STATE GOVERNMENT RELATIONS
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. Three regional meetings remain, each beginning at 11:00 a.m. local time. Below are the dates, locations and registration links of each regional meeting.
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
Barr Officially Joins Fed as Vice Chair for Supervision
The Federal Reserve has an entire seven-member board for the first time in nine years after Michael Barr was sworn in as vice chair for supervision last week. Barr's term lasts four years. He joins ahead of a meeting next week for setting interest rates.
Fed Seeks Comment on Proposal for Default Rules for Contracts Using LIBOR
The Federal Reserve Tuesday invited comment on a proposal to provide default rules for certain contracts that use LIBOR. The proposal implements the Adjustable Interest Rate (LIBOR) Act, which Congress enacted earlier this year.
LIBOR will be discontinued after June 30 of next year. In response, Congress enacted the LIBOR Act to provide a solution for replacing references to LIBOR in existing contracts without adequate fallback provisions. The proposal would replace LIBOR references in certain contracts with the applicable Fed-selected replacement rate after June 30, 2023. The contracts include those governed by domestic law that do not mature before LIBOR ends and that lack adequate fallback provisions.
The proposal identifies separate Fed-selected replacement rates for derivatives transactions, contracts where a government-sponsored enterprise is a party, and all other affected contracts. As required by the law, each proposed replacement rate is based on the Secured Overnight Financing Rate. Comments will be accepted for 30 days after publication in the Federal Register.
Fed Prepares to Raise Key Rate by 0.75 Percentage Points
Federal Reserve policymakers have indicated they likely will raise the benchmark interest rate by 0.75 percentage points at a meeting next week. Some policymakers have signaled they are open to a 1-percentage-point increase in light of high inflation, but lean toward a smaller number.
Central Banks Worldwide Turning to Large Rate Increases
With the Federal Reserve pushing interest rates higher, other central banks are under pressure to raise their own rates to dampen inflation and bolster national currencies. Not only are central banks pressing ahead with higher rates, but they are also implementing rate increases of 50 basis points or more.
CFPB: Overdraft Revenue Increased in 2022, Down 20% Overall Since 2019
The Consumer Financial Protection Bureau released a blog post Wednesday that showed that overdraft revenue has increased over the past year, based on the CFPB's analysis of Call Report data. The CFPB found that the recent increase in overdraft revenue is greatest among community and midsize banks. However, the data shows that overall overdraft revenue is down 20% since the onset of the COVID-19 pandemic in 2019.
Observing that several banks announced changes to their overdraft programs in late 2021 and 2022, the CFPB indicated that it is an "open question how these program changes, once implemented, translate into changes in overdraft/NSF fee revenues."
The CFPB also noted that account maintenance and ATM fees have increased since 2020, including banks that experienced a decrease in overdraft revenue. Nonetheless, the CFPB indicated that, for two banks whose ATM and account maintenance fees have increased significantly since 2020, the increases in revenues from these other fees were "far from sufficient to make up for the decline in overdraft/NSF fee revenues."
CFPB Eyes Giving Banks More Liability in Zelle Scams
The Consumer Financial Protection Bureau is reportedly preparing guidance that would effectively require banks to pay back more customers who are the victims of scams on the Zelle payments network and other money-transfer services.
House-Passed Defense Bill Includes SAFE Banking Act
The House on Thursday passed the 2023 National Defense Authorization Act, which included the SAFE Banking Act, enabling financial institutions to serve legitimate cannabis businesses in states where it is legal. The House has passed the SAFE Banking Act several times previously.
Crypto Legislation Might Not See Vote Until Next Year
A cryptoasset bill might take until next year to get a Senate vote because the topic is "still new to many US senators," says Sen. Cynthia Lummis, R-Wyo., who co-sponsors the bill. In the wake of a crypto market crash, the industry "is running without a statutory framework or regulation," Lummis says.
Lawmakers Reportedly Move Toward Stablecoin Legislation
Lawmakers on the House Financial Services Committee reportedly are close to completing a bill requiring stablecoin issuers to comply with regulations and prudential standards similar to those faced by banks. The bill would let nonbanks issue stablecoins, sources say.
FHFA Plans Review of Federal Home Loan Bank System
Sandra Thompson, director of the Federal Housing Finance Agency, has told the House Financial Services Committee that a reevaluation of the Federal Home Loan Bank system is imminent. The review will "examine everything from the banks' membership base, operational efficiency, and effectiveness to more foundational questions about mission, purpose, and organization," Thompson says.