STATE GOVERNMENT RELATIONS
Senate Bill 35 – Financial Literacy
Author: Sen. Mike Gaskill, R-Hamilton and Madison counties
House Bill 1281 – Financial Literacy
Author: Rep. David Hall, R-Brown, Jackson and Monroe counties
Latest action: Both bills have passed their chambers of origin and have been referred to the other chamber for further consideration. They are currently awaiting committee action.
Senate Bill 468 – Uniform Commercial Code Amendments
Author: Sen. Chris Garten, R-Clark and Floyd counties
Latest action: The bill is currently awaiting a hearing in the House Financial Institutions Committee.
House Bill 1005 – Housing
Author: Rep. Doug Miller, R-Elkhart County
Latest action: The bill passed the House and was referred to the Senate for further consideration. The bill is awaiting a hearing in the Senate Appropriations Committee.
Senate Bill 5 – Consumer Data Protection
Author: Sen. Liz Brown, R-Allen County
Latest action: The bill was heard in the House Judiciary Committee on March 15. It was held and will be brought back for amendments and voting.
Senate Bill 183 – Unclaimed Property Matters
Author: Sen. Eric Koch, R-Lawrence, Jackson, Orange and Brown counties
Latest action: The bill was reassigned to the House Ways and Means Committee on March 22. The bill was amended and voted on by the Ways and Means Committee. It now is eligible for second reading amendments.
Senate Bill 412 – Natural Resource Matters
Author: Sen. Susan Glick, R-LaGrange, Noble, Steuben and DeKalb counties
Latest action: The bill was heard in the House Natural Resource Committee on March 22. It was voted out of committee and is now eligible for second reading amendments.
House Bill 1316 – IFA Approval
Author: Rep. Doug Miller, R-Elkhart County
Latest action: The bill is awaiting a hearing in the Senate Tax and Fiscal Policy Committee.
Bill That Would Change Wetlands Definition Passes Indiana House Committee
Democrats, environmental groups and business leaders are denouncing a bill that would further erode protections for Indiana's already shrinking wetlands.
Senate Bill 414, which deals with the storage of residential sewage, was amended during a House Environmental Affairs Committee hearing Wednesday to make various changes to how wetlands are classified.
Under the amendment, a Class I wetland would be redefined as a wetland that supports minimal wildlife, aquatic habitat and hydrologic function. Under current Indiana law, a wetland must only meet one of those thresholds to be classified as a Class I wetland. Similar changes would be made to the second and third classes of wetlands.
Bill to Loosen the Hold DNR Floodplain Maps Have on Hoosiers Sees Approval in Committee
Under Indiana law enacted last year, local floodplain administrators must use the most updated floodplain maps possible when considering whether construction is allowed in certain areas. However, a bill approved by the House Natural Resources Committee on Wednesday seeks to change this system.
FEDERAL GOVERNMENT RELATIONS
Yellen: Uninsured Depositors at Small Banks Protected if Contagion Risk Exists
Federal regulators would provide similar protections for uninsured depositors at smaller banks as they did at Silicon Valley Bank and Signature Bank, if there is evidence the failures of those smaller banks would pose a larger contagion risk, Treasury Secretary Janet Yellen said Tuesday. Speaking at the American Bankers Association Washington Summit and clarifying congressional testimony she provided last week, Yellen said the government's recent actions were not focused on aiding specific banks or classes of banks.
"Our intervention was necessary to protect the broader U.S. banking system," Yellen said. "And similar actions could be warranted if smaller institutions suffer deposit runs that pose the risk of contagion. I believe that our actions reduced the risk of further bank failures that would have imposed losses on the Deposit Insurance Fund, which is paid for through fees on insured banks."
Yellen reiterated the Biden administration's message that the banking system is sound and said that aggregate deposit outflows at regional banks have stabilized. Yellen also noted that while the current crisis may lead regulators and policymakers to evaluate whether regulatory adjustments are needed, she didn't want to speculate on what those may be at this time. "What I'm focused on is stabilizing the system and restoring the confidence of consumers," she said.
Yellen: Treasury Not Studying Blanket Deposit Insurance
Treasury Secretary Janet Yellen said in a Senate hearing Wednesday that she had not "considered or discussed anything having to do with blanket insurance or guarantees of all deposits" at banks. "This is not something that we have looked at. It's not something that we're considering," Yellen said.
Rep. McHenry Warns Against Seeking Quick Fixes for Bank Failures
In the matter of the Silicon Valley Bank and Signature Bank failures, lawmakers must first gather the facts and determine what allowed both to occur rather than instantly pushing for new regulation, House Financial Services Committee Chairman Patrick McHenry, R-N.C., said Wednesday at the American Bankers Association Washington Summit.
McHenry and Ranking Member Maxine Waters, D-Calif., recently announced the committee would soon hold the first of multiple hearings on the bank failures and subsequent economic turmoil. In his remarks, the chairman chided lawmakers who he believed were too quick to call for more regulation.
"Too often as legislators, we walk around and assume the answer is legislation," McHenry said. "I think it is too early to tell if new legislation is necessary…Some policymakers on both sides of the aisle are already jumping to the conclusion with incomplete information."
McHenry said there are key questions about the bank failures that must be answered. Did regulators miss red flags that would have alerted them to problems at both institutions? Were the banks' management teams deficient? Is new regulation needed, or did regulators fail to use the tools already available to them? "It's important to note that we can't legislate competence," he said. "We give power to regulators and supervisors, they need to be competent. Management of institutions needs to be competent. Boards of directors need to be competent…We need to have competent people at the helm."
