STATE GOVERNMENT RELATIONS
FLD Day at the Statehouse
It’s not too late to register for the FLD Day at the Statehouse on Feb. 10 at the Hilton Indianapolis Hotel & Suites! This free event provides opportunities to network and learn about grassroots advocacy and its importance to the banking industry. For questions, contact Josh Myers at 317-333-7165.
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 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 passed the Senate by a vote of 47-2 on third reading. The bill is now eligible for consideration by the House.
Senate Bill 395 - Uniform Consumer Credit Code
Author: Sen. Eric Bassler, R-Washington
Summary: Amends the Uniform Consumer Credit Code (UCCC) as follows: (1) Changes: (A) from July 1 of each even-numbered year to January 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) 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. 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 passed the Senate by a vote of 40-9 on third reading. The bill is now eligible for consideration by the House.
House Bill 1021 - Liens
Author: Rep. Jerry Torr, R-Carmel
Summary: Permits a person to discharge a mechanic's lien by filing an indemnification, payment, or cash bond with the recorder's office in an amount equal to at least 150% of the lien or $7,500, whichever is greater. Requires the surety responsible for issuing an indemnification or payment bond to: (1) be authorized to do business in Indiana; and (2) be rated at least "A-" by at least one nationally recognized investment rating service. Specifies certain requirements concerning the recording of an indemnification or payment bond. Provides that the filing of a bond discharges the property and liability of a person served by a lien claimant not less than 30 days after the filing of a bond. Provides that a contractor or subcontractor may adjudicate the adequacy of a bond in certain instances. Provides that the liability of a person served by a lien claimant may not be discharged while the adequacy of a bond is being adjudicated. Repeals the current statute concerning the filing of a written undertaking to discharge a lien.
Latest Action: House Bill 1021 passed the House by a vote of 60-33 on third reading. The bill is now eligible for consideration by the Senate.
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 (UCCC); (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 passed the House by a vote of 92-0 on third reading. The bill is now eligible for consideration by the Senate.
FEDERAL GOVERNMENT RELATIONS
Agencies Propose Volcker Rule Reforms
Federal regulators proposed modifying the Volcker Rule's general prohibition on banking entities investing in or sponsoring hedge funds or private equity funds. Citing compliance uncertainty, the proposal would streamline the rule and address the treatment of certain foreign funds. The provision within S. 2155 regulatory relief law exempts most community banks from the Volcker Rule.
FDIC Publishes Risk-Based Pricing Study
The FDIC published a comprehensive history of how it has assessed banks to build its 85-year-old Deposit Insurance Fund. "A History of Risk-Based Premiums at the FDIC" chronicles the evolution of how the agency has set premiums that reflect the risk banks pose to the DIF. The agency said it is the first in a series of staff studies.
Fed Finalizes Rule to Clarify Bank Control Determinations
The Federal Reserve issued a final rule amending its existing rules for determining control of a company by another company under the Bank Holding Company Act and the Home Owners’ Loan Act. The final rule will provide greater transparency and clarity regarding the facts and circumstances the Fed considers most relevant when assessing controlling influence.
Under the final rule - which takes effect April 1 - the Fed established a tiered structure for how it will make control determinations, based on the level of voting ownership at four different thresholds: less than 5%; 5% to 9.99%; 10% to 14.99%; and 15% to 24.99%. The Fed will also consider several additional factors, including the size of a company’s total equity investment, rights to director representation and the scope of business relationships.
At a time when many banks are pursuing partnerships with fintech firms and other organizations, the final rule is expected to provide additional transparency that will allow banks to more easily make investments in other companies by reducing the risk of unexpected control concerns
FHFA: Fannie, Freddie Continue LIBOR Transition
The Federal Housing Finance Agency said Fannie Mae and Freddie Mac are taking additional steps to transition from the London Interbank Offered Rate, or LIBOR.
• New language will be required for single-family Uniform Adjustable Rate Mortgage instruments closed on or after June 1, 2020.
• All LIBOR-based single-family and multifamily ARMs must have loan application dates on or before Sept. 30, 2020, to be eligible for acquisition.
• Acquisitions of single-family and multifamily LIBOR ARMs will cease on or before Dec. 31, 2020.
The Alternative Reference Rates Committee, which is implementing the LIBOR transition, last fall released recommended contractual fallback language for ARMs.
Brainard: Fed Understands FedNow Urgency
The Federal Reserve understands stakeholder urgency to quickly launch the FedNow real-time payments service and is working to determine initial business requirements, Fed Governor Lael Brainard said. Speaking at Stanford, Brainard said FedNow and The Clearing House's RTP system together will increase payments speed and efficiency.