their financial institution—almost every American who has a bank or credit union account and has gross inflow and outflow of at least $600,” the groups wrote. “While recent proposals suggest that increasing the de minimis threshold to $10,000 is less objectionable, this is a flawed assumption and will not significantly reduce the scale of this new IRS program.” Along with the letter, the groups also included a supplemental document refuting some of the commonly made—and erroneous—claims being made about how the provision would affect taxpayers and financial institutions.
Read the supplemental document
Pelosi: Budget Reconciliation Package to Include Tax Reporting Provision
House Speaker Nancy Pelosi (D-Calif.) told reporters on Tuesday that Democrats plan to include a controversial tax reporting provision in their budget reconciliation package that would require banks to report information to the Internal Revenue Service on gross inflows and outflows on customer accounts above a certain de minimis threshold.
Pelosi did not specify what the threshold would be, though Democrats have eyed a $10,000 threshold in recent days, up from the $600 threshold originally proposed by the Biden administration. Despite Pelosi’s remarks, House Democrats have not yet agreed on the details of a final reconciliation package, and no vote has been scheduled at this time. Any final version will have to also clear the U.S. Senate, where some Democrats are pushing for a smaller package.
Please continue to contact your representatives to let them know you firmly oppose this proposal. In addition, please consider using the customer contact alert to engage your customer base to speak directly with their members of Congress regarding this troubling proposal.
DOL Proposes New Set of ESG Investing Rules; Offers Clarity to Fiduciaries
The Department of Labor on Wednesday issued a proposed rule regarding environmental, social responsibility and governance (ESG) investment factors and a fiduciary’s proxy voting activity under the Employee Retirement Income Security Act. This marks the second attempt by the DOL to implement rules regarding ESG investing; a previous final rule – issued in 2020 – prompted industry groups to raise concerns that it would have a “chilling” effect on the integration of ESG factors in investment decisions. (DOL indicated earlier this year that it did not intend to enforce compliance with that final rule until further guidance could be published.)
The proposal clarifies that climate change and other ESG factors are often material, and that in many instances fiduciaries should consider climate change and other ESG factors in the assessment of investment risks and returns. The proposal provides examples “that, depending on the facts and circumstances, may be material to the risk-return analysis.”
The proposal would also: remove the special rules for qualified default investment alternatives that apply under the current rule; replace the existing “tie-breaker” standard with one that requires the fiduciary to conclude prudently that competing investments, or competing investment courses of action, equally serve the financial interests of the plan over the appropriate time horizon; and make changes to the current rule’s provision on exercises of shareholder rights, including proxy voting. Comments on the proposal are due 60 days after publication in the Federal Register.
OSHA Sends Draft Vaccine Emergency Temporary Standard to OMB for Review
The Occupational Safety and Health Administration on Tuesday sent the Office of Management and Budget a draft emergency temporary standard that would implement part of President Biden’s vaccine mandates. In September, Biden directed OSHA to issue an emergency temporary standard that requires all employers with 100 or more employees to have all employees be fully vaccinated or be tested weekly for COVID-19.
Under a Clinton-era executive order, any regulatory action that is projected to have an annual effect on the economy of $100 million or more must be submitted to OMB for review prior to the agency issuing the action. The text of draft actions under OMB review, like the vaccine emergency temporary standard, are not made available to the public.
OMB is permitted 90 days to review the draft action. The review of high-priority agency actions often takes only one to two weeks, so the emergency temporary standard may be issued within the next few weeks or sooner.
U.S. Coin Task Force Urges Increased Circulation of Coins
As part of October’s Get Coin Moving Month, the U.S. Coin Task Force is urging Americans to return their dormant coins into circulation. There is currently $46.8 billion in coins in circulation, according to the task force, but much of it is sitting unused in 128 million households.
“Returning coins into circulation by spending them, or depositing or exchanging them at banks or kiosks, will make a meaningful difference for the millions of American people and businesses that rely on coins to support cash transactions,” the task force said.
Resources to spur increased coin circulation are available on the task force’s website, GetCoinMoving.org, and include best practices and recommendations for increasing coin circulation and decreasing barriers for handling coins in the supply chain, while maximizing equitable access to coins and emphasizing financial inclusion. The task force is also encouraging banks, retailers and others to raise awareness about the circulation issue by using the hashtag #getcoinmoving.
FOMC: Asset Purchase Tapering Could Start in November, December
Federal Open Market Committee members said that if they decide to start tapering asset purchases at their next meeting, the process could begin in mid-November or mid-December. In minutes from the group’s Sept. 21-22 meeting released this week, members remarked that it would be appropriate to have a gradual tapering process that ended around the middle of next year, provided the economic recovery remains broadly on track.
On inflation, members increased their inflation projections as supply constraints have been larger and longer lasting than previously anticipated. Members noted that uncertainty with the economic outlook remains high, with the uncertain course of the virus, supply chain disruptions and labor shortages complicating the interpretation of economic data.
Participants noted that they expect the labor market to continue to improve in coming months. However, some members remarked that a complete return to pre-pandemic conditions was unlikely, as the pandemic had prompted reductions in the workforce that were likely to persist, including a large number of retirements and other departures from the labor force. FOMC members indicated that their contacts had broadly reported having difficulty in hiring workers.
Congress Clears Temporary Debt Ceiling Increase
The House on Tuesday night approved – and President Biden is expected to quickly sign – a bill to temporarily raise the debt ceiling until at least Dec. 3. Financial trade associations have urged lawmakers to act promptly to raise the federal debt limit to ensure continued confidence in the creditworthiness of the U.S. and the functioning of Treasury markets.
Quarles Ends Term as Fed Supervision Vice Chair
Federal Reserve Governor Randal Quarles ended his term as vice chair of supervision without a replacement to lead the agency’s Committee on Supervision and Regulation. According to multiple reports citing a Fed spokesperson, the committee of Quarles and Governors Lael Brainard and Michelle Bowman will meet as necessary without a chair, requiring a broad consensus to advance regulations. While Quarles’ term as a Fed Board member runs until 2032, President Joe Biden will need to nominate a successor for vice chair of supervision. Biden also is expected to announce whether he will renominate Fed Chair Jerome Powell, whose term as head of the agency ends in February.
SEC Officials Debate Digital Asset Oversight
Securities and Exchange Commission officials continued the debate over regulating digital assets in recent remarks. Last Friday, Commissioner Hester Peirce said stablecoins are a convenient payment tool that facilitate the exchange of cryptocurrencies. She warned against overly strict and broad stablecoin oversight that does more harm than good. In a separate speech on Tuesday, Commissioner Caroline Crenshaw expressed opposition to providing cryptocurrency firms with temporary waivers from securities regulations, a proposal first introduced by Peirce. Crenshaw said the exemption would create an unlevel playing field with traditional startups.
The contrasting remarks reflect the broader debate over crypto regulation. The president’s Working Group on Financial Markets is expected to issue recommendations on regulating stablecoins as soon as this month, while the Federal Reserve is developing a paper on a U.S. central bank digital currency.