STATE GOVERNMENT RELATIONS
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: House Bill 1353 was heard and amended in the Senate Insurance and Financial Institutions Committee on Feb. 26. It was passed by the committee 6-0.
Senate Bill 327 - Reporting of Consumer Loans by Unlicensed Lenders
Author: Sen. Andy Zay, R-Huntington
Summary: Requires a person, with certain exceptions, that is not required to be licensed with the department under the Uniform Consumer Credit Code to report to the Department of Financial Institutions certain information concerning each consumer loan made to a debtor who is a resident of Indiana by the person after June 30, 2020. Authorizes the department to adopt rules to implement these provisions.
Latest Action: Senate Bill 327 was heard in the House Financial Institutions Committee on Feb. 18 and was not brought back for a vote, effectively killing the bill.
Senate Bill 395 - Uniform Consumer Credit Code
Author: Sen. Eric Bassler, R-Washington
Summary: 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 must issue an emergency rule announcing the adjustment. (2) For an agreement for a consumer credit sale entered into after June 30, 2020: (A) authorizes a seller to contract for and receive a nonrefundable fee based on the amount financed, in addition to the credit service charge and any other authorized charges and fees; and (B) 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) redesignates the authorized “nonrefundable prepaid finance charge” as an authorized “nonrefundable fee” and changes the amount of the authorized fee from $50 to an amount based on the amount financed, in the case of a consumer loan not secured by an interest in land; and (B) prohibits precomputed consumer loans. It excludes depositories from the cap on the allowable fee. 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 conforming technical amendments throughout the UCCC to reflect the bill’s changes.
Latest Action: Senate Bill 395 was heard and amended in the House Financial Institutions Committee on Feb. 25. It was passed by the committee 6-3.
FEDERAL GOVERNMENT RELATIONS
FDIC: Overall Bank Earnings Decline, Community Bank Earnings Up
Banks and savings institutions insured by the Federal Deposit Insurance Corp. earned $55.2 billion in the fourth quarter of 2019, a 6.9% decrease from the industry’s earnings a year before, the FDIC indicated in its Quarterly Banking Profile released Tuesday. The decline was attributed to lower net interest income and higher expenses. Noninterest income rose 2.5% from the previous year, driven by higher trading revenues.
Community banks earned $6.4 billion during the fourth quarter, up 4.4% from the same period last year. Net interest income ticked up 2.1% as a result of strong annual loan growth. Loan and lease balances were up 5.5% year-on-year, led by growth in nonfarm nonresidential loans; single-family residential loans; and construction and development loans. The loan growth rate slowed to 1%, down from 1.3% in the third quarter. The average community bank net interest margin fell 15 basis points to 3.62%.
Overall, banks’ noninterest expense was up 3.2% from the year prior, driven by higher salary and employee benefits. Average return on assets fell from 1.35% to 1.29% year-on-year, and average net interest margin fell 20 basis points from a year ago to 3.28%, as funding costs outpaced asset yields. Deposit balances increased by 1.8% from the third quarter.
Net charge-offs rose 10.4% from a year ago, while the rate of loans that were 90 or more days past due remained relatively stable at 0.91%. Meanwhile, the number of institutions on the problem bank list fell from 55 to 51. Three de novo banks were added in the fourth quarter.
Access the Quarterly Banking Profile
Sens. Thune, Baldwin Urge Greater Regulatory Flexibility for Ag Lenders
In a letter to the federal banking agencies on Tuesday, Sens. John Thune (R-S.D.) and Tammy Baldwin (D-Wis.) made a bipartisan appeal for greater regulatory flexibility that would allow community financial institutions to work with farmers and ranchers during a challenging time in the agricultural economy.
The senators raised concerns about policies that could limit banks' and credit unions' ability to lend to struggling farmers and ranchers, such as arbitrary concentration limits on ag portfolios. "Community financial institutions have a great deal of experience in agriculture lending during downturns in the farm economy," they wrote. "We urge you to encourage your examiners to continue valuing their judgment when it comes to providing capital to producers."
They added that additional flexibility need not come at the expense of safety and soundness, emphasizing that "we believe community financial institutions, together with examiners and regulators, can exercise sound judgment until the farm economy rebounds."
CFPB Proposes Time-Barred Debt Supplement to Third-Party Debt Collection Rule
The Consumer Financial Protection Bureau last Friday published a supplement to its spring 2019 notice of proposed rulemaking on third-party debt collection. The supplemental proposal addresses the collection of time-barred debt, which is debt that has run past any applicable statute of limitations.
Specifically, the proposal requires debt collectors to make certain disclosures if the collector knows or should know that a debt is time-barred. It would also require that debt collectors disclose, if applicable, that a payment made on a debt can revive the statute of limitations and enable the collector to sue to collect.
The supplemental proposal accompanies the bureau’s existing proposed rule which, if finalized, would modernize and clarify rules around third-party debt collection as governed by the Fair Debt Collection Practices Act. The FDCPA does not generally apply to creditors collecting their own debts, and thus would not generally apply to banks. Many banks, however, place debt with third-party debt collectors and must monitor vendor compliance with the FDCPA.
Read the supplemental proposal
CFPB Updates TRID FAQ
On Wednesday the Consumer Financial Protection Bureau updated its FAQ related to the TILA-RESPA Integrated Disclosure Rule. The latest updates address lender credits under the TRID rule, which are defined as payments – including credits, rebates or reimbursements – that a creditor provides to a consumer to offset closing costs, and premiums in the form of cash that a creditor provides to a consumer in exchange for specific acts, such as for accepting a specific interest rate. The FAQ details the differences for specific and general lender credits, disclosure requirements related to lender credits and more.