STATE GOVERNMENT RELATIONS
Register Today for 2021 IBA Regional Meetings
Register today and join us for a series of regional meetings around the state. The IBA has implemented these meetings in an effort to facilitate grassroots communication between the bankers we serve and the legislators who serve our state. The meetings 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, three regional meetings remain, each beginning at 11:00 a.m. local time. Follow the links below for your preferred location and register today!
Fair Oaks
The Farmhouse Restaurant at Fair Oaks Farms
New Date! Monday, October 4
Click here to register
Evansville
The Bauerhaus
Tuesday, October 5
Click here to register
Fort Wayne
The Landmark Centre
New Date! Monday, October 25
Click here to register
Indiana Lawmakers to Return to Session to Complete Redistricting
The Indiana General Assembly is expected to return to session next week to redraw both Indiana’s Congressional districts and all the Indiana state legislative districts. This is done through legislative process and is required every 10 years. Traditionally, this process would have taken place during regular session earlier this year, but at that time lawmakers did not have access to U.S. census data required to adjust for population shifts.
The proposed new legislative districts for Indiana’s congressional delegation and Indiana’s House of Representatives can be viewed through the link below. Indiana’s new Senate districts are expected to be released in the coming week. The House Elections Committee held hearings on Wednesday and Thursday of this week seeking input on the proposed maps and will again meet on Monday for a final committee hearing. The full House vote is expected next week. The Senate is then expected to convene the following week to debate for passage the bill that emerges from the House.
FEDERAL GOVERNMENT RELATIONS
Action Alert: Urge Lawmakers to Oppose New IRS Reporting Rules
The Biden Administration is proposing a sweeping expansion of tax information reporting aimed at raising revenue to help offset the cost of additional spending programs in the American Families Plan. While the initial draft of the Biden administration’s $3.5 trillion spending plan currently does not include the IRS reporting proposal, the language could be added over the coming weeks as the current package is debated. We must continue our grassroots efforts to ensure that this provision stays out of future drafts of the bill.
Contact your lawmakers today to express your opposition to any new IRS reporting that leads to increased compliance costs, damages your customer relationships and threatens customer privacy. In addition to the current action alert seeking bank employee participation, we have created an action alert with messaging specifically designed for bank customer engagement. Please consider sharing this unique action alert link so they may urge Congress to protect their financial privacy!
FDIC Launches Mission-Driven Bank Fund
The Federal Deposit Insurance Corp. yesterday announced the launch of the Mission-Driven Bank Fund, a capital investment vehicle to support insured minority depository institutions (MDIs) and community development financial institutions (CDFIs). As anchor investors, Microsoft and Truist Financial Corp. will lead the investment fund. In addition, Discovery Inc. will join as a founding investor, bringing the combined initial commitment to $120 million, with additional investments expected.
MDIs and CDFIs are banks, savings banks and savings associations that provide critically needed capital and financial services to minority, lower income and rural communities. The FDIC designed the framework for the Mission-Driven Bank Fund to channel private capital and other resources to these institutions, allowing them to amplify the impact of investments in the communities they serve.
FDIC Releases Strategic Plan for 2022-2026
The Federal Deposit Insurance Corp. on Wednesday released a draft of its strategic plan for 2022-2026 for public comment. Comments are due Oct. 1. The agency’s strategic goals include ensuring that insured depositors are protected from loss without recourse to taxpayer funding, that FDIC-supervised banks are safe and sound, that consumers’ rights are protected and banks are investing in their communities, that large bank issues can be resolved in an orderly manner in the event of bankruptcy, and that resolutions are orderly and receiverships are managed effectively.
The FDIC flagged several strategic challenges on the horizon – the largest of which was the trajectory of the nation’s economy as the pandemic recovery persists. The FDIC noted that “while the banking industry continues to perform well, the interest rate environment and economic uncertainty continue to pose challenges for many institutions. Overall, the industry must manage interest-rate risk, liquidity risk, and credit risk carefully to remain on a long-term, sustainable growth path.”
Among the additional strategic challenges that will shape FDIC’s strategic priorities are: nonbank competition with community banks and regional banks; innovation, information technology and cybersecurity; economic inclusion; and workforce development and management.
OCC’s Hsu: Regulatory Coordination Needed to Ensure Level Playing Field
In remarks at an industry event on Wednesday, Acting Comptroller of the Currency Michael Hsu called for coordination among regulatory agencies to address the significant changes that are taking place in the banking industry, particularly those related to technology, payments and the rise of cryptocurrencies and decentralized finance.
With regard to cryptocurrencies and decentralized finance (defi) in particular, Hsu acknowledged that controlling growth in this area “is challenging given their nature and in light of market demand,” but emphasized that “it is imperative that financial regulators work together to ensure that crypto/defi activities that take place within the banking system or are facilitated by banks are trustworthy. Innovation is important, but safeguarding trust is paramount.”
Hsu added that “coordination among all financial regulators will also be needed in the future to ensure a level playing field and limit regulatory arbitrage and to keep shadow banking at a safe distance from the regulated financial system. These goals cannot be achieved if the financial regulatory agencies, including state banking supervisors, do not work together. Public trust in bank regulators will rise or fall depending on our ability to do so.”
House Releases Draft Spending Bill
The House Committee on Ways and Means, the chamber’s chief tax-writing committee, has released legislative text for the Biden administration’s $3.5 trillion spending plan, with committee votes expected to begin soon. The draft legislation includes a number of tax provisions that will affect banks, including provisions that would: increase the corporate tax rate from 21% to 26.5%; and limit the 20% 199A deduction for Subchapter S banks to $500,000.
Additional banking-related provisions would: expand the net investment income tax to earnings for active participants in pass-through businesses; accelerate limitations on deductibility of compensation; and make significant international changes affecting both U.S. branches of overseas-based banks and U.S.-based banks with global activities.
The bill would also: increase the top individual tax rate from 37% to 39.6%; add a surtax on modified income for taxpayers with income over $5 million; and raise the capital gains tax from 20% to 25%. It additionally includes several provisions related to affordable housing and community development, including expanding and making permanent the New Markets Tax Credit and expanding housing and energy tax credits.
Importantly, the draft legislation does not include the industry-opposed requirements for financial institutions to report information to the IRS on all customers with gross inflows and outflows above a de minimis level of $600. However, banks and their customers must continue their grassroots efforts to ensure that this provision stays out of any future versions of the bill. Lawmakers will have many opportunities in the coming weeks to add it to the pending budget reconciliation package. Below is a link to the IBA alert for bankers and a separately created message to be used for customer communications. Please continue to make your voice heard on this very concerning issue.
FHFA, Treasury Suspend PSPA Changes
The Federal Housing Finance Agency and the Department of the Treasury on Tuesday announced the suspension of changes to the preferred stock purchase agreements governing the conservatorships of Fannie Mae and Freddie Mac that were announced in January. FHFA indicated it will use the suspension to review the requirements and contemplate further revisions, and noted that the suspensions “do not affect the Enterprises’ ability to build or retain capital.”
Among other provisions, the changes enacted in January placed limits on the GSEs’ ability to acquire loans with higher-risk features which may conflict with ongoing efforts to expand safe and sound affordable housing options. Industry trade groups previously raised concerns about the changes, the market disruptions caused by their implementation, and the potential they had to hurt lower-income and credit-challenged borrowers.