STATE GOVERNMENT RELATIONS
General Assembly Returns for Technical Corrections and Veto Override
The General Assembly convened on Monday to consider a technical corrections bill – which is customary to make needed technical changes on bills passed during the legislative session – and to override Gov. Holcomb’s veto of SEA 5.
SEA 5 puts in place restrictions on local public health emergency orders and provides an appeals process for entities impacted by said orders, among other provisions. SEA 5 passed on a veto override vote in both the House and Senate and is now law.
The legislature will convene later this year to address the redrawing of legislative maps, a process that takes place every 10 years.
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!
Senate Votes to Repeal OCC ‘True Lender’ Rule
The Senate on Tuesday voted 52 to 47 to repeal the OCC’s “true lender” rule using a Congressional Review Act resolution. The rule, finalized in 2020, established a test to determine when a bank is considered the true lender on a loan made in a partnership with a nonbank entity.
Under the Congressional Review Act, a resolution that receives simple majorities in each chamber of Congress and the president’s signature may overturn regulations finalized within the previous 60 days that Congress is in session. A resolution using this procedure also prohibits the agency in question from reissuing a substantially similar rule.
Fed Proposes Changes to Interchange Regs
The Federal Reserve Board invited public comment on proposed changes to Regulation II (Debit Card Interchange Fees and Routing).
Details: The changes would clarify that debit card issuers should enable, and allow merchants to choose from, at least two unaffiliated networks for card-not-present debit card transactions, such as online purchases.
Background: The Fed indicated that two unaffiliated networks are often not available to process card-not-present debit card transactions because some issuers do not enable them, which prevents merchants from having a choice between competing networks when routing such transactions.
Report: The Fed also issued its latest biennial interchange report, which found that U.S. payment card networks in 2019 processed 79.2 billion debit and general-use prepaid card transactions valued at $3.1 trillion. Total transaction volume grew 7% in 2019, in line with the 7.8% average annual growth rate from 2009 to 2018.
Next: Comments are due 60 days after publication in the Federal Register.
Fed: Interchange Fees on PIN Transactions Down Nearly Decade Post-Durbin
Smaller debit card issuers – those covered by the Durbin Amendment’s routing provision but not its interchange fee cap – continue to see a decline in revenue from interchange fees on PIN debit transactions since the provision took effect, according to the Federal Reserve’s biennial survey of debit card issuers’ economics released last Friday.
The average interchange fee paid to these smaller, nominally “exempt issuers” (institutions with less than $10 billion in assets) for PIN debit transactions fell from 31 cents in 2011 before the Durbin amendment took effect to 25 cents in 2019. The average interchange fee for exempt signature debit transactions rose modestly from 51 cents in 2011 to 54 cents in 2019.
However, in surveying banks and credit unions to set debit interchange price caps for covered issuers, the Fed does not consider many important costs that issuers incur to facilitate electronic debit transactions. (For example, the Fed does not include costs related to corporate overhead, account relationships, rewards programs, non-sufficient funds handling, non-sufficient funds losses, debit card compliance costs, cardholder inquiries, card production and delivery, fraud-prevention costs not incurred as part of authorization, costs associated with funds loads, or costs of account setup and maintenance.)
About 79.2 billion debit and prepaid card transactions amounting to $3.1 trillion were processed in the U.S. during 2019. Signature transactions experienced faster volume growth in 2019 than PIN transactions, at 7.6% and 6%, respectively. While card-not-present transactions were the fastest growing transaction type, these types of transactions represented a little over one-fifth of total transactions.
Yellen Names Hsu Acting Comptroller
Secretary Janet Yellen has designated Michael J. Hsu as first deputy comptroller at the Office of the Comptroller of the Currency, where he took over as acting comptroller effective May 10.
Hsu: Prior to joining the OCC, Hsu served as an associate director in the Federal Reserve Board’s Division of Supervision and Regulation, where he led a program on supervising the nation’s largest financial institutions.
Background: While the president appoints the comptroller, the Treasury secretary may designate the first deputy comptroller, who serves as acting comptroller during a vacancy at comptroller.
More: Blake Paulson, who has served as acting comptroller since Jan. 14, will return to his role as the agency’s senior deputy comptroller and chief operating officer.
Boston Fed to Test Central Bank Digital Currency
The Boston Fed is working with MIT to build and test a hypothetical digital currency platform, reserve bank President Eric Rosengren has reported.
Details: Rosengren said the institutions’ “Project Hamilton” is designed to determine the feasibility of the core processing of a central bank digital currency. They plan to issue a white paper in the third quarter, he said.
IRS Issues 960K EIPs
The IRS has reported it is disbursing roughly 960,000 more Economic Impact Payments in the ninth batch under the American Rescue Plan. The latest batch – which has a total value of more than $1.8 billion – began processing May 7 with an official payment date of May 12.
IBA COVID-19 Updates
The IBA has several COVID-19 resources and updates available at our website.