STATE GOVERNMENT RELATIONS
Senate and House Republicans Far Apart on Key Issues
The second half of the 2022 Indiana General Assembly begins Monday, setting off a five-week sprint to the legislature's statutory March 14 adjournment deadline. The two chambers’ supermajorities are currently split on a range of controversial topics, from vaccination mandates to education issues.
Senate Bill 370 - Community Infrastructure Improvement Districts
Author: Sen. Brian Buchanan (R-District 7)
Bill summary: Creates a procedure to establish a community infrastructure improvement district. Specifies that the procedure added by the bill allowing for the establishment of a district does not authorize the unit to establish a district that overlaps with an economic improvement district. Requires a petition for the establishment of a district to include a rate and methodology report. Specifies the contents of the report. Specifies the basis upon which benefits accruing to parcels of real property within a district may be apportioned among those parcels. Requires a determination that the aggregate assessments within a district do not exceed 30% of the projected assessed value of property within the district before a legislative body may adopt an ordinance to establish a district. Requires a community infrastructure improvement board to assist the county treasurer in order to make certain specified determinations and designations regarding annual assessments within a district. Adds specific provisions that apply to the board's issuance of revenue bonds.
Latest action: The bill has been referred to the House Ways and Means Committee and awaits a hearing.
Senate Bill 371 - Replacement of the London Interbank Offered Rate
Author: Sen. Andy Zay (R-District 17)
Bill Summary: Replacement of the London Interbank Offered Rate. Adds provisions to the title in the Indiana Code concerning financial institutions to provide for the replacement, by operation of law, of the United States Dollar LIBOR as the benchmark index for any contract, security, or instrument, with a recommended benchmark replacement that is based on the secured overnight financing rate (SOFR). Sets forth certain events that serve to trigger the replacement of LIBOR with the recommended benchmark replacement. Specifies that such replacement by operation of law applies with respect to a contract, security, or instrument that either: (1) contains no fallback provisions setting forth a methodology or procedure for determining a benchmark replacement; or (2) contains fallback provisions that result in a benchmark replacement that: (A) is not a recommended benchmark replacement; and (B) is based in any way on any LIBOR value. Provides that if a recommended benchmark replacement becomes the benchmark replacement for any contract, security, or instrument, any applicable benchmark replacement conforming changes become an integral part of the contract, security, or instrument by operation of law. Provides that the bill's provisions do not alter or impair contracts, securities, or instruments that contain certain provisions. Provides that the selection or use of a recommended benchmark replacement as a benchmark replacement for a contract, security, or instrument: (1) constitutes a commercially reasonable replacement for and a commercially substantial equivalent to LIBOR; and (2) does not: (A) impair or affect certain rights and performance obligations under; (B) constitute a breach of; or (C) void or nullify; the contract, security, or instrument. Provides that a person is not liable for damages and is not subject to any claim for equitable relief, in connection with: (1) the selection or use of a recommended benchmark replacement; or (2) the determination, implementation, or performance of benchmark replacement conforming changes; with respect to any contract, security, or instrument. Makes a cross reference to this immunity provision in the chapter of the Indiana Code that lists statutes outside of Title 34 of the Indiana Code that confer civil immunity.
Latest action: The bill was passed out of the House Financial Institutions and Insurance Committee by a vote of 13-0.
House Bill 1048 - Sheriff's Sale in Mortgage Foreclosure Action
Author: Rep. Sean Eberhart (R-District 57)
Bill Summary: Allows the sheriff to conduct a public auction electronically. Prohibits certain persons and entities from purchasing a tract at a sheriff's sale. Raises the amount that a sheriff can charge for administrative fees from $200 to $350. Makes a conforming amendment. Makes a technical correction.
Latest action: The bill was amended and passed out of the Senate Local Government Committee by a vote of 10-0. The bill will be recommitted to the Senate Committee on Tax and Fiscal Policy.
FEDERAL GOVERNMENT RELATIONS
SBA Issues New PPP Procedural Notice for Loan Reviews of Lender’s Partial Forgiveness Decision
The Small Business Administration has issued a new procedural notice that allows Paycheck Protection Program borrowers to request an SBA loan review of partial forgiveness decisions issued by their PPP lenders. According to the notice, when a lender receives a forgiveness remittance from SBA on a loan where only a portion of the PPP loan was forgiven, the lender must inform the borrower that it has 30 calendar days to seek, through the lender, an SBA loan review of the lender’s partial approval decision. The SBA retains discretion to accept or deny the borrower’s request to review the loan. If SBA selects the loan for review, the loan is not deferred and the borrower must continue to make payments on the remaining balance of the loan.
