STATE GOVERNMENT RELATIONS
Legislators Continue Working Through the Second Half of Session
The General Assembly worked through the week holding committee hearings on various topics, including several bills of note to the industry. SB 370, SB 400, and HB 1079 passed their committees of jurisdiction this week. Lawmakers now have little over four weeks of committee work remaining before the legislature enters the final stages of the 2021 session.
Click here for a complete list of bills that the IBA Government Relations Team is tracking in the 2021 Indiana General Assembly.
Senate Bill 370 – Limitation on Actions Concerning Deposit Accounts
Author: Sen. Andy Zay (R).
Summary of legislation: Limitation on actions concerning deposit accounts. 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 include actions upon deposit accounts. Specifies that the bill's provisions are intended to be a restatement of the law and not a substantive change in the law and as such shall be applied with respect to deposit accounts executed during the applicable time frames set forth in the statute.
Senate Bill 400 – Statewide Electronic Lien and Title System
Author: Sen. Chris Garten (R).
Summary of legislation: Statewide electronic lien and title system. Requires the bureau of motor vehicles (bureau) to implement a statewide electronic lien and title system (system) to process: (1) vehicle titles; (2) certificate of title data in which a lien is notated; and (3) the notification, maintenance, and release of security interests in vehicles; through electronic means instead of paper documents. Provides that the bureau may: (1) contract with one or more qualified vendors to develop and implement a system; or (2) develop an interface to provide qualified electronic lien service providers secure access to data to facilitate the creation of a system. Sets forth certain requirements that apply if the bureau elects to implement the system through a qualified vendor versus through qualified electronic lien service providers. Specifies that a contract entered into between the bureau and: (1) a qualified vendor; or (2) a qualified electronic lien service provider; may not provide for any costs or charges payable by the bureau to the qualified vendor or the qualified electronic lien service provider. Sets forth dates by which the bureau must implement and allow or require the use of: (1) a statewide electronic lien system; and (2) a statewide electronic title system. Sets forth certain conditions that apply to the use of a statewide electronic lien system implemented by the bureau under these provisions. Authorizes the bureau to adopt rules, including emergency rules, to implement these provisions.
House Bill 1004 – Small Business Restart Grant Program
Author: Rep. Shane Lindauer (R).
Summary of legislation: Small business restart grant program. Establishes the Hoosier hospitality small business restart grant program (program) to provide grants to eligible entities to accelerate economic recovery from the impacts of the coronavirus disease (COVID-19) pandemic. Establishes the small business restart grant fund (fund). Provides that the Indiana economic development corporation (corporation) administers the program and fund. Provides criteria for grants. Allows the corporation to award grants from the fund. Makes an appropriation.
House Bill 1079 – Practice of Dentistry; Virtual Claims Payments
Author: Rep. Dennis Zent (R).
Summary of legislation: Practice of dentistry; virtual claim payments. Amends the definition of dentistry. Provides that a dentist may order and administer an immunization that is recommended by the federal Centers for Disease Control and Prevention Advisory Committee on Immunization Practices for individuals who are not less than eleven years of age, if the dentist: (1) is certified in cardiopulmonary resuscitation; (2) has successfully completed a course of training in immunization that meets specified requirements; and (3) administers the immunization in accordance with a protocol that includes specified requirements and procedures. Prescribes reporting requirements for a dentist who administers an immunization. Provides that a dentist: (1) is not required to administer immunizations; and (2) is not required to complete immunization training if the dentist chooses not to administer immunizations. Provides that a health insurance plan, including a health management organization contract, may not require a dental provider to accept payment under the health insurance plan by virtual claim payment. Requires a health insurer, including a health maintenance organization, to do the following before providing payment to a dental provider by electronic funds transfer, including by virtual claim payment: (1) Notify the dental provider of fees associated with the electronic funds transfer. (2) Advise, concerning virtual claim payments, the dental provider of the methods of payment available under the health insurance plan and provide clear instructions to the dental provider as to how to select an alternate payment method.
House Bill 1001 – State Budget
Author: Rep. Tim Brown (R).
