STATE GOVERNMENT RELATIONS
Holcomb Issues Mask Requirement
Gov. Eric Holcomb announced on Wednesday that a mask requirement will go into effect in Indiana on Monday, July 27, requiring face coverings for anyone 8 years old or older in the following places:
• Public indoor spaces and commercial entities;
• While using public transportation or other vehicle services, such as taxis or ride shares;
• Outdoor public spaces when not possible to socially distance from people not in the same household.
Additionally, face coverings will be required in schools for students in the third grade and above, along others in school buildings, and masks are required for co-curricular and extra-curricular activities with exceptions for strenuous physical activity.
The requirement provides exceptions for medical purposes, disabilities, exercising, and eating and drinking. While the state will approach enforcement with an emphasis on education, a penalty can be levied under the authority of state law. Local governments may impose more restrictive guidelines.
FEDERAL GOVERNMENT RELATIONS
Senate Stimulus Outline Includes Streamlined PPP Loan Forgiveness
Senate Republicans released an outline of forthcoming stimulus legislation with provisions to streamline the Paycheck Protection Program loan-forgiveness process. The rough outline includes language on an intermediate forgiveness process for PPP loans under $1 million and streamlined forgiveness for loans under $150,000.
The outline also notes a second round of PPP loans to certain small businesses that can demonstrate 50% lost revenue against a reference period as well as an alternative working capital loan for businesses that don't use the second PPP round.
SBA: Lenders May Submit PPP Forgiveness Decisions Beginning Aug. 10
The Small Business Administration yesterday issued a procedural notice providing detailed instructions for Paycheck Protection Program lenders on the PPP forgiveness process. The notice outlines processes for submitting decisions on PPP borrower loan forgiveness applications to SBA, requesting payment of the forgiveness amount determined by the lender, SBA loan forgiveness reviews and payment of the loan forgiveness amount determined by SBA.
Lenders may begin submitting their loan forgiveness decisions to SBA’s secure PPP Forgiveness Platform on Aug. 10, 2020, subject to extension if any new legislative amendments to the forgiveness process necessitate changes to the system. All PPP lender authorizing officials currently registered in the E-Tran system will receive a welcome email from SBA with instructions on accessing the platform.
SBA also said it will soon issue an interim final rule addressing how borrowers can appeal SBA’s determination on PPP loan or loan forgiveness eligibility.
Senate Passes Bill to Protect Economic Impact Payments From Garnishment
The Senate yesterday unanimously passed a bill that would exempt the CARES Act economic impact payments from garnishment orders. While the March CARES Act exempted these payments from being offset for debts owed to federal and state agencies (except for child support), it did not address court-ordered garnishments to pay creditors.
Under the legislation—which must still be passed by the House and signed into law—extends protections against bank garnishment to EIPs that are very similar to how current law treats garnishment of Social Security benefits. The bill includes a continued exception for child support enforcement orders.
U.S. Mint Calls on Consumers to Help Address Coin Circulation Slowdown
With the COVID-19 pandemic disrupting the circulation of coins nationwide, the U.S. Mint yesterday called on the public to pay with exact change and return any spare change to circulation by depositing coins, exchanging them for bills at a financial institution or taking them to a coin redemption kiosk.
“In normal circumstances, retail transactions and coin recyclers return a significant amount of coins to circulation on a daily basis,” the Mint noted in a statement. “However, precautions taken to slow the spread of the virus have resulted in reduced retail sales activity and significantly decreased deposits from third-party coin processors, resulting in increased orders for newly minted coins. Simply put, there is an adequate amount of coins in the economy, but the slowed pace of circulation has meant that sufficient quantities of coins are sometimes not readily available where needed.”
To further address the slower circulation, the Mint reports it has been operating at full production capacity since mid-June, producing almost 1.6 billion coins in June alone and expects to continue producing at around that capacity for the remainder of the year.
Additionally, Sherri Reagin of North Salem State Bank serves on the 22-member U.S. Coin Task Force, one of only three bankers nationwide represented. She was interviewed in the July 22 edition of Marketplace.
OCC Issues Long-Awaited ‘True Lender’ Proposal
In a long-awaited move, the Office of the Comptroller of the Currency has issued a proposal establishing a “clear test” to determine when a bank making a loan is considered the “true lender” in the context of a partnership between a bank and a third party. Under the proposal, a bank makes a loan if, as of the date of origination, it is named as the lender in the loan agreement or funds the loan.
A loan originated by a bank that satisfies either part of this test would retain its status as a bank-originated loan if the loan is sold, assigned or otherwise transferred to a nonbank entity. In cases where the bank funds the loan, the OCC noted that “if a bank funds a loan as of the date of origination, the OCC concludes that it has a predominant economic interest in the loan and, therefore, has made the loan – regardless of whether it is the named lender in the loan agreement as of the date of origination.”
