STATE GOVERNMENT RELATIONS
Glynn Wins House District 32 Nomination By Six Votes
Ten days after Indiana's primary, Republicans have their nominee for one last seat in the Indiana House of Representatives. On election night, Hamilton County Councilman Fred Glynn held a six-vote lead on former Trump administration official Suzie Jaworowski.
Glynn’s victory will become official Monday when the Marion County Election Board votes to certify the totals. Jaworowski still has the option of seeking a recount. Glynn will face IUPUI Professor Victoria Wilburn in November for an open seat created by redistricting. The seat is expected to be a swing district.
Register for 2022 IBA Regional Meetings
The IBA is once again hosting a series of regional meetings around the state to facilitate grassroots communication between the bankers we serve and the legislators who serve our state. The meetings will include an hour-long update on the IBA, including legislative information and advocacy opportunities. Following the update, local legislators from the Indiana General Assembly will meet for lunch with bankers from the community. This year, the IBA will be hosting eight regional meetings, each beginning at 11:00 a.m. local time. Below are the dates, locations and registration links of our eight regional meetings.
Evansville – May 25
Biaggi’s Ristoranto Italiano
6401 E Lloyd Expy., Ste. 3
Evansville, IN 47715
Fort Wayne – June 1
The Landmark Center
6222 Ellison Road
Fort Wayne, IN 46804
Indianapolis – June 2
The Columbia Club
121 Monument Circle
Indianapolis, IN 46204
Merrillville – July 19
Cooper’s Hawk
2120 Southlake Mall
Merrillville, IN 46410
West Lafayette – July 20
Walt’s Pub & Grill
1050 Kalberer Road
West Lafayette, IN 47906
New Albany – August 4
The Exchange Pub
118 W Main Street
New Albany, IN 47150
Richmond – August 29
Olde Richmond Inn
138 South 5th Street
Richmond, IN 47374
Bloomington – August 30
Graduate Hotel
210 East Kirkwood Avenue
Bloomington, IN 47408
FEDERAL GOVERNMENT RELATIONS
Powell Confirmed to Second Term as Fed Chairman
By a vote of 80 to 19, the Senate confirmed Jerome Powell to a second term as chairman of the Federal Reserve. Powell has led the Fed board since 2018.
Earlier this week, the Senate confirmed Lisa Cook and Phillip Jefferson to serve terms on the Fed board. President Biden's nominee for vice chairman for supervision, Michael Barr, is scheduled to have his first confirmation hearing next week in the Senate Banking Committee.
Yellen Calls for Legislation on Stablecoins by Year-End
Treasury Secretary Janet Yellen has warned of significant risk attached to stablecoins and has called for legislation before year-end. Stablecoins theoretically are correlated with actual currency, but TerraUSD, which is supposed to be pegged to the dollar, has dipped as low as 65 cents this week, prompting Yellen to say, "I think that this simply illustrates that this is a rapidly growing product and there are rapidly growing risks."
Household Debt Ticks Up Slightly in Q1
Total household debt increased by 1.7% to $15.84 trillion in the first quarter of this year, the Federal Reserve Bank of New York reported. Balances now stand $1.7 trillion higher than before the COVID-19 pandemic at the end of 2019.
Following typical seasonal trends at the start of the year, credit card balances declined by $15 billion. Still, they remained $71 billion higher than Q1 2021, a substantial year-over-year increase. Auto loan balances increased by $11 billion in the first quarter, while student loan balances increased by $14 billion to $1.59 trillion. The volume of newly originated auto loans was $177 billion during the first quarter, reflecting an increase in auto prices. Aggregate limits on credit card accounts increased by $64 billion to $4.12 trillion – $224 billion above the pre-pandemic level.
Mortgage balances rose by $250 billion in the first quarter of 2022 to reach $11.18 trillion. Mortgage and auto loan originations declined in the first quarter after historically high volumes in 2021. Mortgage originations were at $859 billion, declining from last year's high volumes but still $197 billion higher than in Q1 2020.
Although the number of new foreclosures remained low, there was an uptick in Q1 2022. About 24,000 individuals had a new foreclosure notation added to their credit reports during the first quarter, compared to 9,000 in Q4 2021, reflecting the partial resumption of new foreclosures. Although the hold on foreclosures due to the CARES Act was lifted in July, additional federal and state policies may delay some foreclosure starts, the report noted. The share of mortgage balances more than 90 days past due remained at 0.5%, a historic low.
Loan Delinquency Lowest Since 2006
The Federal Reserve indicated in its most recent supervision report that geopolitical risk and high volatility hadn't undermined the strength of the U.S. banking system. The report notes that overall loan delinquency was below 1%, the lowest since 2006, but also cited declining profitability and market confidence among banks' top risks.
OCC's Hsu: Time to Update Frameworks of Bank Merger Analysis
During an industry event, Acting Comptroller of the Currency Michael Hsu once again addressed the topic of bank mergers – an issue he says has gotten "significant attention" recently. "Concerns about the negative effects of bank mergers on competition, communities, and financial stability have prompted some to call for a moratorium on merger activity," Hsu said. "In response, others have defended the benefits of mergers. They note that the U.S. financial services market is highly competitive, and mergers allow institutions to achieve needed economies of scale and diversify risk through geographic or product expansion."
Hsu said the frameworks for analyzing bank mergers need updating but that imposing a moratorium on mergers would "lock in the status quo," preventing mergers that could increase competition, serve communities better, and enhance industry resiliency. The Office of the Comptroller of the Currency uses the Department of Justice's bank merger review guidelines, which were last revised in 1995 – though an update to the guidelines is currently pending.
Given all the market, technological and demographic changes of the last 27 years in the United States, Hsu said it's time to "rethink the frameworks" used to analyze bank merger applications. "I do not think the statutory prongs of competitiveness, safety, and soundness, meeting community needs, and financial stability need to be revisited," he said. "Rather, the modes of analysis used by regulators to apply these factors need to be improved."
Hsu cited the analytical framework for assessing financial stability risks of bank mergers under the Bank Merger Act, which he said needs "significant work," citing a "resolvability gap" for large regional banks. "Unless and until that gap is addressed, the approvals of large bank mergers risk creating a new set of too-big-to-fail firms," he said. His comments echo those he made at an industry event in early April.