STATE GOVERNMENT RELATIONS
Legislative Committee Work Presses On
With the first week of February coming to an end, committees have little more than one week remaining to conclude their work hearing bills introduced in their chambers of origin. Any House bills to pass this session must first pass their committees of origin, and the same for Senate bills in Senate committees. With that deadline looming, the next week and a half will be critical for policy discussions. Indiana’s biennial budget still needs to pass out of the House Committee on Ways and Means and will garner much attention in coming days.
As the first quarter of session proceeds, the IBA Government Relations Team continues to represent industry views on banking-related legislation. Following are some bills of importance.
Senate Bill 346 – Financial Institutions and Consumer Credit
Author: Sen. Eric Bassler (R)
Summary of legislation: For purposes of the statutes governing (1) first-lien mortgage transactions, (2) the Uniform Consumer Credit Code and (3) financial institutions; changes references to federal laws within those statutes from federal laws as in effect on Dec. 31, 2019, to federal laws as in effect on Dec. 31, 2020. Amends the statute concerning loans made by credit unions to their members to eliminate certain requirements with respect to loans secured by real estate. Amends the definition of “check” for purposes of the statute governing licensed cashers of checks to remove a reference to a “personal money order.”
Senate Bill 370 – Limitations on Actions Concerning Deposit Accounts
Author: Sen. Andy Zay (R)
Summary of legislation: The bill amends the statute concerning the statute of limitations for actions upon promissory notes, bills of exchange or other written contracts for the payment of money to: (1) include actions upon deposit accounts; and (2) provide that an action against a financial institution with respect to any of these that are executed after Aug. 31, 1982, must be commenced within two years after the cause of action accrues.
Senate Bill 400 - Statewide Electronic Lien and Title System
Author: Sen. Chris Garten (R)
Summary of legislation: This bill has the following provisions:
(1) Requires the Bureau of Motor Vehicles to implement a statewide electronic lien and title system (“system”) to process: (a) vehicle titles; (b) certificate of title data in which a lien is notated; and (c) the notification, maintenance and release of security interests in vehicles; through electronic means instead of paper documents.
(2) Provides that the BMV may: (a) contract with one or more qualified vendors to develop and implement a system; or (b) develop an interface to provide qualified electronic lien service providers secure access to data to facilitate the creation of a system.
(3) Sets forth certain requirements that apply if the BMV elects to implement the system through a qualified vendor versus through qualified electronic lien service providers.
(4) Specifies that a contract entered into between the BMV and: (a) a qualified vendor; or (b) a qualified electronic lien service provider; may not provide for any costs or charges payable by the BMV to the qualified vendor or the qualified electronic lien service provider.
(5) Sets forth dates by which the BMV must implement and allow or require the use of: (a) a statewide electronic lien system; and (b) a statewide electronic title system.
(6) Sets forth certain conditions that apply to the use of a statewide electronic lien system implemented by the BMV under these provisions.
(7) Authorizes the BMV to adopt rules, including emergency rules, to implement these provisions.
House Bill 1056 - Recording Requirements
Author: Rep. Jerry Torr (R)
Summary of legislation: This bill amends the requirements for instruments and conveyances to be recorded. The bill adds instances in which an instrument is considered validly recorded for purposes of providing constructive notice.
Senate Bill 1 / House Bill 1002 – Immunity Related to COVID-19
Authors: Sen. Mark Messmer (R) and Rep. Jerry Torr (R)
Summary of Senate legislation: Professional Discipline – This bill protects health care providers from professional discipline for certain acts or omissions arising from a disaster emergency unless the act or omission constitutes gross negligence, willful or wanton misconduct, or intentional misrepresentation. The bill also provides that a health care provider is not protected from professional discipline for actions that are outside the skills, education and training of the health care provider, unless certain circumstances apply.
Emergency Orders – The bill specifies that orders and recommendations issued by local, state and federal government agencies and officials during a state disaster emergency do not create new causes of action or new legal duties. The bill also specifies that the orders and recommendations are presumed irrelevant to the issue of the existence of a duty or breach of a duty. It specifies that the orders and recommendations are inadmissible at trial to establish that a new cause of action has been created or proof of a duty or a breach of a duty.
Civil Immunity – The bill prohibits filing a class action lawsuit against a defendant in a civil action allowed by the statute. The bill specifies that a governmental entity or employee is not liable if a loss results from an act or omission arising from COVID-19 unless the act or omission constitutes gross negligence, willful or wanton misconduct, or intentional misrepresentation. The bill provides that a person is not liable to a claimant for loss, damage, injury or death arising from COVID-19 unless the claimant proves by clear and convincing evidence that the person caused the loss, damage, injury or death by an act or omission constituting gross negligence, willful or wanton misconduct, or intentional misrepresentation. It provides immunity from civil liability to certain persons, entities and facilities providing health care and other services for certain acts or omissions related to the provision of health care services and other services during a state disaster emergency.
