STATE GOVERNMENT RELATIONS
Regional Meetings Conclude With Impressive Results
The 2019 season of IBA regional meetings concluded this week with our final meetings in New Albany and Bloomington. After traveling nearly 1,800 miles throughout Indiana this summer, the IBA staff is very appreciative of all those who joined this year to share in an IBA update and lunch with local legislators. In total, over 190 bankers and 48 legislators attended this year’s regional meetings, as well as several sponsoring associate members. Thank you to all of our grassroots advocates who made these meetings a success, and we hope to see you again next year!
FEDERAL GOVERNMENT RELATIONS
IBA Annual Washington Trip Registration Open
Don’t miss out on the 2019 IBA Washington Trip, Oct. 20-22! The IBA Annual Washington Trip affords bankers the opportunity to talk with legislators and regulators about the successes and concerns of Indiana's banking industry. These officials need to hear your ideas firsthand in order to produce workable laws and regulations. This is your chance to tell policymakers face-to-face why the regulatory burden imposed on banks is too heavy and to make suggestions for modifications to burdensome rules. For more information and to register, click here or contact Michelle Long, 317-333-7148.
Fed Cuts Interest Rates for First Time Since Financial Crisis
As expected by analysts, the Federal Open Market Committee announced Wednesday that it would cut the target range for the federal funds rate by a quarter of a point to 2 to 2.25% amid slowing global growth and mounting economic uncertainties. In a statement issued at the end of the meeting, FOMC members said that after reviewing incoming economic data, they expect the economic expansion to continue, but noted that “uncertainties about this outlook remain.”
The FOMC said it would “assess realized and expected economic conditions relative to its maximum employment objective and its symmetric 2 percent inflation objective” in determining the timing and size of future rate adjustments.
Agencies Testify on Hemp Rulemaking
Federal agencies are working to quickly implement provisions of the 2018 Farm Bill authorizing the production of hemp, officials told the Senate Committee on Agriculture, Nutrition & Forestry. In a hearing on regulatory implementation, USDA Under Secretary Greg Ibach said agencies are reviewing an interim final rule with the goal of issuing regulations this fall to accommodate the 2020 crop year.
Innovation Inquiry Continues on Capitol Hill
The Senate Committee on Banking, Housing, and Urban Affairs has continued to examine digital currencies following hearings earlier this month on Facebook's Libra project. At Tuesday's hearing, Chairman Mike Crapo (R-Idaho) noted concerns with digital currencies, but also said technology innovations could be beneficial and should be led by U.S. companies.
CFPB Seeks Feedback on ‘QM Patch’ Ahead of 2021 Expiration
The Consumer Financial Protection Bureau has issued an advance notice of proposed rulemaking seeking feedback on the upcoming expiration of the temporary “GSE patch,” which grants Qualified Mortgage status to loans eligible to be purchased or guaranteed by Fannie Mae or Freddie Mac. The bureau noted that it is currently planning to allow the GSE patch to expire as scheduled in January 2021, "or after a short extension."
Accordingly, the bureau is seeking comments on possible changes to the ability-to-repay rule, including whether to revise the definition of a Qualified Mortgage. Specifically, the bureau asked for input on the current debt-to-income ratio, as well as potential alternatives for determining borrowers’ ability to repay. Comments on the ANPR will be due 45 days after publication in the Federal Register.
Japanese Retail Giant Applies for Banking Charter
Rakuten, the largest e-commerce company in Japan, last Friday filed an application for an industrial loan company charter in the state of Utah. The company – known as the "Amazon of Japan" – operates several consumer-facing retail and fintech businesses, including the U.S. rewards brand Ebates.
Senators Call for Faster Pace on Reg Reforms
A group of 13 Republicans on the Senate Committee on Banking, Housing, and Urban Affairs on Tuesday urged the federal banking agencies to accelerate implementation of regulatory reforms made by the S. 2155 reform law, as well as other reforms that they said would enhance economic growth. "More can still be done to support the economic expansion," they wrote.
Among outstanding S. 2155 action items, the senators called for the agencies to use the discretion provided by Congress to finalize the community bank leverage ratio at 8%, rather than 9% as proposed; to make the short-form call report more streamlined; to simplify their proposal to revise the Volcker Rule; and to “significantly simplify” stress testing for banks with assets of $100 billion to 250 billion.
The senators also called for agencies to assist banks during the transition to the current expected credit loss model for loan loss accounting, tailor regulations for U.S. operations of banks headquartered abroad, index regulatory thresholds to rise automatically over time, guard the line between rules and guidance, and address the challenge to the "valid when made" doctrine rejected by a federal appellate court.