STATE GOVERNMENT RELATIONS
Bill Limiting Foreign Ownership of Hoosier Ag Land Passes House
A bill to limit who can buy agricultural land in Indiana advanced Monday with bipartisan support.
House Bill 1183, authored by Rep. Kendell Culp, R-Rensselaer, would prohibit purchasers from “adversarial countries” from owning or leasing Hoosier farmland. A list of those countries is kept by the U.S. Department of Commerce and currently includes six nations: Russia, China, North Korea, Iran, Cuba and Venezuela.
The proposal builds on a previous measure passed in the 2022 session, which limited foreign entities from buying more than 320 acres in Indiana for crop farming or timber production, among other restrictions.
Read more from the Indiana Capital Chronicle
Bill Further Rolling Back Indiana Wetland Protections is First to Land on Governor’s Desk
Republican state lawmakers quietly fast-tracked a contentious bill to further strip protections on some Indiana wetlands. It’s the first piece of legislation to head to the governor’s desk this session.
The Senate approved the measure 32-17 on Tuesday – with eight Republicans joining the opposition. It’s not clear where Gov. Eric Holcomb stands on the bill, however.
House Bill 1383 reduces wetland protection by shifting some Class III wetlands – which are currently protected – down to Class II, which have far fewer safeguards.
The rush happened despite significant pushback to the bill. Sen. Rick Niemeyer, R-Lowell, who sponsored the bill, said it ensures “significant, isolated wetlands” are protected in Indiana, “but without needlessly driving up the costs of buying a home, operating a business or farming.”
Read more from the Indiana Capital Chronicle
The IBA is tracking several bills as the 2024 legislative session progresses, including:
- Senate Bill 188 – Actions on deposit accounts
- House Bill 1284 – Deposit account agreements
- House Bill 1209 – Rule against perpetuities
- House Bill 1183 – Foreign ownership of agricultural land
FEDERAL GOVERNMENT RELATIONS
ABA, ICBA Sue Federal Regulators Over CRA Implementation Rules
The American Bankers Association, Independent Community Bankers of America and five national and state associations sued the Federal Reserve, Federal Deposit Insurance Corp. and Office of the Comptroller of the Currency on Monday for exceeding their statutory authority with their recent amendments to final rules implementing the Community Reinvestment Act. In a lawsuit filed in the Northern District of Texas, the groups asked the court to vacate the rules. They also will seek a preliminary injunction pausing the new rules while the court decides the merits of the case.
The Federal Reserve and FDIC boards late last year approved the rules, although neither vote was unanimous. In their lawsuit, the associations allege the rules exceed congressional authority and violate the Administrative Procedure Act by evaluating bank lending well beyond banks’ deposit-taking footprint, as required by the CRA. They also said it violates the law by evaluating some institutions’ records of providing deposit products and services to low-to-moderate income consumers even though the CRA only authorizes regulators to assess a bank’s record of meeting the credit needs of its local communities.
The other plaintiffs in the lawsuit are the U.S. Chamber of Commerce, Texas Bankers Association, Independent Bankers Association of Texas, Amarillo Chamber of Commerce and Longview Chamber of Commerce.
Research: Credit Card Routing Bill Benefits Large Retailers Over Small Businesses
A proposed credit card routing mandate bill would result in the transfer of billions of dollars from consumers to the nation’s largest retailers, with small businesses seeing little to no benefit, according to new research.
The paper by Indraneel Chakraborty, chair of the finance department at Miami Herbert Business School, modeled the potential economic effects of the Credit Card Competition Act introduced by Sens. Dick Durbin, D-Ill., and Roger Marshall, R-Kan. He concluded that the largest U.S. retailers would effectively receive a transfer of approximately $2.9 billion from issuers and cardholders affected by the legislation. However, small businesses would save significantly less, if anything, putting them at a further competitive disadvantage to their larger rivals.
“Further, small business operators receive roughly $12 billion in credit card rewards when they make purchases on credit themselves, which constitutes roughly one-tenth of all credit card rewards,” Chakraborty wrote. “The CCCA would result in the reduction of such programs, costing small businesses over $1 billion in lost rewards as well as a decline in access to credit. This would further diminish their ability to compete with larger businesses.”
NCUA to Require Credit Unions to Report Overdraft, NSF Fees
The National Credit Union Administration plans to require credit unions with more than $1 billion in assets to report their overdraft fees and nonsufficient fund fees, NCUA Chairman Todd Harper said Tuesday. During a Q&A at the Brookings Institution, Harper announced the proposed policy change, although he didn’t provide a timeline for when it may be introduced or implemented.
“Overdraft and nonsufficient fund fees are a key component of the NCUA’s review,” Harper said in prepared remarks before the Q&A. “NCUA examiners this year will continue an expanded review of credit union overdraft programs, including website advertising, balance calculation methods and settlement processes. Problematic overdraft programs and nonsufficient funds alerts include fees that aren’t reasonable and proportional, rely on systems that authorize positive and settle negative, or impose multiple representment fees, often in one day.”
The proposed reporting requirements would apply to more than 420 credit unions that hold roughly 90% of the industry’s assets, Harper said. He added that credit unions would be required to report overdraft and NSF fees separately, so there would be “greater granularity” in the data.