Summary of House legislation: Professional Discipline – This bill protects health care providers from professional discipline for certain acts or omissions arising from a disaster emergency unless the act or omission constitutes gross negligence, willful or wanton misconduct, or intentional misrepresentation. The bill also provides that a health care provider is not protected from professional discipline for actions that are outside the skills, education and training of the health care provider, unless certain circumstances apply.
Emergency Orders – The bill specifies that orders and recommendations issued by local, state and federal government agencies and officials during a state disaster emergency do not create new causes of action or new legal duties. The bill also specifies that the orders and recommendations are presumed irrelevant to the issue of the existence of a duty or breach of a duty. It specifies that the orders and recommendations are inadmissible at trial to establish that a new cause of action has been created or proof of a duty or a breach of a duty.
Civil Immunity – The bill prohibits filing a class action lawsuit against a defendant in a civil action allowed by the statute. The bill specifies that a governmental entity or employee is not liable if a loss results from an act or omission arising from COVID-19 unless the act or omission constitutes gross negligence, willful or wanton misconduct, or intentional misrepresentation. The bill provides that a person is not liable to a claimant for loss, damage, injury or death arising from COVID-19 unless the claimant proves by clear and convincing evidence that the person caused the loss, damage, injury or death by an act or omission constituting gross negligence, willful or wanton misconduct, or intentional misrepresentation. It provides immunity from civil liability to certain persons, entities and facilities providing health care and other services for certain acts or omissions related to the provision of health care services and other services during a state disaster emergency.
Save the Date - Legislative Briefing - March 5
Join us for the virtual 2021 IBA Legislative Briefing, scheduled for March 5. We have transitioned our annual grassroots advocacy event to the safety of a virtual format, providing an opportunity for members to engage with Indiana lawmakers and discuss legislative issues important to the banking industry. Details and registration are forthcoming.
Save the Date - FLD Day at the Statehouse - April 9
The virtual IBA Future Leadership Division Day at the Statehouse is scheduled for April 9. This is an opportunity for emerging bank leaders to network with peers and learn more about grassroots advocacy and the legislative process. Details and registration are forthcoming.
FEDERAL GOVERNMENT RELATIONS
New PPP FAQs Released
The Small Business Administration has released additional Paycheck Protection Program FAQs, including:
- Shuttered Venue Operators Grants - FAQ
- Paycheck Protection Program - FAQ – New content includes questions 54-56, shown below:
54. Question: Are FinCEN’s April 2020 Frequently Asked Questions regarding the Paycheck Protection Program (PPP) applicable to Second Draw PPP Loans?
Answer: Yes. The FinCEN April 2020 PPP Frequently Asked Questions (FAQs) apply to Second Draw PPP Loans. If you have general questions about requirements related to customer due diligence or beneficial ownership, please see fincen.gov/resources/statutes-and-regulations/cdd-final-rule.
55. Question: For purposes of Bank Secrecy Act/Anti-Money Laundering compliance, can a PPP lender rely on the same information received from a borrower for the purposes of a First Draw PPP Loan for a Second Draw PPP Loan to that same borrower?
Answer: The information a lender obtained from a borrower in connection with a First Draw PPP Loan can be relied upon by that lender for a Second Draw PPP Loan application, if the borrower is an existing customer. Decisions regarding the updating of customer due diligence and the verification and updating of the beneficial ownership information collected from customers should be made consistent with the guidance for both existing customers and new customers set forth in the previous April 2020 FAQs and in this FAQ, and pursuant to the lender’s risk-based approach to Bank Secrecy Act compliance.
56. Question: How does the 500-employee limit for First Draw PPP Loans and the 300- employee limit for Second Draw PPP Loans apply to a public broadcasting station if a college or university operates or holds the license for the station and the station is not a separate legal entity?
Answer: Subsection B.1.g.vi of the consolidated interim final rule implementing updates to the PPP, 86 FR 3692 (Jan. 14, 2021), and subsection c.4 of the interim final rule for Second Draw PPP Loans, 86 FR 3712 (Jan. 14. 2021), apply the 500- and 300-employee limits, respectively, based on the number of employees “per location” of the public broadcasting station. This limit on the number of employees per location applies to the public broadcasting station itself and does not include other employees of a college or university that operates or holds the license for the station.