Rep. Waters: 'Deep Dive' Needed to Explore Causes of Banks' Collapse
House Financial Services Committee Ranking Member Maxine Waters, D-Calif., shared her priorities for the committee's oversight of the banking sector – broadly and in light of recent bank instability – during Wednesday's American Bankers Association Washington Summit.
Saying she was "most disturbed" with reports of the role bank executives might have played in the events leading to the failures, Waters is working on legislation to strengthen regulators' authority to hold executives accountable for "any unlawful behavior." In a series of hearings next week with officials from the Treasury, the Fed and the Federal Trade Commission, she plans to explore ways to "quickly strengthen our laws to ensure this does not happen again," including reforms to strengthen deposit insurance and enhanced prudential standards "in an appropriate way." She also wants to finalize rules under Section 956 of Dodd-Frank, which would reform incentive-based compensation for executives.
She said a "deep dive" will be required, looking into the different factors and components that comprise a bank's business, citing Silicon Valley Bank’s ties to tech companies and startups, and that 94% of the bank's deposits were uninsured. There were "missed opportunities," Waters said, to "see what was happening…with [SVB's] balance sheet" and to "correct things" before the point of collapse. "I believe we can work this out," she added. "We can ensure that banks can operate in fashions that make good sense for them, but at the same time, always think about the important role that they play in our society, in our economy, and be poised to avoid collapse and failure." Waters also said she is focused on diversity, equity and inclusion and strengthening the Community Reinvestment Act.
Sen. Scott Sees Chance for SAFE Banking Act This Congress
Senate Banking Committee Ranking Member Tim Scott, R-S.C., said Wednesday that he and Chairman Sherrod Brown, D-Ohio, agree that the SAFE Banking Act "should go through regular order," rather than rushing it to the floor and risking opposition on procedural grounds.
While Scott pointedly did not express support for the bill – which has been passed by the House several times in previous Congresses – he acknowledged that many of his Republican colleagues are eager to bring the bill to the floor, and that "I think we'll come to a conclusion, likely in this Congress."
Scott also decried the Consumer Financial Protection Bureau’s recent campaign against so-called "junk fees" – rhetoric that was echoed by President Biden during his State of the Union speech earlier this year. "When you bring in more rules, or have a conversation about 'junk fees' that reduces the fee structure somewhere, it typically leads to an interest rate increase somewhere else or a new fee structure somewhere else. Those typically disadvantage the folks who are coming into a system," Scott said.
He added that he's "excited" about a pending Supreme Court ruling in a case challenging the bureau's structure, and that "the more Supreme Court rulings that rein in bureaucracy, the better off the American public will be."
FOMC Raises Rates by 25 Basis Points
The Federal Open Market Committee Wednesday announced it would raise the target range for the federal funds rate by 25 basis points to 4.75-5%. The decision marked the ninth consecutive increase, but for the first time since the FOMC began raising rates last year, committee members signaled that further increases may not be necessary.
In a statement, the FOMC said the U.S. banking system "is sound and resilient." However, it added that recent developments will likely result in tighter credit conditions for households and businesses, and will weigh on economic activity, hiring and inflation. "The extent of these effects is uncertain," the committee added.
The FOMC said "additional policy firming" may be appropriate to combat inflation. However, unlike in previous rate hikes, the committee did not say that it anticipates that further rate hikes would be necessary. In a news conference, Fed Chairman Jerome Powell said before recent events in the banking sector, committee members were on track to continue with rate hikes throughout the year, perhaps even at a higher rate than they forecasted during their December meeting because of recent economic data showing persistent inflationary pressures.
GOP Lawmakers Seek Information from Fed on Bank Failure Timeline
House Financial Services Committee Chairman Patrick McHenry, R-N.C., and Senate Banking Committee Ranking Member Tim Scott, R-S.C., Monday called on the Federal Reserve to provide "a comprehensive timeline of events related to the Federal Reserve's lending, supervisory and examination activity for the last two years with regards to [Silicon Valley Bank] and/or Signature Bank," as well as an account of the events leading up to the Fed's decision to invoke a systemic risk exception for the two banks.
The lawmakers also asked for information about Fed examiners tasked with supervising the institutions or involved with recommending the systemic risk exception. They instructed the agency to preserve all communications and other materials related to the bank failures.
Biden, Waters Call for Stronger Repercussions for Execs of Failed Banks
Following the failures of Silicon Valley Bank and Signature Bank earlier this month, the Biden administration last Friday called on Congress to expand the Federal Deposit Insurance Corp.’s authority to claw back compensation from executives at failed banks, bar bank executives at failed banks from holding jobs in the banking industry and bring fines against executives of failed banks.
The administration is seeking authority for the FDIC that would go beyond the clawback authority extended under the Dodd-Frank Act's Section 956. (Implementing regulations for Section 956 were proposed by the banking agencies, but never finalized.) It also called for lawmakers to lower the legal standard for barring a bank executive from holding another position in the banking industry when a bank is put into receivership. Currently, the FDIC can bar executives who engage in "willful or continuing disregard for the safety and soundness" of their institutions.
House Financial Services Committee Ranking Member Maxine Waters, D-Calif., echoed the administration's call in a letter to the agencies. She urged them to investigate and bring enforcement actions against executives of the failed banks. Waters also called for the completion of the Section 956 rulemaking. Waters also noted that she is "moving quickly to develop legislation on clawbacks and other matters" in the wake of the two bank failures.
In related news, Waters and House Financial Services Committee Chairman Patrick McHenry, R-N.C., announced a March 29 hearing on the SVB and Signature Bank failures. FDIC Chairman Martin Gruenberg and Federal Reserve Vice Chairman for Supervision Michael Barr will testify at the hearing.