IBA E-News 1-25-19
STATE GOVERNMENT RELATIONS
The Indiana General Assembly continues to work through bills assigned to committee. Legislative committees, including both the House Financial Institutions and Senate Insurance and Financial Institutions committees, met throughout the short work week to address a wide variety of issues. Another 85 House bills were released this week, culminating in 1,349 total bills being filed to date. The IBA GR Team continues to review legislation and work to address notable problems with legislation as they arise.
Author: Rep. Woody Burton, R-Whiteland
Summary: The bill urges the legislative council to assign to an interim study committee, for study during the 2019 interim, the topic of revisions to the Uniform Consumer Credit Code. Sets forth issues for consideration by an interim study committee assigned this topic.
Amended language: The language makes the following change to the Uniform Consumer Credit Code
(UCCC): Amends the provisions authorizing specified additional charges for consumer credit sales and consumer loans to: (A) permit a seller or a lender, as applicable, to contract for and receive a charge not to exceed $10 for procuring a credit report; and (B) in the case of a revolving loan account, permit a lender to contract for and receive a transaction fee that may not exceed the greater of:
(i) 2% of the amount of the transaction; or (ii) $10. (Current law authorizes the lender to charge a transaction fee in the lesser of these two amounts.) Replaces the authorized $5 delinquency charge (subject to indexing by the Department of Financial Institutions) for consumer credit sales and consumer loans with a nonindexed delinquency charge of: (A) $5 if installments are due every 14 days or less;
(B) $25 if installments are due every 15 days or more; or (C) $25, in the case of a single installment due at least 30 days after the consumer credit sale or consumer loan is made. Specifies that a creditor may not charge or collect a delinquency charge on a payment that: (A) is paid within 10 days after its scheduled due date; and (B) is otherwise a full payment of the payment due for the applicable installment period; if the only delinquency with respect to a consumer credit sale or a consumer loan is attributable to a delinquency charge assessed on an earlier installment.
Latest action: The bill was heard in the House Financial Institutions Committee on Jan. 15, but was held due to potential amendments. Several changes to the UCCC (note amended language description) were proposed as an amendment on Jan. 22. The proposed amendment was adopted, and the bill was passed out of committee 11-1. It is eligible for second reading amendment on Monday, Jan. 28.
Author: Sen. Greg Walker, R-Columbus
Summary: This bill changes the current incremental finance charge limits that apply to a
small loan to a maximum annual rate of 36%. The bill also prohibits certain acts with respect to financing of a small loan and makes a violation a deceptive act and subject to penalties.
Latest action: The bill was heard in the Senate Insurance and Financial Institutions Committee on Jan. 23 and was held for further consideration.
Author: Sen. Randall Head, R-Logansport
Summary: The bill establishes the Indiana Hemp Advisory Committee to provide advice to the office of the State Seed Commissioner and the Indiana State Department of Agriculture (ISDA). It amends the definition of “industrial hemp” to conform with the federal definition. It changes references from “industrial hemp” to “hemp.” The bill establishes requirements for negligent violations. It requires any civil penalties collected under the hemp law to be transferred to ISDA and used for hemp marketing and research purposes. The bill allows the State Seed Commissioner to adopt emergency rules to comply with federal requirements. It establishes procedures to apply for approval from the United States Department of Agriculture (USDA) to receive approval to produce hemp. It requires a person who sells hemp to be licensed and provide certain information to the buyer. It makes conforming changes.
Latest action: The bill was heard in the Senate Commerce and Technology Committee on Jan. 24. It was voted out of committee 8-3.
Author: Rep. Carolyn Jackson, D-Hammond
Summary: This bill prohibits the installation, placement, or attachment of a GPS device or a starter interrupter device in, on, or to a motor vehicle by a lienholder in connection with the potential or actual: (a) enforcement of the lienholder’s interest in the motor vehicle; or (b) repossession of the motor vehicle; without the written and signed consent of the owner of the motor vehicle. The bill provides that a violation of these provisions is a deceptive act for purposes of the deceptive consumer sales act. The bill establishes as Class A misdemeanors the related criminal offenses of:
(a) lienholder vehicular stalking;
(b) lienholder vehicular disablement; and
(c) unlawful vehicular tracking.
(4) Sets forth the elements of these offenses
Latest action: The bill has been assigned to the House Roads and Transportation Committee.
FEDERAL GOVERNMENT RELATIONS
Rep. McHenry Calls for Hearings on Several Priority Issues
House Financial Services Committee Ranking Member Patrick McHenry (R-N.C.) wrote to Chairman Maxine Waters (D-Calif.) Wednesday urging her to hold hearings on a number of critical financial services issues.
Specifically, McHenry called for hearings on the modernization of the Bank Secrecy Act and anti-money laundering regulations, the Financial Accounting Standards Board’s Current Expected Credit Loss standard, housing finance reform, the National Flood Insurance Program and cybersecurity. He also urged the committee to examine the potential effects of Brexit on the U.S. financial system, as well as the global economic implications of China’s financing decisions.
The IRS last Friday issued its final rules providing guidance on how Subchapter S corporations may calculate the 20 percent deduction for pass-through entities included in the 2017 tax reform law. While generally positive, preliminary analysis suggests mixed results for a few issues of concern to S-corp banks.
In line with the rules as proposed, core banking activities such as taking deposits and making loans qualify for the deduction. The rules also clarified that most income from originated loan sales qualifies. However, the IRS declined to issue a blanket qualification for all activities of a regulated bank – as repeatedly advocated by the American Bankers Association, Independent Community Bankers of America and Subchapter S Bank Association in letters and meetings with key staff.
The IRS also declined to increase the de minimis levels for non-qualifying activities, but it clarified that non-qualifying activities exceeding a de minimis level only disqualify net income from that activity, not all income of the bank. This will require S-corp banks with non-qualified activities, including some wealth management functions, to maintain records and determine the gross and net income from those activities.