Additional PPP Procedural/Informational Notices Released
The Small Business Administration has released the following Paycheck Protection Program notices:
- Updated Information on IRS Information Reporting Relating to the Payments Made on Behalf of Borrowers under Section 1112 of the CARES Act Based on Section 278 of the COVID-related Tax Relief Act of 2020 – Information Notice 5000-20087
- Extension of Temporary Procedures for Closing SBA Loans to Microloan Intermediaries – Procedural Notice 5000-20088
- Extension of Previous Guidance on Acceptable Signatures for Applications and Loan Documents in the 7(a) and 504 Business Loan Programs Through April 30, 2021 – Procedural Notice 5000-20089
- Extension of Guidance on Acceptable Signatures for Microloan Program Notes – Procedural Notice 5000-20090
IRS Concluding Stimulus Payments
The IRS last Friday reissued 1.2 million Economic Impact Payments through the ACH network with an effective date of this Wednesday, Feb. 3. Another 2.3 million reissued EIP2 checks are scheduled to be printed and mailed by today, Feb. 5.
These payments conclude the second round of EIPs. Henceforth, recipients will need to file for the Recovery Rebate Credit for any missing or returned EIPs from either round of payments.
Additional information is available on the IRS's EIP webpage.
OCC Issues CRA Bank Type Determinations
The Office of the Comptroller of the Currency has released the 2021 list of bank type determinations under its Community Reinvestment Act rule, including how the agency identifies small banks, intermediate banks and more. The OCC release also includes its list of distressed and underserved areas, as well as the banking industry median hourly compensation value.
Senate Democratic Committee Membership Announced
Senate Majority Leader Chuck Schumer, D-N.Y., has announced Senate Democratic committee memberships for the 117th Congress. Key chairmen include Sens. Sherrod Brown (Banking), Debbie Stabenow (Agriculture), Patrick Leahy (Appropriations), Ron Wyden (Finance) and Ben Cardin (Small Business). New Georgia Sens. Jon Ossoff and Raphael Warnock will join the Senate Banking Committee.
House Banking Panel Issues Hearing Schedule
The House Financial Services Committee has released its hearing schedule for February, including separate hearings on additional COVID-19 stimulus and supporting small and minority-owned businesses during the pandemic. Other hearings this month will address short selling, terrorist financing, climate change, monetary policy and lending discrimination.
Fed Survey Shows Further Stabilization in Q4 Credit Practices, Demand
Loan demand and standards for lending continued to stabilize in the fourth quarter of 2020 after the economic freefall caused by the COVID-19 pandemic in the second quarter. Fewer banks reported tightening on commercial and industrial, commercial real estate and personal loans, although most banks kept standards unchanged, according to the Federal Reserve’s senior loan officer survey released recently.
C&I. Half as many banks on net reported tightening standards on C&I loans for firms of all sizes in the fourth quarter versus the third quarter, while the share of banks that eased quadrupled for large and midsize businesses. Roughly 7 in 10 banks kept their standards unchanged. The handful of banks which eased standards cited an improving economic outlook as the most important reason. C&I loan demand was mixed but was slightly weaker on net – although the share of banks reporting stronger demand from large and midsize firms rose by about 10 points from the third quarter. Banks seeing stronger C&I demand said the most important factors were growing client M&A financing needs.
CRE. The CRE market also saw stabilization in Q4, with roughly 7 in 10 banks keeping standards unchanged for construction and land development loans and loans secured by nonfarm nonresidential properties. The remainder of banks tightened standards, as almost none reported easing standards for CRE loans. On net, banks reported slightly weaker demand for CRE loans with the exception of multifamily.
Mortgages. Most banks kept standards unchanged for mortgage loans in the fourth quarter. On net, 3.3% of banks reported easing standard for conforming mortgages. Demand for mortgages eased substantially, with just 6.4% of banks on net reporting stronger demand for conforming loans – down from 65% in the third quarter. The weaker demand came as the Federal Housing Finance Agency imposed a surcharge on GSE refinances.
Personal loans. Credit cards saw the 2020 trend in tightening reverse, with 12.8% of banks on net easing standards on credit card loans. The Q3 pattern of eased standards for auto loans also continued. Demand was mixed for credit cards and was moderately weaker for car loans.
2021 projections. Over 2021, roughly three-quarters of banks projected their standards for C&I and CRE credit to remain unchanged, with modest net percentages of the remaining banks projecting tighter standards. However, for residential mortgages and auto loans, while more than 8 in 10 expected standards to remain unchanged, the balance expected to ease standards. A little under half of banks expected C&I loan demand to improve, with most of the rest expecting it to remain the same.
IBA COVID-19 Updates
The IBA has several COVID-19 resources and updates available at our website.