Summary of legislation: State budget. Appropriates money for capital expenditures, the operation of the state, K-12 and higher education, the delivery of Medicaid and other services, and various other distributions and purposes. Replaces the governor with the budget director or the budget director's designee on the state board of finance. Renames the personal services/fringe benefits contingency fund as the budget agency contingency fund (fund). Adds the following authorized fund uses: (1) Emergency capital project expenses. (2) Necessary expenses for existing programs as determined by the governor and budget director. Removes a provision that prevents transfers from the fund for other purposes. Requires the budget committee to be advised of each transfer from the fund that exceeds $500,000. Replaces the state librarian with the budget director as a member of the enhanced access fee committee. Transfers the operations of the Indiana department of gaming research into a newly established gaming research division of the Indiana gaming commission. Repeals the exoneration fund. Provides that any money remaining in the fund is transferred to the state general fund. Replaces the director of the budget agency with the director of the office of management and budget as an ex officio voting member of the board of trustees of the Indiana public retirement system. Removes the annual appropriation provision for the examinations fund of the state board of accounts.
FLD Virtual Day at the Statehouse
Register now for the FLD Virtual Day at the Statehouse, 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. If you have an interest in politics, or if you just want to do your part to promote the future success of the banking industry, register now to unlock your potential as an industry advocate.
FEDERAL GOVERNMENT RELATIONS
President Biden Signs COVID-19 Relief Bill; EIPs to Start Moving Today
President Biden yesterday signed the $1.9 trillion COVID-19 relief bill into law. Among other provisions, the bill authorizes another round of $1,400-per-person economic impact payments that will be paid to eligible taxpayers.
The IRS said it expects to send a first tranche of about 95 million ACH files this morning for payment on Wednesday, March 17. Mailed payments – including checks and prepaid cards will begin to be processed on Friday – but the IRS was not yet able to provide any details on those volumes. The IRS also indicated it is working to update its Get My Payments Tool, but noted that given the compressed timeframe between the time the bill was signed and the first payment distribution, the tool will only provide status updates for taxpayers who have filed their 2019 or 2020 tax returns with direct deposit. The IRS is also working to update its set of FAQs on the EIPs to provide additional information to taxpayers and payments processors.
As lawmakers worked to finalize the relief bill, a coalition of finance and consumer advocacy groups engaged in a coordinated effort to encourage lawmakers to exempt these EIPs from garnishment, but due to procedural hurdles and the timing of the bill’s passage, no such action was taken.
CFPB Rescinds 2020 Policy Statement on ‘Abusive’ Practices Under UDAAP
The Consumer Financial Protection Bureau yesterday rescinded a January 2020 policy statement that clarified the bureau’s approach to citing and challenging “abusive” conduct in supervision or enforcement actions.
In the now-rescinded statement, the CFPB had said that it would consider whether the harm to consumers outweighs the benefit to consumers, and that it would generally avoid “dual pleading” both abusiveness and unfairness or deception violations that stem from the same or nearly all of the same facts. In addition, the CFPB had indicated it would generally not seek monetary relief for abusive violations in instances where there is a good-faith effort to comply with the abusiveness standard, except to address consumer injuries caused by the conduct.
Going forward, the CFPB said it “intends to exercise its supervisory and enforcement authority consistent with the full scope of its statutory authority under the Dodd-Frank Act as established by Congress.”
Department of Labor to Revisit ESG, Proxy Voting Final Rules
In response to concerns raised by industry stakeholders, the Department of Labor will revisit its recent final rules regarding environmental, social or governance (ESG) investing and a fiduciary’s proxy voting activity under the Employee Retirement Income Security Act. In a statement, DOL noted that it has received significant feedback suggesting that the rulemakings were rushed, as well as concerns that the final rules “have already had a chilling effect on appropriate integration of ESG factors in investment decisions.”
The ESG investing final rule requires ERISA fiduciaries to evaluate investments and investment courses of action based solely on pecuniary factors. Under the proxy voting final rule, fiduciaries must carry out their duties related to proxy voting solely in accordance with the economic interest of retirement investors. Both rules are part of DOL’s investment duties regulation.
DOL noted that it will not enforce compliance with the final rules until further guidance can be published.
Treasury’s Emergency Capital Investments to Count as Bank Capital
The Federal Reserve, Federal Deposit Insurance Corp. and Office of the Comptroller of the Currency on Tuesday announced an interim final rule (IFR) allowing Treasury investments made to community development financial institutions and minority depository institutions under the newly established Emergency Capital Investment Program qualify as regulatory capital. Comments are due 60 days after publication in the Federal Register.
