STATE GOVERNMENT RELATIONS
Mandatory E-Lien Now in Place in Indiana
Per legislation that was enacted two years ago, all lienholders who conduct 12 or more lien transactions annually through the Bureau of Motor Vehicles should be prepared to be enrolled in the e-lien program by July 1, 2023. The BMV has approved two vendors: DDI Technology, an IBA Preferred Service Provider, and Dealertrack Inc., an associate member of the IBA. The BMV is currently working to onboard two additional vendors for consideration. Lienholders who qualify for e-lien under this criterion but are not enrolled in the program could experience significant time delays in paper liens being processed moving forward.
Read the BMV's Mandatory E-Lien Memo
FEDERAL GOVERNMENT RELATIONS
CFPB Issues Guidance for Enforcing Section 1071 Rule
The Consumer Financial Protection Bureau has issued guidance for how the agency plans to enforce its final rule implementing Section 1071 of the Dodd-Frank Act, which requires the collection and reporting of credit application data for small businesses, including women-owned and minority-owned small businesses.
In a statement, the CFPB indicated it intends to pay particular attention to covered lenders' response rates for data requested from applicants. The agency also will consider how a lender's response rates compare to financial institutions of a similar size, type, geographic reach or other relevant factors, “because, as noted in the rule, low response rates may indicate discouragement or other failure by that lender to maintain proper collection procedures consistent with the rule.”
In addition, the agency will consider, among other things, irregularities in a particular response – for example, very high rates of an applicant response of “I do not wish to provide this information” – because “that may indicate steering, improper interference, or other potential discouragement or obstruction of applicants' preferred responses.”
Read the CFPB statement on enforcement of the rule
GOP Lawmakers Raise Concerns About Beneficial Ownership Rule Implementation
A group of four Republican lawmakers Thursday wrote to Treasury Secretary Janet Yellen and Financial Crimes Enforcement Network Director Him Das to raise concerns about FinCEN’s plans to educate stakeholders, including 32.6 million U.S. small businesses that may become reporting companies pursuant to new beneficial ownership rules, about their future filing obligations, and possible penalties for non-compliance when the rules take effect Jan. 1, 2024.
The groups requested detailed information on how FinCEN intends to work with stakeholders to educate reporting companies. Among other things, they requested a detailed report on FinCEN’s timeline for the finalization of the “access rule” and “CDD rule,” two related rulemakings called for under the Corporate Transparency Act, as well as a detailed plan on how Treasury will safeguard the information collected.
Fed Council: Community Bankers Hard Hit by Increased Regulatory Costs
During an April 13 meeting, members of the Community Depository Institutions Advisory Council told the Federal Reserve that the cost of regulatory compliance will likely drive an increase in merger and acquisition activity among community banks, with new regulations regarding Section 1071 and the Community Reinvestment Act being a major concern.
A recently released summary of the meeting shows members had many concerns about the cost of federal regulation, particularly at a time when many banks are facing increased labor costs. As a result, they said their institutions were designing business lines to meet regulatory requirements rather than the needs of their customers, “which ends up hurting some of the more vulnerable communities.”
The Consumer Financial Protection Bureau’s final rule implementing Section 1071 of the Dodd-Frank Act was a major concern for council members, as were ongoing CRA modernization efforts. “Though members’ business models have changed before due to regulation…council members expect 1071 to have an outsized impact on the industry,” according to the summary. “Some council members reported that community institutions are considering acquisitions in order to scale up and accommodate increased costs.”
Council members were also worried about government attempts to further limit fees banks can charge for overdraft services. “Limitations on fees will squeeze already-shrinking margins and prevent banks from continuing to offer or grow such services,” according to the summary. “Many community institutions serve overdraft customers, but fee limitations will send these consumers to other, possibly unregulated, lenders. The ongoing focus on so-called ‘junk fees’ ignores the economic risks banks face in providing specific products and services to their customers.”
IBA, State and National Bankers Associations Urge Congress to Reject Credit Card Routing Bill
In a joint letter to congressional leaders on Tuesday, the IBA and 50 other state bankers associations said a proposed bill to impose network routing requirements on banks that issue credit cards is anti-consumer, anti-competitive and will harm everyone except large merchants. The Independent Community Bankers of America and American Bankers Association also joined with other national associations to condemn the bill.
The Credit Card Competition Act was introduced in Congress last year, but failed to advance due to the efforts of bankers and other stakeholders who recognized the potential harm to consumers. Groups representing large merchants have been pressuring lawmakers to revive the bill, with the legislation expected to be reintroduced as early as Friday. In their letter, the state associations said the legislation would raise costs on consumers, reduce access to important card benefits, imperil payment system security and harm community financial institutions.
“Make no mistake: this bill was specifically written to deliver a major payday for big retail and big grocery at a time that these giant retailers have been getting even bigger, increasing their profits, and raising prices on American consumers,” the associations said.
In a separate joint statement with national associations representing banks and credit unions, it was noted the U.S. currently has the safest, most convenient and most customer-friendly payment system in the world. “If the big-box retailers get their way, American consumers will lose the credit card rewards they’ve earned and rely on to help pay for family vacations or dinners with friends and to put some extra cash in their pockets to cover the cost of gas and groceries,” the groups said. “We saw this happen once before when Senator [Dick] Durbin slipped debit card regulations into the Dodd-Frank Act in 2010, leading to the elimination of popular debit card reward programs and many free checking products. Meanwhile, the big-box retailers broke their promise to lower prices.”