The proposal is intended to provide regulatory clarity and certainty to enable banks to engage in relationships with third parties. Comments on the proposal will be due on Sept. 3.
House Votes to Include Industry-Backed AML Provision in Defense Bill
With a bipartisan majority of 336 to 71, the House voted to add anti-money laundering provisions to the 2021 National Defense Authorization Act. NDAA still requires a vote of the House on passage of the final amended bill, which is expected soon.
The provisions would direct the Financial Crimes Enforcement Network to establish and maintain a registry of beneficial ownership information and also modernize Treasury authorities and certain anti-money laundering requirements.
These provisions passed the House with a bipartisan majority in a standalone bill last year.
National Taxpayers Union Calls for Broad Credit Union Industry Reforms
In a letter to House Financial Services Committee and Senate Banking Committee leaders last week, the nonpartisan National Taxpayers Union expressed concerns about the credit union industry’s recent push to increase the member business lending cap. In the letter, NTU’s Thomas Aiello noted that “over the past several years persistent, increasingly urgent issues surrounding transparency, oversight, and unfair competition in the credit union industry have arisen” and indicated his organization would oppose the MBL expansion until key reforms are made to the credit union industry, including:
• The removal of an exemption for credit unions from filing IRS Form 990.
• A re-examination of the exemption for credit unions from unrelated business income tax, including whether business lending should be considered part of a credit union’s exempt purpose.
• Leveling the playing field to ensure that all entities face the same regulatory requirements and pay roughly the same level of tax on non-CU asset acquisitions and member business loans.
• Reestablishing and clarifying field of membership rules that align with congressional intent.
“The legislative conversation over striking a reasonable balance between increasing credit union lending capacity and accountability, transparency and fairness should not begin and end with simply boosting the MBL cap,” Aiello wrote. “A more thorough discussion that leads off with reform will better serve taxpayers, the credit union industry, and other community financial institutions across America that constitute the financial backbone of this nation.”
CFPB Announces 2021 Reg Z Dollar Thresholds
The Consumer Financial Protection Bureau announced 2021 changes in dollar thresholds for several Regulation Z provisions governed by the CARD Act, the Home Ownership and Equity Protection Act and the Dodd-Frank Act. The thresholds are based on changes in the Consumer Price Index and take effect on Jan. 1, 2021.
For credit cards, the penalty fees safe harbor for 2021 will remain unchanged at $29 for a first late payment. The subsequent late payment safe harbor fee will also remain unchanged at $40. The minimum interest charge disclosure threshold will remain unchanged at $1 in 2021. The loan amount at which HOEPA’s points-and-fees test comes into effect will increase to $22,052, and the HOEPA points-and-fees trigger will rise to $1,103.
Fed to Hold Payments Services Fees Steady for 2021
The Federal Reserve has announced that it will maintain its current fee schedules for priced services for most payments services in 2021. The Fed acknowledged the uncertainties created by the coronavirus pandemic and that it intends to hold most prices steady “in order to support the business planning of users and providers of payment services.” The Fed indicated it will publish a final list of 2021 fee schedules in the Federal Register later this year.
Senate Banking Committee Advances Fed Nominees
The Senate Banking Committee on Wednesday approved the nominations of Judy Shelton and Christopher Waller to fill vacancies on the Federal Reserve Board of Governors. Shelton was approved along party lines, while Waller was advanced by a bipartisan 18 to 7 vote. Both nominations now go to the Senate floor for final confirmation.
OCC: Banks May Offer Crypto Asset Custody Services
In an interpretive letter Wednesday, the Office of the Comptroller of the Currency indicated that national banks and federal thrifts may provide cryptocurrency custody services for their customers. The OCC noted that it considers such services to be a modern form of traditional bank activities.
“As the banking industry entered the digital age, the OCC recognized the permissibility of electronic safekeeping activities,” according to the letter. “Specifically, the OCC has concluded that a national bank may escrow encryption keys used in connection with digital certificates, finding that the key escrow service is a functional equivalent to physical safekeeping, except it uses electronic technology suitable to the digital nature of the item to be kept safe.”
In addition, banks may also provide secure web-based document storage, retrieval and collaboration of documents and files containing personal information or other confidential information “because these services are the electronic expression of traditional safekeeping services provided by banks.” The OCC added that banks engaging in these activities should develop them consistently with sound risk management practices and align them with the bank’s overall business plan.
IBA COVID-19 Updates
The IBA has several COVID-19 resources and updates available at our website.