FEDERAL GOVERNMENT RELATIONS
Chairman White Pens CU Op-Ed
The Sept. 4 edition of the Indianapolis Business Journal featured an op-ed by Lucas White, IBA chairman and president of The Fountain Trust Company, Covington. In his op-ed, “Another Taxpaying Bank Bought out by a Credit Union,” White reviews the alarming trend of credit unions purchasing banks and the serious tax revenue consequences. He notes: “When the Federal Credit Union Act of 1934 was enacted, surely the intent was not to create tax-exempt entities that would grow so profitable that they would swallow up taxpaying institutions.”
Coin Task Force Issues Resources
The U.S. Coin Task Force has published new resources for financial institutions, armored carriers and retailers to help address disruptions to coin circulation. The resources on the task force’s Get Coin Moving site include best practices, suggestions to encourage coin circulation, customizable graphics, social media recommendations and more.
The task force also indicated it plans to complete another sprint this month to measure and monitor the impact of its resources to maximize effectiveness. Both the American Bankers Association and Independent Community Bankers of America are represented on the task force, which released initial recommendations last month. Additionally, Sherri Reagin of IBA-member North Salem State Bank serves on the task force.
Fed Continues Increasing Coin Allocations
The Federal Reserve has increased maximum coin allocations under its program that manages coin distributions due to low inventories caused by the coronavirus pandemic. In a message to Federal Reserve Cash Services customers, the Fed outlined the increases to small, medium, large, X-large and XX-large “endpoint” groups.
The sizing regime is based on historical ordering volumes and doesn’t correspond to bank size, with branches, cash vaults and outsourced handlers potentially serving as endpoints. With the allocation increases, the various groups are now nearer their pre-coronavirus average, with the Fed ultimately seeking to reach 100% of historical averages as supply chains normalize.
The Fed noted that it is providing maximum allocations. If the agency’s coin inventories are depleted, it might not be able to fully fill orders. The new caps will apply to orders placed today for pickup on Monday, Sept. 14.
Texas Study Reaffirms Community Bank PPP Leadership
The Paycheck Protection Program has worked as intended to provide short-term support to small businesses largely due to community banks, according to a forthcoming study from Texas Tech University researchers.
The study found that roughly 64% of Texas-based participants in the first phase of the PPP are community banks, which were instrumental in distributing PPP loans to rural markets. Further, community banks helped serve the most vulnerable sectors, including the hotel, food services, mining, and oil and gas industries.
USDA Reopens Hemp Program Comment Period
The USDA recently reopened the comment period on its interim final rule that established the U.S. Domestic Hemp Production Program. Stakeholders will have an additional 30 days to submit comments.
HUD Finalizes Rule to Align ‘Disparate Impact’ Rule With Court Ruling
The Department of Housing and Urban Development has finalized its revised standard for bringing “disparate impact” claims under the Fair Housing Act. Proposed last summer, the final rule conforms HUD’s 2013 disparate impact rule with the Supreme Court’s 2015 decision in Texas Department of Housing and Community Affairs v. Inclusive Communities Project, which recognized disparate impact analysis to demonstrate discrimination claims under the FHA but added key limitations to ensure the burden of proof in disparate impact cases is with the plaintiffs.
To do this, the final rule adds five elements that must be included in disparate impact claims under the FHA. Specifically, plaintiffs will be required to plead that: a challenged practice is arbitrary, artificial and unnecessary to achieve a valid or legitimate objective; a “robust causal link” between the challenged policy or practice and the disparate impact; the challenged policy or practice has a harmful effect on a protected class; the disparity is significant; and finally, there is a direct relation between the injury and the challenged policy or practice.
The final rule also provides methods for defendants to rebut disparate impact claims. For example, at the pleading stage of a claim, defendants may argue that the plaintiffs have failed to plead one of the elements above or show that a challenged policy or practice is required to comply with a binding third-party requirement such as law (also available at the merits stage). At the merits stage of a claim, a defendant may defeat a claim by demonstrating that the practice or policy is intended to predict an outcome, that the prediction represents a valid interest, and that the outcome predicted does not or would not have a disparate impact on a protected class.
In cases where fair housing liability is based solely on disparate impact, the final rule states that “remedies should be concentrated on eliminating or reforming the discriminatory practice.” HUD indicated it will only pursue civil money penalties in disparate impact cases where the defendant has been determined in the previous five years to have violated the FHA.
DOL Clarifies FFCRA’s Application During School Reopening
As schools reopen for the fall, the Department of Labor issued three new frequently asked questions that address application of the Families First Coronavirus Response Act in circumstances where the employee’s ability to work is affected by how and whether a child’s school reopens. The FFCRA provides paid family, medical and sick leave to employees (of companies with fewer than 500 employees) who cannot work because of the coronavirus, or who are caring for a child whose school or daycare is closed.
The recently issued FAQs clarify that an employee whose child's school is providing a choice between in-person or remote learning for the fall is not eligible to take paid leave under the FFCRA, because the child’s school is not “closed” due to COVID-19-related reasons. The FAQs also state that an employee is eligible to take paid FFCRA leave if the employee’s child’s school is operating in a hybrid arrangement where the child attends in-person instruction some days and remote learning other days, as long as the employee needs the leave to care for the child during the remote learning time and no other suitable person is available to do so.
‘Ask the Fed’ Webinar on PPPLF
The Federal Reserve will host a webinar Sept. 18 at 2 p.m. ET on the Paycheck Protection Program Liquidity Facility (PPPLF). The webinar will provide an update on reporting requirements and the paydown process for PPPLF participants that receive loan paydown payments on Paycheck Protection Program loans that are pledged to the PPPLF. In addition, the webinar will cover the steps a PPPLF participant would need to take in cases where the maturity of an existing PPP loan pledged to the PPPLF is extended from two years to five years.
The PPPLF supports the effectiveness of the Small Business Administration’s PPP by supplying liquidity to financial institutions that are eligible to make PPP loans to small businesses. The PPPLF provides nonrecourse advances to these financial institutions by using PPP loans as collateral. Questions may be submitted in advance to questions@askthefed.org.
Financial and Retail Trade Groups Call for Short-Term Extension of Covered Business Method Program
Financial and retail trade groups, in a letter to Sens. David Perdue (R-Ga.) and Richard Blumenthal (D-Conn.) expressed support for a one-year extension of the Covered Business Method program, which protects the rights of legitimate patent holders while providing an efficient alternative to patent litigation over questionable patents.
The groups noted that the program – which was established in 2012 – has been working but said that “some patent owners may be waiting to assert their business method patents until after the CBM program has expired.” They warned that “if these patents are asserted without the CBM program in place, the end result will be a tax on our economy at a time when many of our members are fighting to recover from the devastating economic impact of the COVID-19 pandemic.”
IBA COVID-19 Updates
The IBA has several COVID-19 resources and updates available at our website.