STATE GOVERNMENT RELATIONS
Holcomb Visits Refugees as State Cuts Russian Ties
The Indiana state government is selling off nearly $150 million of Russian-related investments as the governor says he's looking at ways the state can help Ukrainian refugees fleeing from the Russian invasion of their country. The divestment announcement came as Gov. Holcomb visited a refugee camp for hundreds of Ukrainians in Slovakia as part of a weeklong trade mission trip to NATO-member Slovakia and Israel.
FEDERAL GOVERNMENT RELATIONS
Banks Signs on to ECORA Act
Indiana Rep. Jim Banks, R-IN 3, has signed on as a co-sponsor to H.R. 1977, the Enhancing Credit Opportunities in Rural America Act. This legislation was brought forward by Rep. Ron Kind, D-WI 3, with the bill's intention to help agricultural borrowers. Without record financial assistance from the U.S. Department of Agriculture, net farm income would have dropped dramatically in 2020. Farm incomes have been declining from their high in 2012. ECORA would enhance net farm income for the long term and benefit agricultural producers that aren't likely to receive similar direct assistance. It is estimated that ECORA could reduce the average interest rate on a farm and ranch real estate loan by 21%. This legislation offers a straightforward solution to help farmers and ranchers during this time of lower farm incomes without creating new government payments or programs.
Biden Administration's 'Green Book' Details Tax Proposals
The Biden administration released its "Green Book," a document containing proposed tax changes that the administration will likely pursue during the coming year. The administration views the Green Book proposals as supplements to the changes put forth in the Build Back Better legislative effort last year.
Among other provisions, the administration is seeking an increase in the corporate tax to 28%, an effective increase in the global intangible low-taxed income (GILTI) rate to 20% with country-by-country application and the replacement of the base erosion and anti-abuse tax (BEAT) with an undertaxed profits rule.
The proposed changes would make the New Markets Tax Credit permanent, repeal the "like-kind" exchange for various transactions, increase the top individual rate to 39.6%, make capital gains taxed at ordinary rates, eliminate the carryover basis for estates and other transfers, institute a 20% minimum tax for very wealthy individuals and address carried interest taxed as ordinary income, among other provisions. Many of the provisions become effective depending on taxpayers' income levels.
Some previously suggested proposals were left out of the Green Book, including a proposal requiring financial institutions to report information about customer accounts and proposed reductions to the Section 199A deduction. However, it remains possible that these and other provisions could be reintroduced through future legislation.
CFTC Nominees Approved by Senate
The Senate has voted to confirm President Biden's four nominees for the Commodity Futures Trading Commission. The Senate confirmed by voice vote Kristin Johnson, a law professor at Emory University; Summer Mersinger, chief of staff to sitting CFTC Commissioner Dawn DeBerry Stump, who is scheduled to resign from the agency; Caroline Pham, a former CFTC staffer currently working as a managing director and head of market structure for strategic initiatives in Citi's institutional client's group; and Christy Goldsmith Romero, the special inspector general for the Troubled Asset Relief Program.
Banks Fossil Fuel Investments Slow Marginally
Campaigners have expressed disappointment at the slow pace of investment reduction. According to research by a coalition of environmental activists, the world's 60 largest banks handed $742 billion worth of financing to the fossil fuel industry in 2021, compared to $750 billion the year before. The thirteenth annual Banking on Climate Chaos release notes that one-quarter of the financing has come from JPMorgan Chase, Citigroup, Wells Fargo, and Bank of America over the last six years.
SOFR Steadily Gaining Acceptance
Market participants say that disruption from Russia's invasion of Ukraine has not interfered with a transition to a risk-free rate from U.S. dollar LIBOR. Trading activity in the Secured Overnight Financing Rate hit 33.4% of U.S. dollar interest-rate derivatives transactions conducted in February, up from 28.4% in January, according to an International Swaps and Derivatives Association indicator Clarus Financial Technology.
FDIC Steps Up to Aid Banks with Climate Risk Planning
The Federal Deposit Insurance Corp. has issued a far-reaching set of guidelines to help larger banks in their advance assessments of climate-related financial risk and their plans to manage it. It has also announced it will release further tailored guidelines for smaller institutions in due course. The document's release follows similar guidance issued by the Office of the Comptroller of the Currency in December, and the two documents are said to be in close alignment with each other.
Cook's Fed Nomination Progresses to Senate Floor Vote
The nomination of Michigan State University economics professor Lisa Cook as Federal Reserve governor will proceed to the Senate floor after the resolution of Republican opposition. A floor vote is also planned for the re-nomination of Jerome Powell as chair, the nomination of Gov. Lael Brainard as vice-chair, and the nomination of Davidson College economics professor Philip Jefferson as governor.
House Approves Bill to Bolster Retirement Savings
The House has voted 414-5 in favor of the Securing a Strong Retirement Act, commonly called SECURE Act 2.0, which is designed to promote retirement readiness in many ways, such as raising the age when people must start required minimum distributions. The bill awaits approval from the Senate.