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IBA E-News 2-8-19



Senate Bill 265 - Various Trust Matters

Author: Sen. Randall Head, R-Logansport

Summary: Defines “designated representative,” “judicial proceeding” and “nonjudicial matter” for purposes of the trust code. Provides that a protective provision in a legacy trust prevents a creditor of the settlor from satisfying a claim from the settlor’s interest in the trust estate when the settlor is also a beneficiary of the trust. Authorizes the establishment of legacy trusts. Prescribes the procedures for establishing a legacy trust. Bars most claims against a legacy trust. Provides immunity to the trustees and advisers of legacy trusts and the professionals involved in establishing legacy trusts. Provides that the rule against perpetuities does not apply to legacy trusts. Adopts the Uniform Directed Trust Act, which allows for the terms of a trust to grant a person other than a trustee power over some aspect of the trust’s administration. Repeals a provision regarding duties and liabilities of a trustee under the control of a third person. Allows for the use of quiet trusts. Provides that an interested person may enter into a binding nonjudicial settlement agreement with respect to trust matters. Provides for nonjudicial account settlements.

Latest action: SB 265 was amended in the Senate Judiciary Committee on Feb. 6. It was voted out of committee 6-4 and now awaits potential amendments for second reading.

Senate Bill 516 - Regulation of Hemp

Author: Sen. Randall Head, R-Logansport

Summary: Establishes the Indiana hemp advisory committee to provide advice to the Office of Indiana State Chemist & Seed Commissioner and the Indiana State Department of Agriculture. Amends the definition of “industrial hemp” to conform with the federal definition. Changes references from “industrial hemp” to “hemp.” Allows the state seed commissioner to perform a criminal background check of an applicant for a hemp license or agricultural hemp seed production license. Establishes a uniform expiration date for hemp licenses and agricultural hemp seed production licenses. Requires a person who sells agricultural hemp to have a seed distribution permit. Establishes requirements for negligent violations of the hemp law. Requires any civil penalties collected under the hemp law to be transferred to the Indiana State Department of Agriculture and used for hemp marketing and research purposes. Allows the state seed commissioner to adopt emergency rules to comply with federal requirements. Establishes procedures to apply for approval from the United States Department of Agriculture to receive approval to produce hemp. Requires a person who sells hemp to: (1) be licensed in Indiana and in the jurisdiction in which the hemp was grown; and (2) provide certain information to the buyer. Makes conforming changes.

Latest action: SB 516 passed the Senate Commerce and Technology Committee on Jan. 24 by a vote of 8-3. The bill awaits potential amendments on second reading in the Senate.

House Bill 1447 - Financial Institutions and Consumer Credit

Author: Rep. Woody Burton, R-Whiteland

Summary: Makes various changes to the statutes concerning: (1) first lien mortgage lenders; (2) persons licensed under the Uniform Consumer Credit Code (UCCC); (3) rental purchase agreements; (4) debt management companies; (5) banks; (6) credit unions; (7) pawnbrokers; and (8) money transmitters. Repeals a provision in the statute concerning rental purchase agreements that specifies that any up-front payment made by the lessee: (1) must be treated as an initial rental payment; (2) is subject to the disclosure requirements under the statute; and (3) may be in a sum larger than a regular rental payment. Repeals a provision in the UCCC that provides that civil proceeding advance payment transactions (CPAP transactions) are subject to the UCCC. Strikes all provisions concerning CPAP transactions from the UCCC. Repeals provisions in the UCCC that define certain terms relating to CPAP transactions. Moves language in the UCCC applicable to the licensing of civil proceeding advance payment providers to the existing statute concerning civil proceeding advance payments and makes conforming amendments.

Latest action: The bill passed the third reading vote in the House 93-0. Sen. Eric Bassler has been named as lead sponsor for the bill in the Senate, along with Sens. Andy Zay and John Ruckelshaus.




CFPB Proposes Reforming Small-Dollar Rule

The Consumer Financial Protection Bureau has proposed rescinding certain provisions of its rule on payday, vehicle title and certain high-cost installment loans. Specifically, the CFPB would drop the rule’s requirements that lenders make certain underwriting determinations before issuing such loans, which the bureau indicated would reduce access to credit.

The final rule issued in October 2017 exempts from the full-payment test and principal-payoff option lenders that make 2,500 or fewer covered short-term or balloon-payment loans per year and derive no more than 10 percent of their receipts from such loans. This exemption would remain under the new proposal.

The bureau’s revised proposal follows an FDIC request for information on ways to increase bank participation in small-dollar lending.

Read more.

OCC Names New Supervision Deputy

The Office of the Comptroller of the Currency has announced that Grovetta Gardineer will become its senior deputy comptroller for bank supervision policy upon the retirement of Grace Dailey on March 2. Gardineer will direct the formulation of policies and procedures for supervising and examining national banks and federal savings associations. She is the current senior deputy comptroller for compliance and community affairs and has 31 years of experience in banking policy.

Read more.

Basel: Shadow Banking Continues Expanding in 2017

Bank-like activity by nonbanks that poses financial stability risks grew by $4.4 trillion, or 8.5 percent, in 2017, according to the Basel, Switzerland-based Financial Stability Board on Monday. The measure, which represents 14 percent of global financial assets, comprises collective investment vehicles, nonbank lenders dependent on short-term funding and market intermediaries depending on short-term or secured funding.

A subset of all nonbank financial activity, the measure is designed to replace the term “shadow banking,” which the FSB is replacing with “nonbank financial intermediation” in its multiyear project monitoring risks posed by nonbanks. In 2017, depository institutions’ share of global financial assets declined to 39 percent – down from 45 percent in 2008.

Federal Reserve Vice Chairman for Supervision Randal Quarles, who chairs the FSB, noted that when shadow banking “involves maturity or liquidity transformation, or leverage like banks, it may have effects on financial stability both directly and through its linkages with the banking system. The FSB’s monitoring exercise draws on the strength of the FSB’s broad-based and diverse membership to facilitate the sharing of information about these developments among authorities and helps to identify potential sources of financial stability risk.” 

Read more.

Crapo Unveils Plan for Housing Finance Reform

Senate Banking Committee Chairman Mike Crapo (R-Idaho) has outlined his plan for overhauling the housing finance system. Under the plan, Fannie Mae and Freddie Mac would become private guarantors that would be permitted to provide guarantees on eligible mortgages securitized by primary market participants. They also would be permitted to buy mortgages from the primary market through a cash window and guarantee and securitize them through a platform operated by Ginnie Mae.

The plan also calls for the Federal Housing Finance Agency to transition from being run by a single director to a bipartisan board of directors that would be responsible for chartering, regulating and supervising the system of private guarantors.

View the plan.