STATE GOVERNMENT RELATIONS
Indiana General Assembly to Convene Next Week
The Indiana General Assembly has scheduled the start of the 2020 legislative session for Monday, Jan. 6. This year’s short session is set to conclude by March 14, but is widely expected to end several days before the official end date. All legislation must be filed by the end of next week. The IBA Government Relations Team will be reviewing bills as they are released and will provide updates on notable issues in the state GR section of IBA E-News throughout the 2020 session.
FLD Day at the Statehouse
Register now for the FLD Day at the Statehouse on Feb. 10 at the Hilton Indianapolis Hotel & Suites. This free event will provide opportunities to network and learn more about grassroots advocacy and its importance to the banking industry. Attendees additionally will learn about the legislative process, see the Indiana Statehouse and have the opportunity to visit with legislators. FLD Day at the Statehouse is a great way to get engaged. For questions, contact Josh Myers at 317-333-7165.
IBA Legislative Briefing & Reception
Register for the 2020 IBA Legislative Briefing & Reception, scheduled for Jan. 15 at the Hyatt Regency Indianapolis. As the first IBA grassroots advocacy event of the new year, this is a prime opportunity to get your bank involved in 2020. The evening will include an in-depth discussion of current legislative issues, an entertaining panel featuring WFYI’s Indiana Week in Review team and valuable networking time to connect with banking peers and Indiana legislators.
FEDERAL GOVERNMENT RELATIONS
IBA Annual Washington Trip - July 26-28
Mark your calendars for July 26-28 and join us next year for this important IBA grassroots event. Usually scheduled in the fall, this trip is being moved to the summer to accommodate the 2020 elections to ensure the effectiveness of legislative meetings. In addition, we are thrilled to share that the IBA has reserved space in one of Washington's most historic hotels, The Willard InterContinental. Watch for more information to be released in early 2020. For questions, contact Josh Myers at 317-333-7165.
Fed Finalizes Extended Hours to Facilitate Same-Day ACH
The Federal Reserve last week finalized new operating hours and procedures for the National Settlement Service and Fedwire Funds Service to facilitate adoption of a third same-day ACH processing and settlement window.
The Fed will extend NSS operating hours by one hour to 6:30 p.m. ET, extending the time for initiating Fedwire transfers on behalf of third parties by 45 minutes to 6:45 p.m. ET and closing Fedwire a half-hour after the NSS at 7 p.m. ET. To minimize late openings of Fedwire, the reserve banks will raise the threshold for granting extensions to the Fedwire closing time from $1 billion to $3 billion and maintain a minimum 90-minute window, down from two hours, between Fedwire closing and re-opening.
The changes are effective in March 2021, aligning with Nacha’s effective date of March 19, 2021, for implementing the later same-day ACH window. The Fed approved corresponding changes to its Policy on Payment System Risk.
Agencies Provide Reg O Relief for Certain Fund-Controlled Companies
Noting the growing risk of "sudden and disruptive unwinding" of lending relationships, the federal banking agencies last Friday issued no-action relief under Regulation O for banks lending to investment fund-controlled companies under specific conditions. Meanwhile the agencies indicated they are "actively considering" amendments to Reg O – which sets limits on the credit that can be granted to bank insiders – to resolve problems addressed by the temporary relief.
Specifically, the relief is being provided for "fund complex-controlled portfolio companies" – that is, companies whose voting shares are at least 10% owned by an investment fund and its sponsor – whose fund complex acquires enough shares in a bank to be considered an insider under Reg O. "Banks have indicated that the treatment of fund complex-controlled portfolio companies as 'related interests' under Regulation O could require the sudden and disruptive unwinding of substantial preexisting lending relationships and reduce credit availability to a wide swath of financial and non-financial companies," the agencies reported.
Under the relief – which is set to expire Jan. 1, 2021, unless amended or extended – the agencies will not take action against banks extending credit to fund complex-controlled portfolio companies that would otherwise violate Reg O, provided that the fund complex controls less than 15% of the bank’s shares and that it does not have or seek to place representatives in the bank or to exercise influence over the bank. Extensions of credit to these companies must be on “substantially the same terms” as those for comparable unaffiliated parties. The relief applies only to portfolio companies, not the fund complexes.