STATE GOVERNMENT RELATIONS
House GOP Proposes Larger Taxpayer Refund
House and Senate Republicans in the Indiana General Assembly remain on a collision course over how to provide inflation relief for Hoosiers after committees from both chambers passed bills that take vastly different approaches. In addition to the $225 tax refund checks originally proposed by Gov. Eric Holcomb, House Republicans added a provision that allows Indiana residents who didn’t file taxes for the tax year 2020 to file an affidavit with the Indiana Department of Revenue to claim the refund. Senate Republicans have proposed a six-month suspension on sales tax on residential utilities as an alternative to refund checks.
Register for 2022 IBA Regional Meetings
The New Albany regional meeting, originally scheduled for August 4, is being rescheduled due to the special legislative session in progress. Once a date is selected, the IBA will send out notifications and update the registration on the IBA website. The Richmond and Bloomington regional meetings will take place as scheduled. Be a part of the 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 – rescheduled – new date forthcoming
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
Fed Raises Interest Rates for Fourth Time This Year
The Federal Open Market Committee announced Wednesday that the Federal Reserve raised interest rates by three-quarters of a percentage point to a target range of 2.25% to 2.5%. The committee added that it anticipates that ongoing increases in the target range will be appropriate, with Fed Chairman Jerome Powell saying that another "unusually large" increase could come during the FOMC's September meeting.
Wednesday's announcement marks the fourth time the Fed has raised rates this year. FOMC also announced it would continue reducing its holdings of Treasury securities and agency debt, and agency mortgage-backed securities. "Recent indicators of spending and production have softened. Nonetheless, job gains have been robust in recent months, and the unemployment rate has remained low," the statement indicated. "Inflation remains elevated, reflecting supply and demand imbalances related to the pandemic, higher food and energy prices, and broader price pressures."
The Fed said the war in Ukraine and related events are creating additional upward pressure on inflation and are weighing on global economic activity. During a news conference, Powell acknowledged that the rapid pace of inflation has come as a surprise, and more economic surprises could be in store. The committee "will strive to avoid adding uncertainty in what is already an extraordinarily challenging and uncertain time."
"We are highly attentive to inflation risks and determined to take the measures necessary to return inflation to our 2% longer-run goal," Powell said. "This process is likely to involve a period of below-trend economic growth and some softening in labor market conditions. But such outcomes are likely necessary to restore price stability and to set the stage for achieving maximum employment and stable prices over the longer run."
Powell Notes Strength of U.S. Banks, Households
Federal Reserve Chair Jerome Powell downplayed concerns that the central bank's latest rate hike could jeopardize financial stability by emphasizing the financial health of U.S. banks and consumers. "I think you've got a well-capitalized banking system. I think you have households that are, generally, in about as strong financial shape as they have been in a very long time, or perhaps ever, given the money that's on people's balance sheets," Powell said.
Sen. Portman: China Has Informants in the Fed
Sen. Rob Portman, R-Ohio, has issued a report that claims China is obtaining sensitive U.S. economic data through a network of informants within the Federal Reserve. Fed Chairman Jerome Powell rejected the claim, saying he is "deeply troubled by what we believe to be the report's unfair, unsubstantiated, and unverified insinuations about particular individual staff members."
Lawmakers, Industry Push Back on Bank Overdraft Bill
During a House Financial Services Committee markup hearing Wednesday, lawmakers were at odds on a bill to place new limits and regulations on banks' overdraft programs. Democrats said it would cut back on "unfair, unnecessary, deceptive fees," while Republicans said the reforms would stop smaller banks from offering a needed service and push consumers toward more expensive payday lenders. The industry and experts have pushed back against the proposed overdraft reforms and told lawmakers that banks have invested significant resources toward innovating overdraft services to provide access to safe, high-quality consumer products and services for consumers' long-term benefit.
Senate Bill Aims to Expand Payment Network Competition
A bipartisan bill introduced by Sens. Dick Durbin (D-Ill.) and Roger Marshall (R-Kan.) in the Senate yesterday aims to ensure merchants' ability to route credit card transactions through alternative networks to those operated by Visa and Mastercard. The legislation would effectively force large banks that issue cards, which typically have partnerships with just one processing network, to provide merchants with a choice of at least two networks to process card transactions.
Senate Democrats Form Deal Including Corporate Minimum Tax
Sen. Joe Manchin (D-W.Va.) says he has formed a deal with Senate Majority Leader Chuck Schumer (D-N.Y.) that would lower the deficit, cut health care costs and address climate change. The package seeks to raise $739 billion through changes to tax laws, including the imposition of a 15% minimum tax on corporations and efforts to tighten IRS enforcement.
House Lawmakers Reportedly Delay Stablecoin Bill
The House Financial Services Committee has postponed consideration of a regulatory framework for stablecoins after Treasury Secretary Janet Yellen requested changes to a key provision of the bill, sources say. The legislation would establish the dollar-linked digital assets as a mainstream payment rail and label them "payment stablecoins." The bill could be considered after Congress' August recess.
Chopra: Big Tech's Consumer Finance Moves Raise "Host of Issues"
Consumer Financial Protection Bureau Director Rohit Chopra undertook a series of interviews this week to discuss the agency's agenda, emphasizing major technology companies and fintechs offering consumer finance products and services. Chopra said the agency will be closely watching Big Tech's entrance into the “buy now, pay later” space, which he says could raise a "host of issues" related to competition and customer data. "Big tech's ambitions when it comes to buy now, pay later are inextricably linked to the desire to dominate the digital wallet," Chopra said. Chopra echoed previous warnings of litigation against firms the agency sees as repeat offenders in a wide-ranging interview. "I think there's a lot of forces in the industry, whether it's nonbank versus bank, who are subjected to different levels of oversight; whether it's Big Tech versus new entrants in fintech," Chopra said.