STATE GOVERNMENT RELATIONS
Featured Speakers Announced for FLD Day at the Statehouse
We are pleased to share this year’s featured speakers for the FLD Day at the Statehouse on Feb. 10. They will include Sen. Eric Bassler, Sen. Andy Zay, Rep. Woody Burton and political pundit Abdul-Hakim Shabazz. Register now and join us for this free event that serves as a prime opportunity to network and learn more about grassroots advocacy and its importance to the banking industry. For questions, contact Josh Myers at 317-333-7165.
House Bill 1109 - Telephone Solicitation and Consumer Credit
Author: Rep. Matt Lehman, R-Berne
Summary: Amends the law requiring telemarketers to register with the office of the attorney general (registration law) as follows: (1) Provides that a seller is not subject to the registration law solely because the seller makes or will make a solicitation in a telephone call that is exempt from the Do Not Call statute. (2) Restores conditions removed by P.L.242-2019 that limit application of the registration law to sellers that make certain types of solicitations. (3) Provides that a solicitation occurs for purposes of the registration law only in a telephone call made by a seller. (4) Removes the requirement that a seller must provide in the seller’s registration statement information as to whether the seller (or any officer, director, trustee, general partner, manager, principal, executive or representative of the seller) has been: (A) held liable in certain civil actions; (B) convicted of certain crimes during the most recent seven years; or (C) declared bankrupt during the most recent seven years. Repeals from the statute governing consumer sales the chapter that sets forth certain requirements for a consumer reporting agency that uses a Social Security number as a factor in determining whether a file maintained by the consumer reporting agency matches the identity of an individual who is the subject of a credit inquiry.
Latest Action: House Bill 1109 passed the House by a vote of 95-0 on 3rd reading. The bill is now eligible to be considered in the Senate.
Senate Bill 395 - Uniform Consumer Credit Code
Author: Sen. Eric Bassler, R-Washington
Summary: Amends the statute concerning first-lien mortgage lending to specify that the statute does not apply to a mortgage transaction to the extent that, at the time of consummation, the debt created by the transaction is secured by a subordinate lien mortgage. Amends the Uniform Consumer Credit Code as follows: (1) Changes: (A) from July 1 of each even-numbered year to Jan. 1 of each odd-numbered year the effective date for the adjustment, based on changes in the Consumer Price Index, of various dollar amounts set forth in the UCCC; and (B) the corresponding date that precedes the adjustment date and by which the department of financial institutions (department) must issue an emergency rule announcing the adjustment. (2) For an agreement for a consumer credit sale entered into after June 30, 2020: (A) changes the maximum authorized credit service charge from a blended rate based on the amount financed, to a maximum rate of 36% per year on the unpaid balances of the principal; (B) authorizes a seller to contract for and receive a nonrefundable fee of not more than $150, in addition to the credit service charge and any other authorized charges and fees; and (C) prohibits precomputed consumer credit sales. (3) Repeals a provision concerning the credit service charge for revolving charge accounts and relocates the language to the provision concerning the authorized credit service charge for consumer sales. (4) For an agreement for a consumer loan entered into after June 30, 2020: (A) changes the maximum loan finance charge from 25% to 36% per year on the unpaid balances of the principal; (B) redesignates the authorized “nonrefundable prepaid finance charge” as an authorized “nonrefundable fee” and changes the amount of the authorized fee from not more than $50 to not more than $150, in the case of a consumer loan not secured by an interest in land; (C) specifies that such a loan is not considered a supervised loan; and (D) prohibits precomputed consumer loans. (5) Amends the definition of “supervised loan” to specify that the term includes only a consumer loan for which a loan agreement is entered into before July 1, 2020. (6) Specifies that a delinquency charge that: (A) is not more than $5; and (B) is subject to: (i) statutory indexing based on the Consumer Price Index; and (ii) change, if contracted for by the parties; is authorized for a consumer credit sale or consumer loan (or to a refinancing or consolidation of either) that is made before July 1, 2019. (7) Specifies that the following delinquency charges, not subject to indexing or to change by agreement of the parties, are authorized for a consumer credit sale or consumer loan (or to a refinancing or consolidation of either) that is made after June 30, 2019: (A) $5, if installments are due every 14 days or less. (B) $25, if installments are due every 15 days or more. (C) $25, in the case of a single installment due at least 30 days after the consumer credit sale or consumer loan is made. (8) Makes cross references in the UCCC provisions concerning delinquency fees to the UCCC provisions that prohibit sellers and lenders from assessing a charge for: (A) a skip-a-payment service; or (B) an optional expedited payment service; with respect to any payment for which a delinquency charge has been assessed. (9) Makes conforming technical amendments throughout the UCCC to reflect the bill’s changes. Changes from $1.50 to $3.00 the amount of the fee that a lessor in a rental purchase agreement may impose for accepting rental payments by telephone. Makes a technical amendment to the criminal loansharking statute to update a reference in that statute to the maximum loan finance charge authorized under the UCCC, to reflect the referenced citation’s redesignation by the bill’s changes to the UCCC.