House Lawmakers Question Yellen on Proposed Capital Standards
Lawmakers on the House Financial Services Committee pressed Treasury Secretary Janet Yellen about proposed capital standards for certain banks Tuesday, saying they worried about the broader economic effects of the rulemaking. Yellen appeared before the committee for the first of two congressional oversight hearings this week on the Financial Stability Oversight Council, where she was asked questions on a broad range of issues, from the FSOC listing some nonbanks as systemically important financial institutions to the current state of the commercial real estate market.
Lawmakers from both parties questioned Yellen on the proposed U.S. implementation of the Basel III endgame, with most opposed to the rulemaking in its current form. “I remain deeply concerned this will further diminish the credit capacities and weaken the economic conditions of our American people,” Rep. David Scott, D-Ga., said. “I think the majority of our committee is very much against this,” he later added. “Are you with us on this? This will be terrible for our economy.”
Yellen said that banking regulators have been accepting comments on the proposal expressing similar concerns and will take those into account. However, she didn’t share her thoughts on the rulemaking, for which Treasury is not responsible. “I think that is important to ensure that credit availability is not significantly diminished,” she said.
Also, during the hearing, Yellen reiterated FSOC’s view that there should be a federal regulatory floor for stablecoins that would apply to states. “And that a federal regulator should have the ability to decide if a stablecoin issuer should be barred from issuing such an asset,” she said. “Also, we believe because wallets are a significant part of the stablecoin ecosystem…that it is critical to enact regulatory protections for holders of wallets.”
Watch a recording of the hearing
FEMA Proposes Updates to Flood Insurance Forms for Homeowners
On Tuesday, the Federal Emergency Management Agency issued its long-awaited proposed rule to amend the Standard Flood Insurance Policy, representing the first substantive changes to the policy in more than two decades. The SFIP defines the coverage, limitations and exclusions for the National Flood Insurance Program flood insurance policies and includes terms and conditions that are unique to the NFIP.
Specifically, the proposed rule would replace the current Dwelling Policy Form used for one-to-four-family residences with a new Homeowner Flood Form and five accompanying endorsements – increased cost of compliance coverage, actual cash value loss settlement, temporary housing expense, basement coverage and builder’s risk. These new endorsements would allow homeowner policyholders to amend the Homeowner Flood Form to modify coverage with a commensurate adjustment to premiums charged.
In its rule, FEMA states that the new form and endorsements “would more closely align with property and casualty homeowners insurance and provide increased options and coverage in a more user-friendly and comprehensible format.” Comments on the proposal are due by April 8.
Lawmakers Request Hearing on Navy Federal Credit Union Lending Practices
Seven House Financial Services Committee lawmakers are asking Chairman Rep. Patrick McHenry, R-N.C., to hold a hearing on the nation’s largest credit union following media reports that it had turned down large volumes of mortgage applications from Black applicants. In a letter, Ranking Member Rep. Maxine Waters, D-Calif., and six committee Democrats noted that Navy Federal Credit Union reportedly approved 75% of white borrowers applying for a new conventional home purchase mortgage in 2022 while rejecting more than half of Black applicants. In addition, they said Latino applicants were turned down at a rate approaching 50%.
“As a private institution that bears the name of an esteemed branch of the United States military, Navy Federal Credit Union must explain both to Congress and its members how such practices took place, what immediate steps are being taken to correct the harm done, and who in management will be held responsible,” the lawmakers said.
Lawmakers Seek Answers About FDIC Tech Lab
In a letter to the Federal Deposit Insurance Corp. last Friday, three House Financial Services Committee members expressed concern over what they said was the agency’s decision to roll back a program to promote technological innovation in financial.
The FDIC Tech Lab – or FDiTech – was created in 2019 under former FDIC Chairwoman Jelena McWilliams to increase collaboration between fintech firms, regulators and the financial institutions the agency oversees. The three lawmakers accused FDIC Chairman Martin Gruenberg of dismantling the public face of FDiTech and rolling it into the Division of Information Technology, where it no longer serves its original purpose. The letter was signed by committee Chairman Rep. Patrick McHenry, R-N.C., and Reps. Andy Barr, R-Ky., and French Hill, R-Ark.
The lawmakers also said the FDIC has not made publicly available information detailing how the FDIC’s posture on innovation will manifest in examinations, and whether the change would be in compliance with the FDIC’s Compliance Examination Manual. “We are concerned that the FDIC’s approach could, within the examination processes or otherwise, be used to prevent the development of innovative products and services that benefit consumers and businesses,” they said.
FHFA: Fannie, Freddie Have Sold $30 Billion in NPLs since 2014
Fannie Mae and Freddie Mac have sold 163,297 nonperforming loans, with a total unpaid balance of $30 billion, from program inception in 2014 through June 30, 2023, according to the Non-Performing Loan Sales Report released last week by the Federal Housing Finance Agency. On average, the NPLs had a delinquency of 2.8 years and an average current loan-to-value ratio of 84%. Forty percent of the NPLs sold were in New Jersey, New York and Florida.
The report also surveyed borrower outcomes based on the 160,576 NPLs that were settled by Dec. 31, 2022. Compared to a benchmark of similarly delinquent enterprise NPLs that were not sold, foreclosures avoided for sold NPLs were higher than the benchmark. NPLs on homes occupied by borrowers had the highest rate of foreclosure avoidance outcomes (45.6% foreclosure avoided versus 17.9% for vacant properties). NPLs on vacant homes had a much higher rate of foreclosure, more than double the foreclosure rate of borrower-occupied properties (a 76.4% foreclosure rate compared to 28% for borrower-occupied properties). The average unpaid principal balance of NPLs sold was $184,231.