STATE GOVERNMENT RELATIONS
Senate Bill 292 – INPRS Investments
Author: Sen. Travis Holdman, R-Allen, Adams, Blackford, Jay and Wells counties
House Bill 1008 – Pension Investments
Author: Rep. Ethan Manning, R-Cass and Miami counties
Latest action: Senate Bill 292 was amended on second reading in the Senate and was subsequently passed on third reading, 40-7. House Bill 1008 passed on third reading, 66-30.
Senate Bill 261 – Economic Development Districts
Author: Sen. Brian Buchanan, R-Boone, Clinton, Hendricks and Montgomery counties
Latest action: The bill was heard in the Senate Committee on Tax and Fiscal Policy on Feb. 21. It was held and no vote was taken.
Senate Bill 35 – Financial Literacy
Author: Sen. Mike Gaskill, R-Madison and Hamilton counties
House Bill 1281 – Financial Literacy
Author: Rep. David Hall, R-Brown, Monroe and Jackson counties
Latest action: Both bills have passed their chambers of origin and have been referred to the next chambers for further consideration.
Senate Bill 477 – Threats to Critical Infrastructure
Author: Sen. Justin Busch, R-Whitley and Allen counties
Latest action: The bill passed the Senate on Feb. 6 and was referred to the House of Representatives for further consideration. The bill was referred to the House Committee on Veteran Affairs and Public Safety on Feb. 28.
House Bill 1236 – Protections for Motor Vehicle Dealers
Author: Rep. Jim Pressel, R-LaPorte and Starke counties
Latest action: The bill passed the House on Feb. 27 and referred to the Senate for further consideration.
FEDERAL GOVERNMENT RELATIONS
Treasury’s Liang Announces Interagency CBDC Working Group
The Treasury Department will form an interagency working group to explore the benefits, risks and potential use cases for a central bank digital currency (CBDC), Undersecretary of Domestic Finance Nellie Liang announced in a speech Wednesday. The working group will include representatives from Treasury, Federal Reserve and White House offices, including the Council of Economic Advisors, National Economic Council, National Security Council, and the Office of Science and Technology Policy.
The working group “is intended to complement the Fed’s efforts” to understand CBDC, Liang said, noting that the group would consider three main objectives: how a U.S. CBDC could contribute to and sustain U.S. global financial leadership; potential national security risks posed by a CBDC; and the implications for privacy, illicit finance and financial inclusion if a CBDC were to be created.
The working group will develop an initial set of findings and recommendations, which “may relate to whether a CBDC would help to advance the policy objectives described above; the features that a CBDC would need to advance these objectives; options for resolving CBDC design trade-offs; and areas where additional technological [research and development] would be useful.”
ICBA, ABA: CFPB Must Extend Comment Period for Credit Card Fee Changes
The Independent Community Bankers of America, American Bankers Association, and five other banking and credit union associations on Tuesday requested that the Consumer Financial Protection Bureau extend by at least 60 days the comment period for a proposed rulemaking on credit card penalty fees. The agency in February proposed adjusting the safe harbor dollar amount for late fees to $8 and capping fee amounts to no more than 25% of the required payment, among other changes. Public comments on the proposal are due today, March 3.
In a letter, the trade groups noted that the Regulation Z penalty fee provisions in the Truth in Lending Act have not been substantively amended since 2010. They requested pushing back the comment deadline by 60 days to June 3 or 90 days after publication in the Federal Register. “Failure to provide sufficient time for industry to consider the proposed rule’s impact on consumers would result in an incomplete administrative record and arbitrary agency action, and likely would result in unintended consequences, adverse consumer and small business impact, and ultimately create flawed public policy,” the groups wrote.
The associations indicated the CFPB’s error is compounded by the fact that, despite industry feedback and data to the contrary, it did not convene a small business review panel for the proposed changes. “A rush to finalize significant changes to a long-standing rule that has endured through CFPB leadership appointed by both political parties, without providing sufficient time for commenters to provide data and other information on consumer and market impacts, would invite scrutiny and the likelihood of future revision, which would not benefit anyone,” they wrote.
Supreme Court to Hear Case on Legality of CFPB Funding Structure
The Supreme Court announced Monday that it will hear a case challenging the Consumer Financial Protection Bureau’s funding structure on the grounds that it violates the separation of powers clause of the U.S. Constitution. Uniquely among federal agencies, the CFPB receives its funding directly from the Federal Reserve System based on a request from the bureau’s director.
A three-judge panel in the Fifth Circuit Court of Appeals ruled last year in the case of Consumer Financial Protection Bureau v. Community Financial Services Association of America that such a funding structure was unconstitutional. Specifically, the court ruled that in setting up the CFPB’s funding structure, Congress ceded direct control over the CFPB’s budget by insulating it from annual appropriation, as well as indirect control by making the agency’s source insulated from the appropriations process.
FinCEN Issues Alert for Check Fraud via USPS
The Financial Crimes Enforcement Network posted an alert Monday on the nationwide surge in check fraud schemes targeting the U.S. Postal Service. Fraud, including check fraud, is the largest source of illicit proceeds in the United States and its prevention is a national priority in anti-money laundering efforts and countering the financing of terrorism, according to FinCEN. Working with the U.S. Postal Inspection Service, FinCEN identified red flags to help financial institutions detect, prevent and report suspicious activity connected to mail theft-related check fraud.
Criminals increasingly have targeted mail carriers since the COVID-19 pandemic to commit check fraud, in addition to blue collection boxes, unsecured residential mailboxes and privately owned cluster box units at apartment complexes, planned neighborhoods and high-density commercial buildings. Personal checks, business checks, tax refund checks and checks related to government assistance programs and unemployment benefits are typically stolen. Following the initial theft and fraudulent negotiation of the stolen checks, criminals may continue to exploit victims by using the personal information found in the stolen mail for future schemes, such as credit card or credit account fraud.
Bank Secrecy Act reporting for check fraud has increased significantly in the last three years. In 2021, financial institutions filed over 350,000 suspicious activity reports (SARs) on check fraud to FinCEN, a 23% increase compared to 2020. In 2022, SARs related to check fraud reached over 680,000. In addition to filing a SAR when suspecting fraud, FinCEN indicated banks should refer customers to the USPIS.
Fed Raises Coin Order Limits to Mitigate Shortages
The Federal Reserve has raised the allocation limits for nickels, dimes and quarters, allowing depository institutions to order more coins from Fed banks, starting this past Monday. The increase comes as a national coin shortage that began during the pandemic continues. The agency indicated it began to see an increase in orders in the first half of 2021 that has not abated as financial institutions continue to scramble for coins.
“The U.S. Mint continues to produce new coins at or near historical production levels; however, increased demand from [depository institutions] is outpacing U.S. Mint production and resupply available from low rates of deposits, resulting in the Federal Reserve’s coin inventory being reduced below normal levels,” the agency wrote on its website.
The Fed is encouraging financial institutions to order only what they need for all coin denominations to meet near-term demand. It is also asking them to assess inventories at the branch and vault levels and deposit excess coin to the Fed as soon as possible or offer excess to other institutions. Finally, it is encouraging financial institutions to use toolkits and best practices provided by the U.S. Coin Task Force for increasing coin circulation and decreasing barriers for coin redemption in the supply chain.