IBA E-News 11-30-18
STATE GOVERNMENT RELATIONS
Indiana House of Representatives Releases Committee Chairs
Leadership in the Indiana House of Representatives has announced committee chairs and caucus leader positions for the upcoming 2019 legislative session. Rep. Woody Burton will retain his position as chair of the Financial Institutions Committee. Several notable changes include Rep. Jerry Torr as the new chair of the Judiciary, Rep. Ed Soliday as the chair of Utilities, Energy and Telecommunications, Rep. Holli Sullivan as the chair of the Roads and Transportation Committees and Rep. Wendy McNamara as the chair of Courts and Criminal Code.
Click to view the full list of committee chairs and leadership appointments.
FEDERAL GOVERNMENT RELATIONS
IBA Op-Ed Published in Indianapolis Business Journal
The Indianapolis Business Journal has published “Keep the ‘farm’ in farm credit,” an op-ed authored by IBA president and CEO Amber R. Van Til. The op-ed argues the need for reform in the Farm Credit System, and outlines the changes needed to do so. Most importantly, Van Til calls on the Farm Credit System to return to its original purpose.
Read the op-ed.
New Fed Report Signals Confidence in Highly Capitalized Financial Sector
The nation’s largest banks are strongly capitalized and are holding more liquid assets than they were in the leadup to the financial crisis, the Federal Reserve noted Wednesday in its inaugural report on financial stability. The report – which will be published twice a year – examines the resilience of the financial system and highlights potential vulnerabilities that could affect financial stability.
While regulators expressed confidence overall in the health of the financial sector, they are concerned about a rise in riskier business debt -- including high-yield bonds and leveraged loans -- which has increased in recent quarters and now totals $2 trillion. They also noted that credit standards for some business loans have loosened. Meanwhile, household borrowing has grown at a low-to-moderate pace relative to income, the report noted.
In the near term, regulators noted that Brexit and uncertainties in the Eurozone could pose potential risks to the financial system, as could an economic slowdown in China. In addition, uncertainties related to U.S. trade policies and geopolitical uncertainties could also make investors more risk averse in the months ahead, the Fed said.
Read the report.
McWilliams: FDIC Considering Multiple Changes to Resolution Planning
The Federal Deposit Insurance Corp. is considering several policy changes to “strengthen and streamline” the large bank resolution planning process, FDIC Chairman Jelena McWilliams said at an industry event Wednesday.
McWilliams expressed support for legislative efforts to establish a tailored, transparent process for large firms to be resolved through bankruptcy, and noted the FDIC is also considering changes to the Orderly Liquidation Authority to make the process more certain and transparent. She also said that the FDIC will soon issue an advanced notice of proposed rulemaking as it prepares to make changes to its rule requiring resolution plans for insured depository institutions (IDIs). McWilliams noted that in light of recent actions to raise the threshold at which bank holding companies are required to submit resolution plans under the Dodd-Frank framework, “it is appropriate that we revisit that threshold” for IDIs as well.
In addition to seeking feedback on which institutions should be subject to the rule, the ANPR will also ask for comments on how to appropriately tailor the rule based on size, complexity, risk profile and other factors, McWilliams said. She added that “for purposes of clarity, the next round of submissions under the IDI rule will not begin until this rulemaking process has been completed.”
Read McWilliams' remarks.
Agencies Issue Second Update on Exam Modernization Effort
As part of an ongoing review of the safety and soundness exam process, the Federal Financial Institutions Examination Council has issued a second update on progress made to date. The update focuses on regulators’ work to tailor examinations based on the risk profiles of individual institutions.
After reviewing and comparing current principles and processes for tailoring community bank examinations based on risk profile, the agencies committed to issuing reinforcing and clarifying guidance where necessary. This guidance would help ensure that examiners consider the unique risk profile, complexity and business model of the bank when developing an examination plan; analyze existing information to identify areas of higher and lower risk; and appropriately tailor document requests based on risk profile, among other provisions.
New IRS Guidance Outlines Restrictions for Deductibility of Net Business Interest Expense
The IRS on Tuesday proposed regulations for implementing provisions of the Tax Cuts and Jobs Act that restrict the deductibility of net business interest expense. The rules generally apply to taxpayers with gross receipts over $25 million and restrict the deductibility of net interest expense to an amount that does not exceed 30 percent of a taxpayer’s adjusted taxable income. There are a variety of exceptions to be considered and calculations required to determine the limitation.
Since the restriction applies to net business interest expense (and banks have net business interest income), it should not apply to banks as taxpayers, but it is likely to affect certain bank customers. In addition, the proposed regulations confirm that the limitation is calculated on a consolidated tax return group basis – an important concern for banking groups with multiple legal entities and financial structures.
Comments on the proposed regulations are due in 60 days.
Read the proposed regulations.
FCC Releases Draft Order to Establish Reassigned Number Database
The Federal Communications Commission last Wednesday released a draft order that would create a database of phone numbers that have been relinquished by one individual and reassigned to another individual. The FCC will vote on – and is expected to approve – the order at its upcoming Dec. 12 meeting.
By approving the order, the FCC would “establish a single, comprehensive database of reassigned number information” provided by all telephone companies that assign telephone numbers to subscribers. The FCC explained that the “database will enable any caller,” such a bank, “to verify whether a telephone number has been reassigned before calling that number.”
Under existing case law and the FCC’s Telephone Consumer Protection Act regulations – prior to being struck down by a federal appellate court last March – a bank or other company is liable for a call made in good faith to a party who has consented to receive the call but whose telephone number has been reassigned to another consumer, unbeknownst to the caller.
Read the draft order.