The SBA also advised that lenders must notify all of their borrowers of loans that previously received a partial forgiveness decision that the borrower has 30 calendar days to seek, through the lender, an SBA loan review of the lender’s partial forgiveness decision. Lenders must do so by Feb. 26. The SBA indicated that it will be providing lenders with additional guidance through the Platform, including step-by-step instructions.
Federal Court Upholds OCC, FDIC's 'Valid-When-Made' Rules
A federal district court on Feb. 8 upheld the Office of the Comptroller of the Currency’s and Federal Deposit Insurance Corp.’s "valid-when-made" rules in separate rulings. The agencies' rules had affirmed that permissible interest on a loan made by a national or state-chartered bank or federal thrift remains valid when the loan is transferred or sold. After the OCC and FDIC issued separate rules in 2020, several state attorneys general challenged both rules in court.
The agencies' so-called "Madden fix" rules responded to a Second Circuit Court of Appeals ruling in Madden v. Midland Funding, which held that a nonbank buyer of a loan issued by a national bank could not export the originated interest rate into another state.
OCC Acting Comptroller Michael Hsu welcomed the district court's ruling on the OCC's rule but cautioned that the "legal certainty" provided by the valid-when-made rule "should be used to the benefit of consumers and not be abused." Hsu also reiterated that "predatory lending has no place in the federal banking system" and that the OCC is committed to ensuring "banks are not used as a vehicle for 'rent-a-charter' arrangements."
Basel Committee Reaffirms Commitment to Basel Implementation
The oversight body of the Basel Committee reaffirmed its commitment to implementing in full the Basel regulatory framework. The aspects of the 2017 framework – commonly known as Basel IV and put on hold due to the pandemic – that still remain to be implemented "seek to address some of the weaknesses in the regulatory framework that were exposed by the [2008 financial crisis], including by reducing excessive variability in risk-weighted assets and improving the comparability and transparency of banks' risk-based capital ratios," the committee noted.
The committee also reappointed Pablo Hernandez de Cos, Governor of the Bank of Spain, as chair of the Basel Committee for a second term, which will begin on Mar. 7.
Senators Eye Legislation to Help Complete Libor Shift
Senate lawmakers are working on legislation that would clear the way for transitioning tough legacy Libor contracts to the Secured Overnight Financing Rate (SOFR) without risking litigation. Developing the legislation is time-consuming as lawmakers need to address challenges such as defining regulatory standards for the future use of non-SOFR reference rates and ensuring that the switch would not constitute a taxable event.
Negotiators Announce Breakthroughs on Budget Talks
Senators negotiating the proposed omnibus spending package framework say they have reached an agreement on some contentious issues. This should clear the way for further agreement on budgeting various aspects of the package and was described by Sen. Richard Shelby, R-Ala., as "a breakthrough in a bipartisan way." Meanwhile, the House has passed an interim measure to sustain government spending until Mar. 11, ending the possibility of a shutdown on Feb. 18.
Treasury's Liang: All Cryptoasset Firms Need Oversight
Nellie Liang, undersecretary for domestic finance at the Treasury Department, stated in a House Financial Services Committee hearing on Tuesday on oversight of stablecoins that every type of company that acts as an intermediary in cryptoasset transactions should be regulated. "For both traditional and digital native intermediaries, it is critical to ensure that regulatory frameworks are in place that appropriately addresses risks to businesses, consumers, and investors, as well as the broader financial system," Liang said in prepared remarks.
Cannabis Banking Legislation Passes House
House lawmakers have passed the SAFE Banking Act as an amendment within the China competition bill, marking the sixth time the cannabis banking legislation has cleared the House. "The SAFE Banking Act is the best opportunity to enact some type of federal cannabis reform this year and will serve as the first of many steps," said Rep. Ed Perlmutter, D-Colo. Championed by Rep. Perlmutter, the SAFE Banking Act has been passed in some form by the House six times but has failed to be successfully taken up by the Senate.