Latest Action: The bill was heard in the Senate Insurance and Financial Institutions Committee on Jan. 22 and was held for a vote at a later date.
House Bill 1353 - Financial Institutions and Consumer Credit
Author: Rep. Woody Burton, R-Whiteland
Summary: Makes various changes to the statutes concerning: (1) first-lien mortgage lenders; (2) persons licensed under the Uniform Consumer Credit Code; (3) civil proceeding advance payment providers; (4) debt management companies; (5) banks; (6) credit unions; (7) pawnbrokers; (8) money transmitters; and (9) licensed cashers of checks. Repeals a provision in the statute governing credit unions that concerns loans made by a credit union to the credit union’s individual directors and committee members. Amends a provision in the statute governing credit unions that concerns loans made by a credit union to the credit union’s individual officers to: (1) include extensions of credit made to the credit union’s individual directors and supervisory committee members (and to the immediate family members and related interests of the credit union’s individual directors and supervisory committee members); and (2) specify that such extensions of credit shall be made in accordance with Regulation O of the Board of Governors of the Federal Reserve System.
Latest Action: The bill was heard in the House Financial Institutions Committee on Jan. 21 and was held for a vote at a later date.
FEDERAL GOVERNMENT RELATIONS
House Members Caution Crapo on Changes to Cannabis Bill
The four bipartisan lead sponsors of the SAFE Banking Act – passed by the House last fall – on Tuesday wrote to Senate Banking Chairman Mike Crapo (R-Ohio) cautioning him not to limit the bill’s safe harbor for financial institutions that choose to serve legitimate cannabis businesses in states where it is legal. The letter came after Crapo last month expressed significant concerns about the bill, particularly related to public health and safety and money laundering.
Reps. Ed Perlmutter (D-Colo.), Denny Heck (D-Wash.), Steve Stivers (R-Ohio) and Warren Davidson (R-Ohio) emphasized that the purpose of the bill is not to legalize marijuana, but to resolve a discrepancy between federal and state law in order to ensure public safety and provide regulatory certainty to financial institutions. They warned against changes that would impose "unworkable burdens on financial institutions, or would jeopardize the larger, bipartisan effort to address public safety concerns associated with cash-only transactions."
Quarles Outlines Plans to Improve Supervision Transparency, Due Process
Federal Reserve Vice Chairman for Supervision Randal Quarles last Friday outlined several actions the agency is considering to increase the transparency of its supervisory activities and ensure due process for supervised institutions, acknowledging that the Fed has not “communicated as clearly as it should” with banks under its supervision.
With respect to transparency, Quarles said the Fed is considering creating a database of all significant agency rules and interpretations, putting supervisory guidance out for public comment and submitting significant guidance to Congress for purposes of the Congressional Review Act. He also noted that the agency will continue making public information about the Comprehensive Capital Analysis and Review process “until we have released substantial details on all of our key models.”
In addition, Quarles said the agency would seek to ensure “firm and fair supervision” by increasing the ability of supervised firms to share confidential supervisory information, adopting a formal rule on the use of guidance in the supervisory process and limiting the use of future Matters Requiring Attention to violations of law, violations of regulation and material safety and soundness issues.
Fed Official: No Near-Term Plans for Climate Risk Weights, Stress Tests
Amid greater attention by policymakers worldwide to financial risks associated with climate change, a senior Federal Reserve official last Friday said that the agency has no "near-term" plans to conduct climate stress tests or impose climate-related risk weighting on assets.
"Our view is that climate change is an issue that was given to other agencies to deal with," said Fed General Counsel Mark Van Der Weide at an event in Washington, D.C., adding that "the potential effects of climate change occur over a long-term horizon that exceeds the near and medium-term horizon of our monetary policy and supervision and regulation functions."
He added that the Fed focuses “quite a bit” on operational risks related to climate change."Many banks have a significant exposure to severe weather risks, and we do pay attention to that," he said, noting that Fed researchers have also done substantial research on climate change effects on finance. However, "on the specific question of climate stress tests or ‘green’ or ‘brown’ risk weights, those are not on our near-term agenda."
FDIC, OCC Issue Joint Statement on Heightened Cybersecurity Risk
With the potential for cyberattacks against the U.S. rising as a result of geopolitical tensions, the Federal Deposit Insurance Corp. and Office of the Comptroller of the Currency last week issued a joint statement reminding financial institutions of the principles of sound cybersecurity risk management. These principles include response and resilience capabilities; protection against unauthorized access; secure configuration of systems and services; data protection; and employee training.
The agencies emphasized that "while preventative controls are important, financial institution management should be prepared for a worst-case scenario and maintain sufficient business continuity planning processes for the rapid recovery, resumption and maintenance of the institution’s operations."
They noted that one step financial institutions can take is to ensure that their data backup and restoration practices are consistent with industry standards or frameworks such as Sheltered Harbor – an industry-led initiative created to protect customers, financial institutions and public confidence in banks in the event of a catastrophic cyberattack.