Under the program – which was established as part of the December COVID-19 relief bill and which is currently accepting funding applications – Treasury investments may take the form of senior preferred stock or subordinated debt, depending on the type of applicant and other factors. Under the IFR, preferred stock issued under the ECIP will qualify as additional tier 1 capital, and subordinated debt will qualify as tier 2 capital, the agencies noted.
“Treasury's Emergency Capital Investment Program helps make capital more available for Community Development Financial Institutions and minority banks. That's a step in the right direction,” Acting Comptroller of the Currency Blake Paulson indicated in a statement. “Making clear that these funds qualify as regulatory capital helps make the most of the program so institutions can maximize its benefits.”
The OCC also issued a pledge to strengthen minority depository institutions through its participation in “Project REACh,” which brings together leaders from the banking industry, national civil rights organizations, business and technology to reduce specific barriers that prevent full, equal and fair participation in the nation’s economy. “The pledge helps minority banks remain vibrant parts of the economic landscape through larger banks' commitments to additional investment, technical assistance, executive development, and business partnerships,” Paulson added. “Twenty-one banks have already taken the pledge, and we are eager to see others join.”
CFPB: Gender Identity, Sexual Orientation Discrimination Illegal Under ECOA
The Consumer Financial Protection Bureau on Tuesday issued an interpretive rule clarifying that the prohibition against sex discrimination as part of the Equal Credit Opportunity Act and Regulation B includes sexual orientation and gender identity (SOGI) discrimination. The CFPB added that the “prohibition also covers discrimination based on actual or perceived nonconformity with traditional sex- or gender-based stereotypes, and discrimination based on an applicant’s social or other associations.”
As part of the interpretive rule, the bureau indicated it will update its publications and examination guidance documents and will take enforcement actions against lenders for SOGI-related ECOA violations.
According to the CFPB, the interpretive rule is consistent with a 2020 Supreme Court ruling that the prohibition against sex discrimination in the Civil Rights Act of 1964 encompasses sexual discrimination based on sexual orientation or gender identity. The CFPB’s interpretive rule is effective upon publication in the Federal Register.
Agencies Update FAQs on Coronavirus, CRA Activities
The banking agencies on Monday updated a list of frequently asked questions related to the Community Reinvestment Act and the coronavirus pandemic. The five new frequently asked questions clarify that:
- CRA regulatory criteria for the service test do not include loan processing and servicing activities for retail loans originated by the bank, and that the agencies will not extend CRA service test consideration for Paycheck Protection Program-related activities. However, the agencies acknowledged that PPP activities may be considered under the CRA lending test when evaluating flexible or innovative lending programs offered by the bank.
- Banks should not report on their CRA loan registers PPP loans that have been rescinded or returned under the SBA’s safe harbor, nor will examiners consider the loans in their CRA evaluations of banks during the applicable time period.
- A PPP loan greater than $1 million in low- or moderate-income geographies or in distressed or underserved nonmetropolitan middle-income geographies will be considered an eligible community development activity.
- The waiving of ATM fees, overdraft fees, early withdrawal penalties on CDs and withdrawal fees on savings accounts are examples of retail services considered responsive to the needs of low- and moderate-income individuals. Allowing a LMI individual to make draws from a home equity line of credit during the repayment period could constitute a flexible lending practice. Allowing an LMI individual to make a withdrawal from an IRA or to draw on a HELOC during the draw period are routine banking services and, as such, are not eligible for CRA consideration.
- As an alternative to in-person services, the agencies will consider services provided virtually by bank representatives that have a primary purpose of community development and that are related to the provision of financial services.
Fed to Extend Paycheck Protection Program Liquidity Facility
The Federal Reserve will extend its Paycheck Protection Program Liquidity Facility until June 30, the agency announced Monday. Through the facility – which is one of many COVID-19 relief programs established by the Fed under its Section 13(3) authority – the Fed may extend non-recourse loans to institutions eligible to make PPP loans. PPP loans guaranteed by the Small Business Administration that are originated by eligible banks may be pledged as collateral to the Federal Reserve Banks. The PPPLF was originally set to expire on March 31.
IBA COVID-19 Updates
The IBA has several COVID-19 resources and updates available at our website.