STATE GOVERNMENT RELATIONS
Few Days Remain in 2021 Legislative Session
Just a few working days remain for the 2021 regular legislative session. The planned target date for conclusion of the work of the General Assembly is Wednesday, April 21. However, lawmakers will have to return to session later this year to enact redistricting legislation, a process that occurs every 10 years based on recent census data.
The final days of session will be reserved solely for conference committee work, a process of reconciliation between changes that the House and Senate made to the respective chamber’s bills. Last week marked important deadlines for passage of a bill with both second- and third-reading deadlines elapsing. If bills failed to pass on a third-reading vote, for purposes of procedure, they are considered dead.
The past week several bills the IBA is monitoring passed on their respective votes, including SB 188 (Unclaimed Property), HB 1001 (State Budget) and HB 1405 (Insurance Matters). The IBA continues to monitor legislation for any possible concerns.
Click here for a complete list of bills that the IBA Government Relations Team is tracking in the 2021 Indiana General Assembly.
FEDERAL GOVERNMENT RELATIONS
IBA Washington Trip - July 18-20
Register now for the IBA Annual Washington Trip, scheduled for July 18-20. Join with fellow Hoosiers as we travel to our nation’s capital to tell the story of Indiana banking to elected officials and regulators. This is an opportunity to discuss the impact legislation has had or may have on your bank, and how currently proposed policies could influence your customers and communities. It is more important now than ever to engage in grassroots advocacy as you share your concerns, your successes and what you believe will allow you to better serve your communities. We look forward to seeing you in Washington!
SBA Issues New PPP Procedural Notice and FAQ; $44 Billion Remains
Yesterday the Small Business Administration announced that just over $44 billion remains in Paycheck Protection Program loan authority as of the close of business Wednesday. As of SBA statistics available through April 11, in Indiana more than 73,000 PPP loans have been approved, providing more than $3.7 billion to Indiana small businesses.
On Friday last week, the SBA issued a new Procedural Notice to implement the PPP Extension Act of 2021. The PPP Extension Act of 2021 extends the application period until May 31, 2021, and also provides an additional 30-day period through June 30, 2021, for the SBA to process applications that are still pending. The notice states that the PPP platform will be shut down to new applications at midnight on June 1. In addition, it states that at midnight on July 1, the platform will shut down processing of any pending PPP loan guaranty applications for which an SBA loan number has not been issued. The text from the notice is below:
“In accordance with the Extension Act, at 12:00 am EDT on June 1, 2021, SBA will shut down the Paycheck Protection Platform (“Platform”) to new PPP Loan guaranty applications from Lenders. Any PPP Loan guaranty applications submitted by Lenders in the Platform before June 1, 2021 must be processed and receive an SBA loan number by 11:59 pm EDT on June 30, 2021. At 12:00 am EDT on July 1, 2021, SBA will shut down processing of any pending PPP Loan guaranty applications from Lenders for which an SBA loan number has not been issued. The additional time period for processing of PPP Loan guaranty applications received before June 1, 2021 allows Lenders and SBA to resolve Hold Codes and Compliance Check Error Messages. The foregoing dates and times are subject to availability of funds, and may change if funds are no longer available.”
In addition, the SBA issued a new FAQ. The latest information is found in question 67, which is found below:
67. Question: To be eligible for a PPP loan, each applicant must certify on the PPP borrower application that the applicant and any owner of 20% or more of the applicant are not “presently involved in any bankruptcy.” If an applicant or owner filed for bankruptcy protection in the past, when is an applicant or owner no longer considered to be “presently involved in any bankruptcy” for PPP loan eligibility purposes?
Answer: If an applicant or owner has filed a Chapter 7 bankruptcy petition, the applicant or owner is considered to be “presently involved in any bankruptcy” for PPP eligibility purposes until the Bankruptcy Court has entered a discharge order in the case. If an applicant or owner has filed a Chapter 11, 12 or 13 bankruptcy petition, the applicant or owner is considered to be “presently involved in any bankruptcy” for PPP eligibility purposes until the Bankruptcy Court has entered an order confirming the plan in the case. Additionally, if the Bankruptcy Court has entered an order dismissing the case, regardless of the Chapter, the applicant or owner is no longer “presently involved in any bankruptcy.” The discharge order, the order confirming the plan or the order of dismissal, whichever is applicable, must be entered before the date of the PPP loan application. Notwithstanding the foregoing, if an applicant has permanently closed as a result of a bankruptcy filing, the applicant is ineligible for a PPP loan because the applicant is required to certify on the PPP borrower application that the applicant “has not permanently closed.”
Fannie, Freddie Announce Effective End of ‘GSE Patch’
In lender letters issued last week, Fannie Mae and Freddie Mac announced that any loans purchased by the government-sponsored enterprises after July 1 must conform to the requirements outlined in the Consumer Financial Protection Bureau’s recently finalized QM final rule – effectively signaling the end of the so-called “GSE-patch.”
This change was required by recent amendments to the GSEs’ preferred stock purchase agreements (PSPAs) with the Department of the Treasury, which stated that Fannie and Freddie may no longer acquire loans that do not meet these new standards. The GSEs indicated they would provide details about these changes and their implementation in future lender letters.
Fannie and Freddie clarified, however, that they will continue to buy loans that fall under the patch that have application dates on or before June 30 and are purchased as whole loans on or before Aug. 31 or in mortgage-backed securities pools with an issue date on or before Aug. 1.
This action by the GSEs comes shortly after the CFPB proposed to delay the mandatory compliance date of the general QM rule until Oct. 1, 2022. If finalized, this delay – coupled with the PSPA provisions – would mean that the GSE safe harbor can continue, but under the new general QM requirements, until the new compliance date or until the GSEs exit conservatorship, whichever comes first.
Read the Fannie Mae lender letter
Read the Freddie Mac lender letter
Biden to Seek Additional Funding for FinCEN’s Beneficial Ownership Database
President Biden is seeking $191 million in funding for the Financial Crimes Enforcement Network – a $64 million increase from FY 2021 – according to the FY 2022 budget released by the White House. The additional funding would go toward FinCEN’s effort to implement new Bank Secrecy Act/anti-money laundering rules, including the creation of a new beneficial ownership database. FinCEN took the first step toward creating the database when it issued an advance notice of proposed rulemaking earlier this month.
The president’s budget also calls for – among other provisions – a 15% budget increase for the Department of Housing and Urban Development, a 9.4% budget increase for the Small Business Administration, and a 10.4% budget increase for the Internal Revenue Service.
View the president's budget request
Agencies Issue Joint Statement on BSA/AML Compliance
Federal regulators have issued a joint statement addressing how risk management principles in “Supervisory Guidance on Model Risk Management” relate to banking systems or models designed for Bank Secrecy Act compliance.
Statement: The statement indicates no specific risk management framework is required. It also notes the statement does not alter existing BSA/AML legal or regulatory requirements or establish new supervisory expectations.
Feedback: The agencies also requested information within 60 days on how the principles discussed in the guidance support BSA/AML compliance, and whether additional clarification would be helpful.
Fed Outlines Vision, Key Pillars for FedNow Service
Federal Reserve Bank Chief Innovation Officer Dan Anthony will outline the agency’s technology strategy and next steps in preparation for the rollout of its FedNow Service during a 90-minute webinar next month. Slated for 1 p.m. (Eastern time) on Tuesday, May 4, participants will receive an overview of the final ISO 20022 message specs, FedNow Pilot Program highlights and upcoming engagement opportunities
IBA COVID-19 Updates
The IBA has several COVID-19 resources and updates available at our website.